My own experience on how most everything has cheapened and quality fallen:

Cleaning out my Dad's shop a couple of years ago my Dad had a bunch of tools handed down from his father who was a tool and die maker. I found a bunch of old tools, some, precision instruments dating from the 1920s and 30s. Many were Craftsman from Sears & Roebuck. Holding them in your hands you felt a certain weight and heft. I was astounded at the high standard of their construction and quality of materials. Some came in protective cases constructed out of wood or steel that were almost fit to serve as presentation cases for jewelry. Everything made in USA. Clearly these tools were from a different era.
It made me a bit sad to think what we've lost and that subsequent generations will only be familiar with what can be purchased at places such as Harbor Freight (certainly useful in it's own right).

Apologies for getting off topic...

Not "off topic" in the least, Kurt. What you describe is precisely what I have been trying to explain to David. Even simple items like tools used to be manufactured to a standard, not a price. I own many tools that were once my father's, many that were once my grandfather's. Everyday, workaday tools, nothing "high grade" or "fancy" by any stretch. Stuff the common working man purchased at his local hardware store. All of which puts today's "expensive" tools to shame. All of which were manufactured by companies who put quality ahead of absolute profitability.

Yes, indeed, we have lost a good deal. So thoroughly lost, it appears, that some will argue that it never existed.

So when did this all change? I have been in the manufacturing world for over 50 yrs and I started seeing this in the early 70s. We used to make stuff, really good stuff. By we got greedy and sloppy. There were 6 steel mills in Chicago, that probably produced more steel than in the entire country during WWII. In the 70s, the USA auto market was 95% USA made - that changed too.

I'm going to focus on steel just a bit. The equipment in those mills was built in the turn of the century. I saw rolling mill stands from the early 1900s. When you have the lock on the steel market, prices are easily raised because there is no other game in town. However along comes technology from abroad especially from Japan, the mini mill concept and continuous casting and eliminating open hearth process. This story is too long to write but those 6 mills were gone by the 80s. Those profits bought other non-steel related companies and money was never reinvested.

The same goes for automotive. Toyota comes out with the Toyota System soon to be copied by others. Back in the 80s, changing dies on a transfer press took a week, the Japanese did it in a day. We took a day to change one die in a single stroke small press but by continuous improvement, we cut that down to an hour. We blamed unions for high labor cost and moved things to the southern states to reduce labor. That trend continues to this day, Taiwan, Mexico China, India, etc. There isn't a machine tool made in the USA anymore, no stamping presses either (most of the American ones are foreign owned). The list is endless.

I worked for a Tier 1 automotive company that was initially family owned until it was sold in 1999. They made allot of money without the worry of charts, graphs, daily numbers and stock price. There were 2 metrics: past due dollars and fill rate. You don't want to shut a n OE line down. How fast can I fill the order at a 98% fill rate. That all changed - Daily metrics, end of month, end of quarter, end of years numbers was checked. Miss a target, how are you going to recover?

A company can control (3) things: labor, material and plant property and utilities. The hardest is land and utilities unless you downsize or relocate. Material is next and this is where you begin to play with chemical compositions, substitutes (plastic for steel, etc) and the easiest is labor.

The rust belt in the Midwest saddens me, because I'm old saw what we did here. There are vacant plants all over this country just decaying or been converted into residences.

The rest of the world caught up. US manufacturing was no longer dominant, business became harder and tougher, competing against countries with people just as smart and hard-working but poorer and hungrier. Profits got harder to make, businesses had to manage the margins and costs and assets as hard as the engineering and production. Newer, more advanced industries where the US was still dominant, generally high technology and high complexity and heavy science, were better places to be so US companies, people, and investment shifted to there. The companies, people, and investment that didn’t shift became poorer and some died out, and along the way they cut corners trying to hang on. This cycle keeps repeating, with other countries catching up in more and more advanced industries and the US shifting to even newer and even more advanced ones, and those who don’t or can’t shift gradually shrinking away.

