Why Amazon Can't Manufacture a Kindle In the US 598
theodp writes "Ever wonder why all those job listings for Amazon subsidiary Lab126 — the internal group behind the Kindle and, by all accounts, an upcoming Android tablet — have travel requirements? Over at Forbes, Steve Denning explains why Amazon can't make a Kindle in the U.S., and why that really does matter. 'The idea that there is a lot of outsourcing going on is hardly news', writes Denning. 'The idea that it is irreversible and destructive of the economy's ability to grow is less well known. Even so, it's not exactly new news: the HBR article that I cite is two years old. What is really new news is that (1) these fairly obvious truths haven't yet dawned on economists at the Federal Reserve Bank of San Francisco, CEOs, accountants, politicians, among others and (2) the way to manage in a radically different way to deal with these issues is now more fully articulated than it has been before.' Denning concludes his trilogy-of-management-terror by noting that the decline is also occurring in software."
Comparative Advantage... (Score:3)
Re:Comparative Advantage... (Score:5, Insightful)
Not really. The US used to have much better manufacturing plants than Taiwan, South Korea, China... what happened is that companies decided to outsource for slave-labor wages.
What is killing US manufacturing now is both slave-labor wages in other countries and the fact that the fab plants have moved there. This wouldn't have happened in the first place if the dickfaced politicians on the take from an elitist multibillionaire class hadn't been so gung-ho on "global free trade", aka Slavery Exported.
Comment removed (Score:4, Insightful)
Re:Comparative Advantage... (Score:5, Insightful)
Would it have been better if that slavery would not have been exported?
Yes, because the bleeding hearts couldn't stand seeing it locally, so they got rid of polluters, sweatshops, abusive management. IF we could export those guys to China, they would clean up China, which is pretty much a hellhole. Better than it was 10 years ago, but still a hellhole..
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But there was more.
Bad management and labor relations caused huge quality problems. Product lifecycles became stretched, rather than market-sensitive. Complexity started to become difficult to maintain, let alone engineer. Supply chain was horrible in the US, but like a quartz watch in Japan, then Taiwan/Singapore/HK.
People gave a shit what the outcomes were, and consumers tired of buying trash from US vendors. Now US tech and automotive products and components are largely made overseas. Greed won, then gre
Re:Comparative Advantage... (Score:4, Interesting)
The average American is worse off? Funny, I didn't see Iphones, PCs, drugs that actually work, etc. in the 1950s?
http://american-business.org/uploads/posts/2011-03/1301047846_work-time-in-minutes-required.jpg [american-business.org]
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Politicians are always toadies. They are here, and they are in China.
Irrelevant of government regulations, bad business leaders WILL find a way to fail. It's what they are good at.
In most of these cases, wages aren't the driving force behind cost of manufacture. It's environmental regulation. In the US water is more expensive, electricity is more expensive, waste removal is more expensive, and most importantly, proving you meet all the environmental guidelines is expensive. Where-as, in Asia you build y
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Stop being such a cynical twat. Most U.S. politicians do care very much about the U.S. and its people. If memory serves correct, we've only invaded one mid-east country for no reason, and that was to remove a miserable tyrant. It is arguable whether the Arab Spring would ever have sprung were it not for an example in Iraq of people actually voting for their government. Worthless post-modern prole...
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Re:Comparative Advantage... (Score:4, Insightful)
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Back in the 90's I spoke to a guy in Texas that ran a Silicon wafer growing facility, he told me that his labor rate would triple if he told the people that were growing these long crystals how much each one was worth. they final moved the company to Asia somewhere.
What people don't realize, is that the USA consumer wants that cheapest product possible. There are people that want good quality products but when they see the price they panic and don't realize the long term value, I happen to have bought a law
Re:Comparative Advantage... (Score:4, Insightful)
I bought a Sears lawn mower over 20 years ago. Last year, the plastic spokes on the rear wheels started cracking, the friendly Sears parts and service on-line had replacement wheels. I bought those wheels rather than a new mower because I cannot buy a new mower with such large rear wheels any longer (at least in the U.S.).
The large rear wheels allow one roll over mole holes and such. I just recently stumped for a new engine for my trusty lawn mower, again Sears on-line had it.
That sort of service from Sears has got to be expensive, I will sorely miss Sears when it goes the way of the dodo because Americans cannot be arsed to fix a quality piece of equipment rather than buying some cheap foreign replacement.
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That reminds me of my German build washing machine, still working at 30 years old.
I always *think* about buying a new one, since the program settings have become a little erratic any you have to turn the dial very carefully, but the company that made it has since moved all manufacturing to china, and from what I hear they only last a few years now.
Re: Slave-labor wages (Score:3, Informative)
"Slave-labor" wages are really a matter of perspective, based on your personal standard of living. The people filling these jobs, particularly in China, are from rural areas, who take them because they are a substantial increase in pay for their family from what they as farmers were making toiling over fields. As hard as the manufacturing work seems to us in America who comparatively have it pretty easy, isn't sitting in a chair putting electronics together somewhat less back-breaking work than bending ov
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Re:Comparative Advantage... (Score:5, Insightful)
Exactly! How dare those damned poor ask for a wage where they can afford rent AND food.
The audacity of it all... Rent AND Food? Next hey will ask for heat and running water. WE need to just put them all down for the sake of humanity.
I have to waste time today hiring a Plant manager to beat my employees... The last one developed tennis elbow from swinging the bat the wrong way so I had to fire him.
Re:Comparative Advantage... (Score:5, Insightful)
The problem is that even if unions led to good things in the past, you have to recognize that they can also go very, very wrong. To be 100% pro union or 100% anti union is an unthinking position. People in those camps are no better than a cardboard sign.
I guess people want to work 12-18 hours a day, every day... and that is just their kids in the coal mines who will get black lung disease before 18.
