Manufacturers Exit China

[RWebb]

Major manufacturers abandoning China for U.S.? - latimes.com

[juan ruiz]

The damage is already done, we trained them and they know all the secrets now we will have to compete against them

[intakexhaust]

According to the Boston Consulting Group. Interesting but I find the survey hard to believe.
A quote: More than four in 10 executives pointed to product quality.

Well, here's my viewpoint. I've been pushing for 100% USA made components and so PO at the mentality of US business owners. Some of the most simplest components made in the US are absolutely crap and the owners of these companies mostly employ illegal aliens, who are unable to read or write. They prefer this method of business madness vs. going to China for production.

I know it starts at the top after seeing the inside operations of Motorola in the 1990's its obvious why they had 80% failure rate of new flip-off phones coming down the assembly lines before shipping /distribution. I don't mind spilling the beans and only wish I had kept the internal reports as proof. Should be a wake up call to all Americans. Sadly, our good ole' American plants like CAT, automotive component suppliers are full of illegals lacking education.

In only a few short years, perhaps a decade, the average American citizen will be at the living standards of average Chinese. Hamburger flippers here will be the standard wage for college degree workers... if they ever get a job.

[RANDY P]

USA is cheap thanks to devaluation

[Scott R]

South America is the new China.

[rnln]

now still better than later.

Originally Posted by juan ruiz

The damage is already done, we trained them and they
know all the secrets now we will have to compete against them

[aigel]

BS on the US workforce being uneducated. I work in high tech manufacturing and there are plenty of talented and motivated people with high school degrees that make excellent trained workers. Many of them are young and the ethnic distribution is about as diverse as the united nations.

What I do worry about are environmental rules. These are very strict in the US and may keep some manufacturing away until China and other countries catch up to the regulations.

On the positive side, many processes are highly automated nowadays and you have to wonder if a robot or a CNC machine in the US is that much more expensive to run than one in Asia.

Maybe it also dawns on companies that China is a communist country. Their IP is basically gone as soon as they set up shop there ...

G

[intakexhaust]

Originally Posted by aigel

BS on the US workforce being uneducated. I work in high tech manufacturing and there are plenty of talented and motivated people with high school degrees that make excellent trained workers. Many of them are young and the ethnic distribution is about as diverse as the united nations.

What I do worry about are environmental rules. These are very strict in the US and may keep some manufacturing away until China and other countries catch up to the regulations.

On the positive side, many processes are highly automated nowadays and you have to wonder if a robot or a CNC machine in the US is that much more expensive to run than one in Asia.

Maybe it also dawns on companies that China is a communist country. Their IP is basically gone as soon as they set up shop there ...

G

Tell that to Apple.

[aigel]

Originally Posted by intakexhaust

Tell that to Apple.

I think their money is in the software, their brand and the design of the phone - not the hardware. Maybe I a mistaken, but I don't think their processors are extra special (Samsung makes them), or their displays.

G

[onewhippedpuppy]

Originally Posted by aigel

BS on the US workforce being uneducated. I work in high tech manufacturing and there are plenty of talented and motivated people with high school degrees that make excellent trained workers. Many of them are young and the ethnic distribution is about as diverse as the united nations.

I work in aerospace, my employer is finding that their outsourcing to Mexico to save money is ultimately costing them more, leading them to bring back many of the more complicated fabrication tasks to Wichita. You may find perfectly capable workers in Mexico or other countries with cheap labor, but it is difficult to find skilled craftsmen that take pride in their work.

Most of the outsourcing studies that I have read indicate that there is no net gain from outsourcing manufacturing, ultimately you're lucky if you break even and many companies actually lose money by doing so. This may be industry dependent, but the fact remains that outsourcing typically looks better on paper than it does in reality. I suspect that we will see more companies bring jobs back to the USA as they realize the error of their ways and swallow their pride.

[herman maire]

What is the MOST frustrating is why APPLE factories are not in the U.S or somewhere in North America.... I mean, how much frigging profits to they want. It would be nice to see MADE IN THE U.S on that and not assembled/made in china.

[recycled sixtie]

Originally Posted by herman maire

What is the MOST frustrating is why APPLE factories are not in the U.S or somewhere in North America.... I mean, how much frigging profits to they want. It would be nice to see MADE IN THE U.S on that and not assembled/made in china.

Management has no conscience. They will locate their factories where the cost of production is the lowest so they can maximize return on investment to the shareholders. If the value of the US $ decreases relative to other currencies this may in time attract new business startups in the US. Too bad about RIM. How quickly hi tech fortunes change!

[targa911S]

Originally Posted by Scott R

South America is the new China.

yep ..yer right there.

[stealthn]

Ah, i wouldn't put the blame all on the. Businesses, unions are one of the key killers, would you pay 2 grand for an ipad? I always look to buy Canadian first, but now a days it's sooooo hard to find, and yes i would pay up to 15% more to buy CDN, if i could find it...

[jcommin]

Originally Posted by targa911S

yep ..yer right there.

It will always be somewhere else: India, SE Asia, Russia, Brazil - anywhere the cost of labor has has an advantage over the USA.

Unless you permanently have people in place to monitor quality standards - quality suffers. Large companies can afford to have ex-pats, small to medium companies cannot.

The other factor is technical piracy - China will copy anything and will get the technology anywhere and anyway possible.