Not just the US - similar in Germany, UK, France, Italy, all of the West. After decades of being the catching-up country, Japan became the getting-caught-up-to country. Eventually it will be China’s turn to see others eating away at their less advanced industries and seeing millions of Chinese companies and people failing to shift and getting poor. In fact, it is already starting to happen there.

What’s the saving grace, if there is one? First, this pressures countries and people to develop more advanced industries - so progress happens. Second, along the way countries get rich. The US is a very rich country, so is Western Europe, so is Japan. “Rich” means per capita (or average) wealth and income. There can be lots of poor people in a rich country if wealth is not distributed or used well, but that’s up to the country and its people and politicians.

Demographics come into this too. As countries get more advanced, birth rates slow and the population gets older, which slows growth. Eventually the country is very old - meaning the population’s average age - but hopefully has gotten rich. Japan got there, so did Western Europe. China is in trouble, it is getting old very fast and is still far from rich. The US is totally unique along major countries - it is a very rich country that is not old and not aging that fast.

I agree with 99% of what's been said here, but I don't see how this increase in efficiency is a bad thing. American cars were dinosaurs right out of the factory until the mid-70s, then they were pure junk for a decade or so. It took competition from Japan to light a fire under US automakers. Now we assemble great cars. I think a lot, if not most, of the parts come from overseas, but the part we do contribute is now first rate.

When I was in high school in the late '60s I worked at a hardware store that sold appliances. We unpacked refrigerators and cleaned them up before delivering them. I would find trash, candy bar wrappers, and one time a half eaten sandwich behind the vegetable drawers. That did not instill confidence that the 'fridge was assembled properly. I haven't seen anything like that in any of the Japanese/Chinese/Korean products I buy in decades.

That's an example of skirting around a problem instead of fixing it. US manufacturers should have focused on the needs of employees as well as of the demands of stockholders. The extreme emphasis on "stockholder value" has been a disaster. The adversarial relationship between labor and management has been a problem in the West since the industrial age began. Maybe in the East they saw the disastrous results of the continuous fight between labor and management and took a different attitude toward their workers, I don't know, but I do know their workers are making money and buying products while our work force is being laid off and turning to drugs.

Very good summation of what has transpired, thank you…

I will also say, part of the problem is that the consumer has gotten used to cheap, disposable crap and doesn’t care about or appreciate true quality. At least a large portion of the population….so it works both ways. Many would not buy the more expensive, but much higher quality item, even if available.

We had both at the pressure control place and Q1 made us be in control of our supply chain. At the end of the day, trust played a big role in the material being what the MTR said it was.

The XRF gun isn’t 100% accurate and only identifies the materials it is programmed to recognize - we didn’t have 1075 tool steel programmed into ours. It also doesn’t give carbon content.

With massive billets of steel, the hardness varies by 5 or more points of the Rockwell C scale from the outside surface to the core (thermodynamics are to blame during heat treatment).

I wanted them manufacturing to scan and hardness test every incoming billet and report anomalies which would have flagged this material for further testing but they didn’t want to…

Another example that supports Jeff’s comments and David will be well aware of is Toyota.

Toyota’s newest vehicles are NOT the same quality level as their pre Covid products that drew us to the brand.

The new Tundra is a glorified F150. The seat trim breaks in EVERY single new tundra. The Radio knobs break if you so much as breathe on them. The recall of every non hybrid 22 and 23 tundra for a new engine because of manufacturing debris left in the engine during manufacturing… I’m sure the hybrids and the 24s will be added to the recall soon enough…

It has NOT always been like this at Toyota.

I have to say it does feel like rose colored glasses, or maybe it's company specific to your experience at Boeing. For example, while my company does target higher margins, it doesn't feel like any corners are being cut, and engineering takes pride in the product. Things are much faster because everything is faster now, but standards are held even when we may lose a job or two as a result.