I'm sorry, but that is just a fuckheaded thing to say. No, people are seeing some very corrupt and broken unions today, and want it fixed, but people like you can't raise yourselves out of the muck of extremist bullshit rhetoric. It's all false dichotomies and dilemmas with you people.
Nothing is perfect, but unions have made life a lot better than it was before. But because they are unions and get in the way of profits, I guess they are bad.
Can you not even understand that they can be both? That different unions are different things? You demonstrate the #1 problem with this country today. No one can see any nuance or individuality. Instead of seeing the different unions out there and judging them individually, it's just "DERP! UNIONS GOOD!" and "DERP! UNION BAD". You are part of the problem. I hope you're fucking proud of yourself.
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Re:Comparative Advantage... (Score:5, Informative)
Which also happens in the US.
Apple are the heavyweight in cheap consumer electronics, and American owned. We should be asking why they aren't building in the US, especially as most of what they "build" is putting together other companies' components.
And we should be defining what "make (or made)" and "build (or built)" mean. If I buy a motherboard from taiwan and build a computer from it in the US, is it "Made in America"? What if the motherboard is from taiwan, CPU from Arizona [wikipedia.org], hard drive [seagate.com] and case [alibaba.com] from China, power supply from California [usstuff.com] and I build the computer in Dallas, is it "Made in America"? What if the parts are mostly from the US but they're assembled in Mexico, what is that? And we can take it further, what if the parts are made in the US but the rare earth elements used in those parts are from China, [yale.edu] where is it "made"?
Car manufactures have been playing this game for years, [wsj.com] buying parts from overseas but assembling the car in the US and calling them "American made". It's so bad that there's a American-Made Index [cars.com] where they rate cars based on how many of their parts come from the US and vehicles like the Toyota Camry and Honda Accord are more "American made" than the Chevy Traverse or Ford Explorer and American icons like the F-150 and Silverado don't even make the list, so people buying trucks from Ford or GM thinking they're supporting America really aren't, they'd be better off buying a Toyota Tundra.
Obviously if the metal, chemicals and other rare materials were mined in the US to make the parts in the US used to assemble the device in the US then it's 100% American made, but that's almost never going to happen so we need to clear this up before we can call something "Made in America".
Re:Comparative Advantage... (Score:4, Insightful)
The competition for cheap foreign labor is not cheap domestic labor.
It is highly automated manufacturing.
Robots cost the same in China and the USA. Most are currently not made in China.
Re:Comparative Advantage... (Score:4, Informative)
They "choose" to live in a dorm style environment"? Are "free" to look for other work?
Yeah right. And Marie Antoinette's peasants were free to eat cake.
Also, you're free to go fuck yourself. Moron.
Hi there - I live and work in China, a free-lance engineer and production consultant, mainly for US and EU companies looking to use production in China and Thailand (I specialize in both countries). Been doing so for 7 years now, mainly in the Shanghai area (Wuxi down to Ningbo, out into Zhejiang province) in China, and the Bangkok-to-Chaiyaphum corridor in Thailand.
For background, I've set up and run my own manufacturing facility in the US, and done the same in Belgium and Chile (the latter two on a contract basis).
Most Chinese factories offer free room-and-board for their employees; it is not mandatory, you're free to live off-campus. However, that means you'll also have to pay for those things - and since most factory workers are planning to only stay in the factory for 5-7 years, saving every kuai they can so they can start their own business or buy a house when they move back home, they choose the dorms. Some factories will give you a small stipend for off-campus housing if they do not have space in the dorms for you, but if you choose to not stay in the dorms and there is space available - you're on your own.
Living in the dorms and eating in the cafeteria, you also typically get first-shot at all overtime work (which, by law, pays 1.5 times). Here in Shanghai, minimum wage (taxable) is 2388 RMB per month; add in typical 12 hours of overtime, and your costs are essentially zero (company provided uniforms are normal), and you can save upwards of 2500 RMB per month - basically your entire salary. Do that for 7 years, and you'll head home with 200,000+ RMB - enough to buy a small home in most of the smaller villages, or buy a car or truck or tractor, or start a nice little business. Which is really the dream of most of the production workers I've spoken with over the last several years.
Most of the larger factories actually have hiring fairs - trying to entice quality workers to come and work for them, especially with higher-than-normal bonuses for those who do jump ship - it's part of the reason 10-12% of the production workforce moves every year. You get more money when you move, so you jump around every year, earning more and more. Most places have a shortage of decent workers - and by that, I mean workers who can actually read and learn new skills (basics like soldering, gluing, inspection, stuffing through-hole components, turning screws, etc).
However, actual labor costs for most modern production is a very small (like less than 4%) part of the overall cost; raw materials dominate, and the savings in labor is almost always offset by shipping and tariffs on imported products to the US. On a typical iPhone-type product, labor accounts for maybe $6 of the cost; if it was done in the US, the direct labor cost would add something like $2 to the labor cost (based on the productivity gain of US labor relative to Chinese labor). Labor costs really don't drive offshoring in manufacturing.
For higher end workers, say programmers at Microsoft of Oracle, or engineers at GE and TI, salaries in China are very close to what is paid in the US - perhaps just a 10-15% cost savings in labor when all is said and done. Knowing some higher-level managers at Microsoft in Shanghai, and the salaries paid in Shanghai relative to Redmond, you really don't save much, if any, by using Chinese labor.
So if you don't really save on labor costs in any meaningful way, why do companies work in China? Simply put - taxation. China and Hong Kong (which, contrary to most Western beliefs, really is pretty much independent - sure, it flies the Chinese flag and is nominally Chinese, but it has its own currency with its own exchange rate, its own passports, its own legal system, its own tax structure, and Chinese nationals need a special
Re:Comparative Advantage... (Score:5, Insightful)
Read the article - it seems you completely missed the point. When you trade entire industries, you are also changing the comparative advantages of the remainder. If you get stuck in a feedback loop you will essentially keep going until you have gutted entire sectors of the economy - this is exactly what the West have been doing for many years.