The quality issue is big - it takes 45 days door to door for overseas shipping. Most companies have a minimum of 4 months worth of inventory sitting in warehouses central to their opeations. If a quality issues arrises, you need to look at what in in warehouse, in the containers and what is stored and in process at the manufacturer. Add to the corrective action, producing quality parts again, shipping via air this time which is 9x expensive than by sea, the cost xcan quickly add up. You also run the risk of damaging the company brand and once that happens takes a long time to recover.

The hidden costs are warehouse operations, logistics, manpower, re-inspection, and the like. The cost advantage quickly errodes.

[Tervuren]

Originally Posted by herman maire

What is the MOST frustrating is why APPLE factories are not in the U.S or somewhere in North America.... I mean, how much frigging profits to they want. It would be nice to see MADE IN THE U.S on that and not assembled/made in china.

I work for a company that even gets our hardware made in the USA, even in House for a quite a bit of it.

We are branching into electronics, and we are having to involve non USA stuff. Fact of life we ran into, is no American manufacturer can deliver the quality they promised us. Entire orders have had 100% failure rate from the USA, and others, have not been able to hold spec.

We do not have the capitol to manufacture these items in house yet, and USA product has been a quality disaster. China has been the only source to give us the quality we need. Until we can manufacture ourselves to our own quality standards, some of the electronic chips are going to be made in China.

If American's weren't lazy, and actually worked, and care about their jobs, maybe we'd be more competitive. Its hard to find good workers in the USA, but when you do, and you take care of them, you are in good shape. A HUGE advantage of manufacturing local to your company sales, is shortened lead time. If a customer calls up and wants something custom, you can do it, problems in manufacturering are spotted and corrected sooner as well. Its just tough to find people that care about quality in the US in this day and age.

[Rick Lee]

China's demographics are such that they're simply never going to have a cost of labor close to our own. They have 3x as many dirt poor peasants in the countryside as we have total population. Try to wrap your head around that. It's mind-boggling. With those kinds of numbers, labor will always be cheap there.

Every one of those peasants who migrates to the city in search of factory work does so because it pays more than subsistance farming, even considering they send a good portion of their measley pay back home to their families in the countryside. I don't see the Chinese gov't. ever deciding to subsidize farmers the way we do to keep food prices at higher levels than they need to be so that 900 million peasants decide farming is a better way to make a living.

[sammyg2]

Originally Posted by recycled sixtie

Management has no conscience. They will locate their factories where the cost of production is the lowest so they can maximize return on investment to the shareholders. If the value of the US $ decreases relative to other currencies this may in time attract new business startups in the US. Too bad about RIM. How quickly hi tech fortunes change!

hogwash.
How many liberal yuppies would buy an i-phone if it cost $1000? They'd be buying cheaper foreign made blackberrys instead.

Environmental and regulatory restrictions and union strangle-holds are killing American manufacturing and make it so freaking expensive the only way to keep most companies alive is to move the manufacturing overseas.

Suggesting we should buy American even though it is too expensive is nothing more that supporting an unamerican governmental ideology akin to that in Cuba.

We should be eliminating all the red tape and BS that keeps companies from being able to compete.

About 20 years ago my father's company bought a very large plot of land near about 50 miles north of smell-A with the intention of building a new manufacturing plant that made super-lightwight composite airplane seats.
The environmental impact report was already filed and approved, they had all the permits, it was a green light. then the enviro-wackos with their lawyer-tards showed up and files suit after suit.

They eventually came up with some BS about how a sub-species of sand flea that lived around there was not understood enough or studied enough to prove it wasn't endangered. Huh?

Eventually the company gave up, and because the land was now virtually worthless because it could not be developed, they ate the $millions and donated it to the enviro-tard organization to turn into a nature reserve to protect the sand flea just so they could write off the loss easier.

And here's the ironic part, it's against the law to shoot environmental lawyers and activists!

I know, go figure.

[Zeke]

The article was rather short and covered little if any of the reasoning executives are using to justify moving their factories back to the US. I think there is an undercurrent involved regarding marketing considerations. We have gone through a couple year period of exposing lead content in Chinese manufactured goods. We have an increased sentiment regarding buying American. These guys are looking at PR and marketing tactics to sell their wares. No altruism here, just economics and marketing. If it works, great.

I spend a little time over on the Garage Journal forum and there are a bunch of American buying nazis there. Of course I take it all with a grain of salt because a lot of them sound like Sam above.

[Porsche-O-Phile]

Have any of you guys ever been in an executive management position? I have. In such a position you are absolutely obligated as a condition of your employment to uphold the goals of the corporation as defined in its corporate charter. For a publicly-traded company this is almost always "maximize shareholder profits" (among others). To do anything contrary to this is a dereliction of your duty and can result in your dismissal.

If you don't like it, don't buy from public corporations, buy from private corporations which might have more open language in their charters (i.e. language like "creating quality products, jobs and opportunities for our employees and suppliers, with due consideration for shareholder returns and company profits"). Private corporations are much freer to do what they want and are less beholden to rigid language (and behavior resulting from it) that is strictly profit-motivated.

In other words, it's your money. Vote with your feet and your wallet. It's the only thing that matters - not b*tching and whining on a car board.

APPL is public, for those who don't know. Here's a copy of their corporate charter:

Apple - Corporate Governance

"long term interests of the shareholders". There you go. It's tough to justify serving the long-term interests of the shareholders if you're opting for far more expensive and burdensome production processes over cheaper and more open / less regulated ones.