To the bolded, I really have to wonder what you mean by that. First off, mundane items used to be much more expensive relative to the average income, and secondly, even if they were built to a standard it's not like nobody considered the cost to produce vs. potential sales price and position in the market (and if they didn't, is it any wonder they're not around any more?).

These two go very well together. High quality tools are absolutely still available, made with pride either abroad or in the USA, but that's not what most people want to buy. 95% of people buying a ratchet are doing it for household chores or last-minute father's day gifts and they're not thinking about longevity and reliability over ten-thousand pulls at 200% rated load. It's the same with everything, the majority of people want cheap and disposable, not expensive and maintainable, and companies that operate in those markets know it.

Honestly, most of the small work in my garage has been done with a $20 Husky 1/4" ratchet set I bought twenty years ago. If that $20 set lasts and serves the purpose why would I have bought an industrial grade set ten times (or more) as expensive?

Another good summary. It's easy to be less mindful of costs when there's no competition.

Just look at appliances. What sells in volume? Cheap refrigerators from Korea or Mexico. Do they last? No. Can they be easily repaired? No. Do they sell millions of them? Yes. Do people complain every day about them failing prematurely? Just look online for reviews.

How many people pony up for a Sub-Zero that will last 25 years? A very small minority.

Why is Toyota cutting costs (and quality)? Because cheap Chinese and Korean cars are taking their business.

We do this to ourselves.

this.

venture capital destroyed quality in america.

the purpose of a business shouldn't be profitability, it should be sustained value creation. the focus on profitability means you just gut everything, make a bunch of money, and destroy what someone else took a lifetime to build. you destroy it in 5-10 years, profit handsomely, and then move on to the next company that someone took a lifetime to build. and they built that business over a lifetime with sustained value creation.

labor builds, capital destroys.

That model no longer works for publicly traded companies. The CEO will be gone. Quickly.

Isn't this made in USA?
Does this apply to the rest of Toyotas?

right?

its because within the economy we value capital above human beings. the economy should work for people, not capital.

Refrigerator chat. The cost of repair labor far outweighs the cost of manufactured units. Earlier this year my Samsung french door refrigerator failed. I checked the boards ($150+ if a technician did it right there) and found that the compressor was at fault. I spoke with a local repair technician who said "unless that thing has sentimental value just get a new one", as the price to replace the compressor and recharge the system was going to be around $1,000. My wife and I bought a brand new stainless Kitchen-Aid for under $1,400 delivered.

The finances of long term maintenance just don't make sense when new units can be made so cheaply.

If we are going to start including the competitive advantages enjoyed by offloading manufacturing to countries such as China, India, Korea, Taiwan, and (to some degree formerly) Japan, we cannot ignore their abject lack of environmental regulation, abject lack of child labor law, the tremendously long hours worked by unskilled adults for exceedingly meager compensation, and other such factors.

Essentially roll back all of the advances made on these fronts in Europe, the UK, the US, and other "first world" economies to 19th century standards.

Spot on.

Venture capital destroys everything it touches except the bank accounts of the middle men. No doubt.

And by tying exec compensation to stock performance we are effective making the entirety of management at these companies venture capitalists. THAT my friends is a problem we don't have the appetite to fix. Such fix would involve capping salaries for execs, forbidding stock options and severely limiting the total $$ that can be managed by any fund.

Absolutely right….we never stood a chance to compete on labor costs. Crazy thing is, everyone could see this coming 40 yrs ago, but here we are. Now the consumer is addicted to cheap, replaceable goods and we will never go back. Everything is a commodity. It’s all a numbers game these days, the product hardly matters. There is no pride in “building” something, just make some quick $$ and get out.

eh, everyone is doom and gloom about outsourcing, but that was the 90s. we are 30 years past outsourcing. this might still be a problem with like lots of hand handled things, like clothes production, but outside of those specific instances, its not cheaper to make things overseas when you look at the quality issues, and the amount of overhead and double checking you need to do in order to insure quality.

you know, all the stuff boeing doesnt do.