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It's a nice theory in a employment market that's saturated. What happens when there's real unemployment in low cost countries? You produce more locally and say "Thank you US, but we don't need your high price goods and services". India and China aren't low-tech countries anymore, there's very little they couldn't make themselves. It might be that we in the western world can no longer charge as large a premium on our labor, hopefully the gap will be closed softly with our salaries stagnating and theirs growi
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The real issue becomes the cost of living in both nations... the 'low cost' nations with growing wages have fairly low costs of living (outside a few specific areas, ie Chinese city land issues), while the costs in 'high cost' nations with stagnant wages keeps increasing... This directly applies to how much cash people have to do things and is why we are said to be destroying the middle class in the developed world and forcing or poor to go onto welfare to live.
Currency undervaluation (Score:2)
In all honestly, it's fair if we all get paid for what we do not what country we happen to be born in - some get the almighty dollar, others monopoly money simply because they live in a poor country.
Are you aware of the Balassa-Samuelson model [wikipedia.org]? A country whose economy consists largely of goods and services that must be consumed locally, such as perishable food or beauty services, will have an undervalued currency. But as the economy becomes more efficient at producing goods for export, its currency will become stronger. So if a company outsources production to a given country due to a currency undervaluation advantage, then over time, there will be less and less of this advantage of keeping production
Short term idiot (Score:5, Informative)
The US used to be better at manufacturing electronic components then the US. This is no longer the case.
How long do you think it will be before the US is no longer top dog in making planes? Tell me... which is the biggest passenger plane in the world? Airbus came out of nothing and is build with EXPENSIVE european workers and the US can barely compete. How do you think it will fair against Chinese build aircraft in 2 or 3 decades?
This discussion is nothing new, a few days ago I asked people to name a US consumer electronics firm. People named Motorola (been selling off its divisions since the 70's to asia) and Apple (a design company that has everything build in Asia).
There is the dream in the US that you can outsource all the drudge work and keep marketing, sales and design... and run the economy on that. 300 million people, all selling, marketing and a handful of designers...
If you can't see just how silly this concept is, well, then there is no hope for you. Vote tea party and pray the end comes swift.
How do you figure the US can't compete? (Score:4, Informative)
The A380 has sold for shit because there just aren't many routes where carriers have a use for a plane that big. You have to have a lot of passengers that want to go on one flight to make it a worthwhile purchase. Thus currently they have had a total of 236 orders and delivered 56 jets, and the ordering seems to have dropped to near nothing (they've had 2 this year).
Now compare that to the Boeing 747, which has a total of over 1,400 delivered, and 114 orders for their new variant, the 747-8, which is still in final testing, and another hundred orders for older variants.
Or how about the Boeing 787, their next generation mid body plane? Expensive little thing, because of all the carbon fibre, and has had more than a few delays in delivery (if it gets certified it'll start shipping fourth quarter of this year). Yet despite that they still have 827 orders for the thing.
Seems like Boeing is doing just fine when it comes to aircraft, in particular making aircraft companies actually want. Remember that having the biggest doesn't mean anything. Who cares if you can make a big jet? Biggest for its own sake isn't useful. The A380 has been a pretty big boondoggle. The R&D cost was about 11 billion euro. They are still in the red on it, and will be for quite some time, perhaps until 2020. They made a jet that cost a lot to design and there isn't a big market for.
Remember the A380 started in 1991. 2 years later, Boeing discontinued a similar project because they felt the demand wasn't there.
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First delivery of 747: 1970, delivered so far: 1400, over 41 years is about 34 a year, so far, on average, for this model. Outstanding orders (your numbers): about 214
Note that Boeing's cashcow *really* is the venerable 737 (6819 built since 1968, 158 a year) and Airbus's cashcow *really* is the A320 (4760 built since 1988, 206 a year)
These plan
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Passengers don't mean shit.* It's the cargo market that they're going after, ultimately, and with the downturn in the economy, shipments are down. Waaay down. You better believe that if/when the economy turns around American (?) consumers are demanding chinese widgets on the scale of the late 90s, FedEx will have a couple A380s, stat.
*Passengers are the "sexy" market. IBM made a fortune selling non-sexy Thinkpads to business-class workers. The Cargo industry employs more aircraft than any of the passen
Don't let facts get in the way of a good rant (Score:5, Informative)
How long do you think it will be before the US is no longer top dog in making planes?
It will be quite a while (if ever) before the US does not have world class aircraft manufacturing. There is of course no guarantee that the US will maintain dominance in this industry but it isn't going to go away quickly.
Tell me... which is the biggest passenger plane in the world? Airbus came out of nothing and is build with EXPENSIVE european workers and the US can barely compete.
Airbus has been around since 1970 and was form out of a consortium of existing aerospace manufacturers - hardly out of nothing. I'm pretty sure that the folks at Boeing would be very surprised to hear they they cannot compete with Airbus. The 747 is built with expensive US labor and Boeing is still selling plenty of those. Both companies have delivered similar numbers of planes for the past 20 years and there is no reason to believe that will change soon. The fact that the A380 is larger means very little by itself.
There is the dream in the US that you can outsource all the drudge work and keep marketing, sales and design... and run the economy on that. 300 million people, all selling, marketing and a handful of designers...
The US has a $3.7 TRILLION manufacturing sector. That is larger than the GDP of all but about 5 countries in the world. Even China does not manufacture anywhere near as much stuff as the US does. The notion that the US has exported all its manufacturing is simply not supported by the facts. There are (and always have been) some industries that are dominated by firms in other parts of the world. That does not however translate to the US outsourcing all its manufacturing expertise.