so for high tech stuff, its not cheaper because of labor costs to do things overseas. thats why we are seeing so much more insourcing.

we are way past outsourcing, what has happened to boeing, is just the tip of ice berg in terms of corporate rot, american companies being sold out, hollowed out, and destroyed, for quarterly profits. companies that took generations to build. they only take a few years to destroy. rise and repeat.

until we decide that the economy is for people, not money, we are going to have this issue. we always talk about job creation, but the purpose of capital is to destroy jobs. until we figure out that our economy is so biased in favor of capital, and against value creation through labor ... this will continue to happen. like how we biased the entire market in favor of capital in the last 3 generations, we need to undo that, and instead bias value producing labor over that.

the biggest thing that we need to do: make stock buy backs illegal. its absurd they were ever legal in the first place.

I agree with #1, but I don't see how we can unwind things. Greed exists, even if's only a small percentage of the population, it drives the market.

Stock buybacks are an acceptable use of excess corporate cash IMO. It's basically saying 'our stock is underpriced, we think it's the best investment available to us'. The result of a ban would be more corporate takeovers, the cash won't/can't sit there.

I might say that we could return to taxing stock options as income, not capital gains, and increasing top tax rates to make extreme executive payments unpalatable for stockholders, but I can only imagine the lobbying bucks going to congress if that were going to be on the table.

These challenges so well stated by CP require leadership and integrity to be addressed. We have none of that in DC. Why does DC matter? Because man can always be counted on to be a greedy, horny little **** and it is the job of our gov't to protect us from our basest instincts.

we get to make up the rules of the world.

we dont have to just accept the world as it is.

stock buy backs were illegal, for obvious reasons, until the 1980s.

this is just one example of how we need to rebuild the world to make the economy serve us, instead of capital.

Oh no.... DC? Taxes? Not PARF, NO! Not PARF!

http://4.bp.blogspot.com/-Y6J5uBDQIw.../s1600/g25.gif

lol, where good threads go to die!

i mean if we want to talk about tax policy, another no brainer that anyone and everyone should support is getting rid of capital gains tax, and taxing it as normal income, at normal income tax rates.

because right now, its ~15% cheaper to do nothing, and be rich, and gut American companies, than it is to get off your ass and do some actual work. because income from working, is taxed at basically double the rate that doing nothing is taxed at.

it is obvious to casual observer that generations of rewarding incomes for doing nothing, while punishing laborers with higher taxes for you know ... doing things ... probably leads to a skewed capital/labor market.

if we want to get go even farther ... if labor is more important than capital, which it is, why would we tax them equally? why wouldnt we seek to reduce the tax burden on those actually doing things, and punish those who dont do things? ie, why isnt capital gains tax actually higher than income tax? it should be.

Because labor doesn't get a real seat at the table anymore, and we're divided over social issues.

yup.

we built the world wrong guys.

we should probably at least try to fix it.

But the job creators, man. Why doesn't anyone look out for the job creators.

idk if I agree with that….those making a capital investment in business or whatever it may be are putting money at risk, and (hopefully) adding jobs and adding to GDP along the way. The traditional argument is that LTCG tax is lower to encourage this investment. Now, you may have a point with regard to carried interest tax rates, which primarily benefit pure financial risk takers, and (generally) only kick in when the original investment $$ is recouped, along with some nominal return (hence, no more risk). I can see the argument why that should be taxed as ordinary income.

It is/has always been about profit, if not why bother. I had an uncle who had several larger car dealerships. He has passed on many years ago and my family knows the car business well. Every department was a profit center. when his numbers didn't look right, I remember him saying, "do you think there is a red cross flag in the front of my store?". I knew what that meant.

There is an essentially a 3 yr corporate cycle in which high level management looks to get promoted either within the company or move outside of the company for a better position. During this period, you want to score home runs by any means. And if the company gets sold, there are consultants who create a playbook to get these savings in with a 2 yr ROI or less. McKensey comes to mind - and they have a reputation.