The military subsidizes airplanes (Score:3)
The US is better at building airplanes than Taiwan is
I was just last week talking with a manager at a big US aerospace company. He said that they much prefer government business than commercial, because a commercial project will bring $20 million in profits while a government project of the same size could bring a billion.
As long as the US has a strong military sector to subsidize the aerospace industry they can compete, but how long will that last?
Re:Comparative Advantage... (Score:4, Informative)
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You frighten me.
I have seen a lot of China "copy" products, and one universal fact with them is they all are half assed and really bad copies. Software is a mess, Intentional Design flaws to cut manufacturing cost. and rejected stock components used to cut costs as well.
China airplanes.... The sky really is falling.
No no no no no... (Score:5, Insightful)
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Re:No no no no no... (Score:5, Insightful)
I think there are times when outsourcing works, but looking at the balance sheets is not necessarily a good indicator. I also wonder why the US or Europe tolerates the situation the way it is. That enormous deficit is in part because the US has gone from being a producer to being a consumer. One would have thought that tipping the scales the other way would be a huge priority of any government. And if that means leaning on the likes of Amazon through cajoling & encouragement then so be it.
Re:No no no no no... (Score:5, Insightful)
Fact: if you want to retain employees you have to treat them well and pay them well.
Problem: most (worthless) management does not give a rats ass about this. as this problem does not affect their 90 day outlook. Competent management does realize this and works to limit the impact.
Re:No no no no no... (Score:4, Insightful)
As for the other factors, no I think it was more a cultural thing. I supervised maybe half a dozen projects going on in India and proactivity was non existent. I was constantly asked "how do we fix this?", "what do I do?" etc. Never once did anyone come to me and say they'd found a problem and here was how they were thinking of fixing it. That's something I can appreciate since it suggests someone who knows what they are doing. I may as well have done the projects myself the amount of handholding I did for them. Projects would take 2-3x as long as they should have and would have.
I don't think management thought this all the way through. To them it was all about daily rates not realising it probably cost more in time and bug fixing / maintenance of poor code.
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You are way off.
* All people are not cut out for College
* College costs to much
* Benefits like 40 hour work week, over time, not working off the clock, a safe work place to much for you??
* Other Benefits should not be tied to a job
Outsourcing (Score:3, Insightful)
Outsourcing to Technologoville has been going on for close to 300 years now and has destroyed countless jobs, not to other poor people, but to machines. Clearly, CEOs, accountants and other must see the job-destroying evilness that is technology and stop all "outsourcing" to Technologyville immediately.
Value addition, cheaper goods accessible to more people and an increase in living standards are no reasons to continue this brain dead policy.
technologyville == lower wages (Score:2)
Exactly the same economics as China. The difference is the workers run on electricity or fossil fuels etc.
Of course on top of that is a what, 30%, 40% handicap on the flesh and blood worker in the form of income tax etc. Just for working.
Machines perform work, should they not be taxed in terms of the amount of energy they consume as a proxy for the amount of work they do? After all, humans are taxed in that manner.
Re:Outsourcing (Score:4, Informative)
Completely, missed the point:
Dell's management shortsightedly completely self-destructed their company by not hanging on to any of the necessary key components for manufacturing a computer. Eventually the firm they outsourced to said, "Why do we need to kick profits back to Dell?"
Sure Dell wanted more profits, but they didn't want to create a competitor who could absolutely destroy them in the market place, and in no way was that a good business strategy for Dell.
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Dell's management shortsightedly completely self-destructed their company by not hanging on to any of the necessary key components for manufacturing a computer.
The really key "component", which he describes in the difference between Dell and Apple, is not physical. His point is that Apple still does all the design of their products, choosing ALL the components and designing the motherboard themselves, in spite of the cost to do so. Dell outsourced that, and therefore no longer really owned the design of the product or the expertise to make it.
That is the real focus of all three of the articles, that these companies are being managed in the traditional hierarchic
Bender Bending Rodriguez (Score:3)
Dude 1: "I lost my job to someone named B. B. Rodriguez."
Dude 2: "Those bastards!! They're destroying the economy with their outsourcing! Jobs jobs jobs! Jobs!"
Dude 3: "I lost my job to Bender the Robot."
Dude 2: "Well, that's the price of progress, and ultimately, technology is the one and only thing that ever really lifts the economy. At least you didn't end up like Dude 1."
Re:Outsourcing (Score:4, Interesting)
I work for a Chinese company in China. If you think you can get software developed cheaper here you're a moron. Then again, most senior management these days are morons, so cool, keep on sending that money guys.
Want to know what's wrong with China? Talent pool is so over-utilised through insane investment that anyone who can implement Pac Man in C expects to be CTO, I myself am paid triple what a doctor with 20 years experience is paid. You can't get a team of more than 1 programmer who isn't a mouth breathing idiot because the second will inevitably have far better opportunities. China just doesn't have that pool of programmers who grew up coding and are eager to be paid for it, so they'll make do with what they have. I imagine India is the same. The west has an absolute glut of talent due to the sheer number of people born in the 70s and early 80s that grew up tinkering and couldn't imagine doing anything else, it's moronic not to exploit it, I imagine China will once it is even richer.
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Reminds me of the following:
"That digger has just one driver. Couldn't you replace it by 100 men with shovels? Then many more people would have work!" -- "Sure. I could also replace it with 10000 people with teaspoons."
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you're kidding, right? (Score:2)
All of the above, except maybe the economist, are concerned with their bottom line OR whose lining their pocket. They wont bring their business back to the US without big incentives. At the moment, other countries provide greener pastures
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End the artificial scarcity of money. Say openly that unemployment represents economic progress, not industrial breakdown. Focus on innovation such as 3D printers that will make China's cheap labor advantage irrelevant.
Re:you're kidding, right? (Score:4, Informative)
To quote Douglas Adams: There is another theory which states that this has already happened.
Specifically, it happened about 10 years ago. But luckily, the banks were willing to give us mortgages we couldn't pay. (Due to complete and utter insanity on their part.) If people needed more money, heck, they could just get a second or third mortgage and get money from there.
Tada. Problem solved forever.
This will of course cause everyone to ignore the fact the economy is actually getting worse and worse, because they personally can continue to survive. They're falling deeper and deeper in debt, but surely that's just them and not some sort of nationwide statistical truth. (What if we held a slow-motion economic collapse and no one notices?)
As long as the banks don't figured out that the mortgages they've been issuing are shit, and just because they put them in complicated financials Shit-Holding Instruments doesn't mean they still aren't shit. As long as that doesn't happen, the 'economy' is great...sure, the actual 'producing things' sector is gutted, but people can borrow from the banks and work min wage jobs selling Chinese stuff to each other. Actual economies can't work like that, but as long as the banks keep ignoring that and loaning to us, we'll be fine.
Let's hope no one ever, Wile E. Coyote-style, looks down and realizes they're standing in mid-air.
*checks the news*
Over seas they still have the company store where (Score:2, Informative)
Over seas they still have the company store where part of the works pay go to having to pay to live at the factory and also where they don't need to spend on safety.
China factory's are like the factory's of the past in the USA.
As for software india code is a big mess.
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Labor conditions (Score:4, Insightful)
Here is a suggestion you could make to your local politician:
Companies selling products in the US or Europe must be obliged by law to ensure that some minimal labor standards are maintained in the whole production chain, including all subcontractors suppliers. If minimum industrial safety and labor protection requirements are violated the management of the company selling to the end-consumer must be held accountable for it and should definitely face prison terms in serious cases.
Such laws would in the long term help people in countries like India, China, and certain regions of Africa (cocoa plantations, mining, ...), where workers are sometimes held and de facto treated like slaves. In case of cocoa plantations, for instance, there is a market of child slaves in certain region in the world. One child costs around $200. That's why chocolate is pretty cheap all around the world. (I am not making this up! This is well-documented.)
Anyway, with such laws in place and being enforced, it would become more viable to produce in the US and Europe again. Of course, some products, especially clothes and chocolate, would also become much more expensive.
Software is another matter. I don't believe Indian programmers are treated significantly worse in terms of working conditions than elsewhere, and salaries are relative, of course.
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(I am not making this up! This is well-documented.)
Well, if it's well-documented, where is it documented?
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are you serious? you would kill standards of living in the west right off the bat and freeze the 3rd world in the stone age.
The West is rich because for the most of history it was most technologically advanced and had access to pretty much all the resources of the world. Now 3 billion people come out of poverty and now the West has to compete for resources that were taken for granted in the past. The West is on the way south until the wealth levels adjust globally and there is no way around it but your idea
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China's currency (Score:5, Insightful)
The Yuan is not floated like many countries currencies are. This gives China a significant competitive advantage over all countries to produce goods and services in their country. China take the long view. They know that his will weaken manufacturing in several countries and drive demand to their economy where labour laws and conditions are under their control. Incrementally they will capture those markets.
The irony in all this is that China is still a communist country using capitalism to destabilise democracy.
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That is not correct.
China has bound its currency to the US$ by guaranteeing its bank will always trade a fixed amount of Yuan for 1$ and vice versa. By that free trade of the Yuan is impossible. That has nothing to do with buying huge amounts of US depts (in fact it would destroy the stability and not gain any! Lol how should buying a dropping currency which soon will be worthless and obsolte stablize the Yuan?) True however is that China is one of the main creditors of the US state.
Re:China's currency (Score:4, Interesting)
Wrong. The Yuan is artificially pegged by and to US debt, and in turn they lock it to the USD. The PRC artificially pushes the yuan's value lower in order to remain hyper-competitive. The Japanese do exactly the same thing in a different way, they buy USD in order to push the yen's value lower. Anyone who's ever done currency trading even a small amount learns this truth of the markets very quickly.
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What's "communist" about China? Sure, they're an authoritarian state, but their economy today is capitalist to its core, despite retaining communist symbols of the past.
If anything, China today is a model national socialist country, minus the mad charismatic leader bent on wholesale murder of millions. Everything else is there: state-promoted nationalism? check; state capitalism? check; welfare programs to keep the populace from revolting? check.
We can't compete (Score:2)
Kindles, and Nooks, and iPhones, iPods, iPads, MacBooks, and MacBook Airs, Lenovo ThinkPads, etc., etc., etc.
The summer before college (1978) I worked for an audio electronics manufacturer. I'd guess that most of the assembly line workers made little more than minimum wage.
I suspect that today, even if they wanted to, most companies here in the U.S. couldn't find enough workers willing to do that work for minimum wage, and even if they could, Foxconn, at let's say $1 an hour, is 1/10th the cost.
Now Foxconn
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Because, as the series of articles makes clear, most of the infrastructure needed to build and operate those factories is also overseas. Now just about everything needs to be shipped back. Expertise and equipment to build the factories, raw inputs at whatever level of refinement you choose, etc. Heck, is there even a local infrastructure for handling the waste by-products of these automated factories?
That's the point... it's not just a fac
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Except the people who built the pyramids were not slaves [nationalgeographic.com].
Pure BS (Score:5, Informative)
Considering I've worked on advanced injection molding machines IN the US this is such pure bullhockey.
The controller board is made in China because US companies long ago transferred manufacture of printed circuit boards to Asia.
Another BS line, again I've worked with an assembly line making PCB's and finished boards, right here in the midwest.
The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers.
The worlds largest lithium-ion battery facility is just being finished outside Dearborn, Michigan right now.
This whole article reads like some rant by a coastie who has no idea that we still make things here in the midwest, and if the MBA's would stop deciding to chase short term profits at the cost of long term brand erosion and control we would be happy to keep doing it. Over the next decade increased fuel costs paired with a decoupling of the Chineese Yuan from the dollar will lead many companies to pull manufacturing back to the US.