These folks don't care where it is made. During my last year at the company I worked for, they have a plan (and it is still in process) to move 40 million in parts offshore in 2 years. Savings: $80 million and 70 heads. The time and dollars to move just don't make sense but no one, internally, will say otherwise. And if it doesn't succeed, "someone will fall on the sword". I had many reasons for retiring, this was one of many.

it should at least be taxed as normal income.

again, the reason we see the "financialization" of the economy (ie, banking and accounting making more money than actually building things), is because of policies like this. its cheaper to make money with money, than it is to make money, by like, actually providing value ,and building things.

Even the beloved Lexus brand is affected…

https://www.consumerreports.org/cars/car-recalls-defects/lexus-lx-and-toyota-tundra-recalled-due-to-debris-in-engines-a4957076545/#:~:text=Toyota%20Motor%20Sales%20is%20recalling,g roup%20involved%20have%20the%20defect.

Union labor got bashed in the private sector. Lazy, overpaid, pensions, benefits, political party affiliation. This is a big reason automotive moved to southern states. And most supported it. Everyone complained about it. It got to the level of 6%.

However, labor rates across the country somewhat equalized which prompted companies to continue looking for cheaper labor offshore.

My comments thru op is I never experience the good ol days. Business is global, technology is shared, or copied - this is the world we live in. We moved from the original agriculture country to a world of manufacturing during the industrial revolution and in the 70s to a service economy. And it is going to change again with AI.

no it hasnt. and no it isnt. well, certainly not maximization of profit.

building a business isn't about profit, its about meeting a need, providing a value, and building a relationship. its not about about maximizing profits on every transaction and maximizing quarterly profits. building a business takes decades.

dunno if you've seen the news, but UAW keeps on winning, more plants, more people, and even non-union plants are seeing big wage and conditions improvement to prevent unionization.

i've always herd the horror stories about unions, but ive never seen any of it, and i work with unions occationally. makes me skeptical of any of these stories, esp since they always seem to have been started by non-workers ... when i have had bad interactions with a union, its always because the company is trying to take advantage, and the union is correctly pointing out their error. thats not on me, thats on the company. if you've had bad interactions with union people, dont blame the union, blame the company for having created the union by treating its people badly, and continuing to try to do that. the union exists as a response to bad management.



there is also the macro data, showing pretty conclusively the death of middle class was right when laws started crippling unions .... and conversely data showing hte middle class doing better when there is higher union membership.

its pretty obvious that supporting unions and union popularity improves outcomes for the middle class, and thus is part of supporting labor, as opposed to capital. like this isnt a mystery or a topic of debate, we did it, we have the data, we know what happens.

epic series of posts from CP.

What a rare thing to see someone cheer for quality of life improvements than don't always = the highest possible profit.

I will say what is killing unions is economics. defined benefit pensions. you don't get them back in any meaningful way (or with any meaningful member benefits) without artificial interference by the gov't.

Wow what a great thread. I have been teaching welding trades for 23 years and prior to that in industry. I have really enjoyed this Thread and appreciate the perspectives. I can tell you that my experience as an aerospace welder fabricator was quality, quality, quality as number 1. We spend so much time ensuring that every part was to all the drawings, multiple NDT methods etc. This was 30 years ago and that company still operates the same way to this day. They are a slow and steady wins the race company that employs 40ish people.

In my current job we train high level welders to go into the trades like manufacturing, Steamfitters, Ironworkers, boiler makers, Elevator erectors ,etc. I can tell you from my experience that the union trades company's are 100% all about job done right. They don't do things half assed. It is either right or not done at all. The manufactures are 50/50 on this. We work with some great manufactures that expect 90+% first pass yields and nothing goes out the door that is even suspect. The other 50% we work with make non critical type of components like chairs/tables/ storage carts, lock mechanisms, lighting, etc.

Maybe it is somewhat a location type of thing? Maybe a size of the company type of thing? I am not sure but at least in our region quality is king in the sectors we provide trained workers to