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The problem with your idea is that it really is hard to find anything made in the USA. Virtually nothing I've bought in the last decade was made here, except stuff I got second-hand at yard sales and flea markets. Indeed, precious little of that was produced here. My truck is a Ford, with an International engine, but the casting was moved overseas and only assembly took place here, while virtually everything electrical was made out of the country as well. My car's a Mercedes made in Germany. Every part of m
Pinball Games are made in the USA! (Score:2)
And they now plan to start selling them at best buy now.
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This comment is also bullshit. I am a mechanical engineer in the chemical industry and our manufacturing facility in Georgia (of all places, right?) is the top producer of small hydrogen plants. We have over 200 of them in almost every country in the world that has an industrial base. While we build a lot of our equipment in other countries (if a plant is in China, we do some of the work in China), we still manufacture the most important pieces of equipment here in the USA.
Why?
1) Chinese and Indian engin
Not looking hard enough (Score:3)
The problem with your idea is that it really is hard to find anything made in the USA.
No it isn't. You just aren't really looking.
My truck is a Ford, with an International engine, but the casting was moved overseas and only assembly took place here, while virtually everything electrical was made out of the country as well.
There is FAR more to a truck than just the engine. I've been in literally hundreds of automotive assembly (including Ford) and part plants (including Visteon, Dana, Delphi, Lear, Cummins, and more) in the country. The percentage of stuff in an automobile that is made in the US is really quite high. Some of the connectors for electrical stuff are made outside the US but there is more made here than you think. (Disclosure: My current company makes wire harness
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Re:Pure BS (Score:4, Informative)
It's popular BS these days (Score:4, Informative)
Look on Slashdot, any time an economics article comes up, there'll be people who post, and often get moderated up, who declare that the "US doesn't make anything anymore except imaginary property." That is of course not just false, it is exceedingly false. Until this year, the US made more manufactured goods than any other nation. China now makes slightly more than the US, but the US still makes more than anyone else (by a reasonable margin).
There's no question that there is a large amount of outsourcing going on, but this make-believe that the US doesn't make anything, particularly anything high tech, is beyond stupid.
My favourite example is always processors. Intel has fabs in a few other countries but most of their fabs (7 of 10) are in the US. All their 32nm stuff is in the US and nealry all their 45nm stuff. So if you buy a modern Intel CPU, it was fabbed in the US. It was tested and packaged somewhere else most likely (though they now have a US packaging site for things sold in the US mostly) but the high tech work, the fabrication, was done in the US.
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New News (Score:2)
News: [reference.com] noun 1. a report of a recent event; intelligence; information
2. the presentation of a report on recent or new events in a newspaper or other periodical or on radio or television.
News is by definition new. If it isn't new, then it's just information.
Begging the question (Score:2)
Because that effect has not been proven? Many, many very informed groups of leaders, business people, and scientists ( economists ) disagree with this forgone conclusion.
There seems to be a lot of that going on on slashdot lately.
It's complicated... (Score:2)
Evan Davis of the BBC made an interesting series recently on manufacturing in the UK (http://www.bbc.co.uk/programmes/b0125v5h). He's been one of the few people in the UK consistently to point out that the VALUE of manufacturing to the enconomy continues to increase even as the number of JOBS continues to decrease, so it's not all doom and gloom.
People are still making stuff, it's just that the stuff they make is increasingly complicated and valuable. In that respect, it's fine if assembly and easily-replic
Did Forbes outsource their editors too? (Score:2)
short memories (Score:5, Insightful)
The arguments that retooling is hard, just doesn't make it. Planned retooling is now designed into the manufacturing process. The U.S. helped develop the the Japanese manufacturing base by ignoring Demming. The Japanese were known for poor quality, so even with their lower labor rates. The Japanese improve their quality by following Demming and eventually overtook U.S. manufacturing and steel production. The remaining U.S. industries learned to focus on statistically analysis integrated quality control, and designed retooling became part of the process. So what drives the decision to outsource: 1) lower environmental standards, 2) lower overall employee costs, 3) tax benefits, 4) economic stability.
I think the underlying article hits the problem straight on. These economic factors are enticing from a cost accounting perspective, but not from a competitive one. Eventually, the knowledge is transferred to the low cost producers and they no longer need the costly U.S. managers to drive the business. We see that now with the rise of Haier and Chinese manufacturers who are beginning to dominate the lower end market. Eventually, they will displace the high margin businesses.
The U.S. main advantage in the past has been easy access to capital via efficient markets. With the current crisis and the idiotic standoff over debt, these markets may give rise to competing capital markets in SE Asia. The Chinese are flush with cash and it won't be long before they start to bypass the Western capital markets.
So what do we do? First, stop letting corporations drive the political agenda, because their short term focus is killing our industry. If we changed our focus to research that will enable lower cost production even with high labor rates, we can pull back manufacturing. This will have to be done at a grass roots level, because Wall Street will not invest in this kind of retooling when they can invest in companies that outsource. This means that we need to stop electing corrupt corporate lackies and uneducated religious nutcases, and change the rules so we encourage companies to invest here. Here a though, remove ALL corporate loopholes, and offer tax incentives only to those companies that in-source production and service jobs. Offer tax breaks to companies who invest in basic research programs that will innovate product and keep the technology here. This incentive can extend to University research which is most corporate funded anyway.
If you believe our problems stem from big government and the fear of socialism, then you are an idiot. Socialism is beating the f..king pants off of us right now, so that can't be the main issue. We as citizens must drive the political agenda and encourage Wall Street to invest in companies who develop our local economies. Otherwise, start learning Chinese because they are destined to be your overlords.
It isn't Unions, socialism, or big government that is killing us. It is the short term thinking of Wall Street. Once Wall Street was temporarily taken out of the picture at GM where they perpetuated a management culture that was adverse to change, the company was able to shed its high cost assets and return to profitability. In essence, it took government action to force the correct change in direction.
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The arguments that retooling is hard, just doesn't make it. Planned retooling is now designed into the manufacturing process. The U.S. helped develop the the Japanese manufacturing base by ignoring Demming. The Japanese were known for poor quality, so even with their lower labor rates. The Japanese improve their quality by following Demming and eventually overtook U.S. manufacturing and steel production. The remaining U.S. industries learned to focus on statistically analysis integrated quality control, and designed retooling became part of the process. So what drives the decision to outsource: 1) lower environmental standards, 2) lower overall employee costs, 3) tax benefits, 4) economic stability.
I think the underlying article hits the problem straight on. These economic factors are enticing from a cost accounting perspective, but not from a competitive one. Eventually, the knowledge is transferred to the low cost producers and they no longer need the costly U.S. managers to drive the business. We see that now with the rise of Haier and Chinese manufacturers who are beginning to dominate the lower end market. Eventually, they will displace the high margin businesses.
The U.S. main advantage in the past has been easy access to capital via efficient markets. With the current crisis and the idiotic standoff over debt, these markets may give rise to competing capital markets in SE Asia. The Chinese are flush with cash and it won't be long before they start to bypass the Western capital markets.
So what do we do? First, stop letting corporations drive the political agenda, because their short term focus is killing our industry. If we changed our focus to research that will enable lower cost production even with high labor rates, we can pull back manufacturing. This will have to be done at a grass roots level, because Wall Street will not invest in this kind of retooling when they can invest in companies that outsource. This means that we need to stop electing corrupt corporate lackies and uneducated religious nutcases, and change the rules so we encourage companies to invest here. Here a though, remove ALL corporate loopholes, and offer tax incentives only to those companies that in-source production and service jobs. Offer tax breaks to companies who invest in basic research programs that will innovate product and keep the technology here. This incentive can extend to University research which is most corporate funded anyway.
If you believe our problems stem from big government and the fear of socialism, then you are an idiot. Socialism is beating the f..king pants off of us right now, so that can't be the main issue. We as citizens must drive the political agenda and encourage Wall Street to invest in companies who develop our local economies. Otherwise, start learning Chinese because they are destined to be your overlords.
It isn't Unions, socialism, or big government that is killing us. It is the short term thinking of Wall Street. Once Wall Street was temporarily taken out of the picture at GM where they perpetuated a management culture that was adverse to change, the company was able to shed its high cost assets and return to profitability. In essence, it took government action to force the correct change in direction.
I don't think you really understand the problem, and as such I really don't see how your solutions have any chance of making it. When you create your boogeymen (Wall Street, uneducated religious nutcases, corrupt corporate lackies) and your panacea (close loopholes, limit tax breaks to a few scenarios, keep technology here) and save your sacred cows from scrutiny (big government, unions, socialism, etc.), I just don't feel you have anything meaningful to contribute to the conversation. Although you will
fixation on cost cutting (Score:3)
Companies have cost-cut themselves into oblivion. They've outsourced themselves out of business. That demonstrates the folly of their business model. Look at the results. If your course of action results in your undoing, it is clearly wrong. And yet, they march like lemmings to the sea.
The worst part is by the time enough people realize what we've lost and why, it may be to late.
So what? (Score:3)
Why should it matter whether Amazon could manufacture a Kindle in the US? Is there any rule that says that every country MUST specialize in everything (which means that the country will specialize in nothing?). New York also specializes in financial services, Houston in the energy business, the SF Bay in high-tech companies, etc. Is it a such cause of concern? Why is it that everyone is very concerned about that when it comes to countries? Specialization is good, this is what makes us all more wealthy.
If you study economic history, you'll see the same progression everywhere. First, people are virtually all employed in agriculture. Productivity in that sector is low and output barely sufficient to feed everyone. Then, an industrial sector arises and expands. Productivity keeps on rising in the agricultural sector and fewer and fewer people are needed. Doomsday prophets tell us that it's horrible, it will forever change the country, etc., but we just keep ignoring them. At one point employment in manufacturing also peaks (there is only so much stuff you can buy and we keep getting better and better at producing things economically); services become more and more important. This is happening everywhere in the world. In fact, even if you consider the earth as a whole, the share of services in world GDP also keeps on rising. And, no, this is not due to trade with other planets.
The premise of the article is also wrong. There is nothing irreversible about this trend. If the US were to unilaterally erect trade barriers, it would once again be profitable to make whatever the author thinks should be made in the US. It's not as if the Chinese and Taiwanese all have some sort of secret technology that no US person could ever replicate or approximate. Especially since in many cases it is US companies that provide the specs and designs that are made in those foreign factories. It would of course be very wasteful, but it'd be possible.
The journal article on which the column is based is also bizarre. First, it's already a bad sign when you talk about "competitiveness". See for instance Krugman's article "The Myth of competitiveness" (http://www.pkarchive.org/trade/MythCompetitiveness.html). Second, weekly wages are not a good metric. Total compensation (including benefits) is what really matters. Third, please provide figures and be precise. It just won't do to say that the US "has lost or is in the process of losing the knowledge, skilled people", etc. that it needs. This makes it an unfalsifiable statement as it is much too vague. It also seems strange to argue that the US is losing the knowledge it needs when people from all over the world come to the US to study in order to acquire this knowledge. Fourth, it almost seems to border on xenophobia at times. Why should it matter if something is designed in Tokyo or Chicago? Do American designers have a higher worth, matter more than Japanese or Korean designers?
This is a failure of US Government Policy (Score:3)
Corporations in the United States benefit from a stable political system, fair court system, strong protection for IP, lenient corporate taxation, excellent communications, etc. However, federal government policy allows these same corporations that enjoy these benefits to make all of their business decisions based solely on what is in the very short-term best interests of the corporation...and that means that those decisions generally are made by using the United States as the corporate ash tray. The only beneficiaries of this are short-term investors. European government policies generally require their corporate citizens to actually be patriotic good citizens of the countries they live in. TFA points out the long-term consequences of the US policies...not only the immediate loss of jobs but much more importantly, the loss of knowledge and expertise that, once lost, can not be easily regained. As a result, we have become a country that ships raw materials and commodities overseas (grain, meat, coal, ores, logs, etc.) and then imports finished products from those same countries that we pay for with money that we borrow from them. Obviously, this cannot be sustained and the eventual result of our own government policies is our impoverishment. Even worse, at the moment we are also borrowing money to pay for very expensive wars in distant locations while other countries laugh at our foolishness.
What should be done? (Score:3)
These companies that outsourced for cheap didn't reinvest in technologies - they just rode a wave of cheap exports. All the while, the expertise in development and manufacturing was moving offshore. They reaped enormous profits during the short term, but they didn't reinvest locally and abroad with those profits.
Successful companies opened up labs in India, Taiwan and China and actively competed for talent. The most successful companies aggregate their talent on the network and build relationships wherever the opportunities arise.
I recently worked with a big company on a new chip platform launch - the software team is in Ireland, Austin, and Israel. I work with the lab in the US, but I can quickly get bugs and questions ironed out across numerous disciplines (hardware, software, and everything in-between). It's fantastic - because they own the design and know what they're doing across the board. If they were simply rebadging imports it would likely take twice as long to hit the market.
Dell built it's first China lab in 2000, then setup a Taiwan lab in 2003. I think that they recognized the importance in integrated design teams pretty early (certainly better than HP who waited until 2005). I've gotten good support from Dell enterprise on Linux for a while now. It was pretty spotty in the beginning but now I've got no major complaints. Actually I think Dell is positioning themselves pretty well in the long term.
A gift from the down economy is that nobody expects miracle profits right now, so companies have a real choice to build up their capitol improvements and long-term outlooks should improve. Everyone knows competing for dollars is going to take a lot more work than selling PC's out of the trunk of a car.
The most successful companies of this century are going to utilize the talents where they come. They are going to reinvest those massive profits into their own product and services and support them during design, delivery and warranty. The ones that merely brand their products are going to be commoditized by their own suppliers.
The Expertise IS here (Score:2)
All the expertise cited in the article IS here. It is just relegated to small specialty shops that cater to small runs.
Even Dell is feeling it (Score:4, Interesting)
Dell told its 905 workers there that the factory will be closed by January in a cost-cutting move that will send more of the company's manufacturing overseas.... Analysts said they expect Dell will transfer much of the work now done in North Carolina to lower-cost contract manufacturers in Asia, who already make PCs for Dell's rivals.
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Dell's stateside 'manufacturing' capability has(at least for a long while now, if not always) been assembly of components from elsewhere into final machines. This allowed them to achieve extremely fast turnaround for more or less any combination of modular parts were supported by a given chassis type. They weren't making custom motherboards, or f
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Uh-huh. American companies outsourcing abroad means fewer US jobs. So far so good.
More questions:
- Why would an impartial observer care one jot about that?
- For someone who did think it was an undesirable state of affairs, what can be done about it?
If you forbid US companies from outsourcing abroad -- they simply take their entire operation abroad, and cease to be US companies.
If you enforce protectionist import/export restrictions -- other countries respond in kind.
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- Why would an impartial observer care one jot about that?
Its an end run around feel good environmental and labor relations laws and it's inherently racist. We got rid of all the factory workers jobs and their benefits and "improved" working conditions. Now its time to race the white collar guys to the bottom. Its intellectually dishonest to prattle on about safe and humane working and living conditions being a human right, unless you are not an American, in which case you deserve to sit in the back of the bus with the other undesirables. Someone, please, just
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Well the problem with lost jobs here is directly related to how much we can afford to buy and how healthy our government spending can realistically be... The later being a big issue not so long ago. Eventually the companies will move away anyways as the US will have circled the economic drain. We've been at real unemployment as high as 20-30% for the past couple years, that is in no way sustainable. Nor is the consequence as more and more things move overseas and the number grows. Add to this an aging popul
Re:What? (Score:4, Interesting)
An impartial observer does not care by definition, thus your question is a red herring.
Put up protective tariffs and make it difficult to send money from the country, but easy for people to move in. You know, what we had in the past when everything went well and the opposite that we have now, when everything is going straight to Hell.
Good riddance. If they aren't doing anything for us, why would we want them around? Away with them, so new companies can rise in their stead to actually benefit us.
Good. With any luck, it kills off the multinationals, thus restoring economic power to where it belongs: in the hands of national governments and through them Us the People.
It's about time we grew a spine and fought back against these rich assholes who would have the whole of humanity compete on who can grovel best before them.
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My question is, can the US just print more money until everyone is sick of selling things in the US for monopoly money and they invert their economies and no longer sell to the US?
Welcome to 2011
Because then there will be no outsourcing from the ensuing market crash, since it will no longer be cheaper to outsource anymore, and the process will reverse
No outsourcing will stop because there will be no employed customers left in the US. At least 20% of the population is currently un or under employed... Also when nothing is left in the US of a company except for overpaid managers, then the managers in outsourceland will take over. See GE, others. So no importers or customers left in the US.
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When these issues would be the true driver. Then how can you explain that Germany, France, Sweden, etc. have not so big outsourcing issues? They have higher taxes, a real social security system with real unemployment insurance, and a lot more regulations to protect the environment. Still they compete the hell out of the US.
While the US have a higher GDP per capita than all these states, but the GDP is not so evenly distributed among the US citizens. And a lot of this GDP of the USA is generated at Wall Stre