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Where Will Your Next Gadget Be Made? 378

Posted by Soulskill
from the not-here dept.
hackingbear writes "The New York Times is warning of the possibility of price inflation for gadgets, cars, and many other items, not from our skyrocketing government debt, but rather the increasing cost of doing business in China. Coastal factories are raising salaries, local governments are hiking minimum wage standards, and if China allows its currency, the renminbi, to appreciate against the US dollar later this year, the cost of manufacturing in China will almost certainly rise. (The report missed the biggest cost factors in China — electric and water utility costs.) 'For a long time, China has been the anchor of global disinflation,' said Dong Tao, an economist at Credit Suisse. 'But this may be the beginning of the end of an era.' The shift was dramatized Sunday, when Foxconn, the maker of the iPhone and everything else, said that within three months it would double the salaries (rather than the rumored 20% increase) of many of its assembly line workers."
"And last week, the Japanese auto maker Honda said it had agreed to give about 1,900 workers at one of its plants in southern China raises of between 24 and 32% in the hopes of ending a two-week-long strike, according to people briefed on the agreement. However, while big and famous manufacturers, like those in the US and Europe, may worry about their PR images and give in to labor demands, it is unclear if thousands of smaller ones will follow. And given the millions of people waiting for work in other countries, from India to Vietnam, the only thing that may have changed is the prevalence of Made in China labels of your gadgets."
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Where Will Your Next Gadget Be Made?

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  • by Em Emalb (452530) <ememalb AT gmail DOT com> on Monday June 07, 2010 @12:07PM (#32485726) Homepage Journal

    Since I live here in the US, I'd really like to see a return to the US for manufacturing. We're still teetering on the brink, don't let day to day market-droid speak fool you.

    The US is not anywhere near out of the woods yet.

    So...I'd like to see my next gadget have "Assembled/Made in the USA" on it.

    Just as I'd suspect anyone from another country would prefer their country to be the country of assembly for their next gadget.

    • by sethstorm (512897) * on Monday June 07, 2010 @12:10PM (#32485780) Homepage

      I'm not sure it's so much "out of the woods" as much as it's beginning to be "sweep the undesirables (long-term unemployed) under the rug" to make things look better.

      • by wealthychef (584778) on Monday June 07, 2010 @12:39PM (#32486226)

        Nationalistic bickering aside, this is very good news. As living standards rise around the globe, labor will get more expensive, sure, and our iPods might cost 20% more or something, and in return, human beings on the other side of the planet have food on their table and work to do. It's good for the world that labor in china is getting more expensive in every way except the most short-term "I want my shit cheap right now" way.

        We are not going to be able to bully China into submission like we are used to doing around the world. How about if we start trading with her and learning to respect their culture? That doesn't mean ignoring human rights abuses, but it means respectful engagement.

        • by timeOday (582209) on Monday June 07, 2010 @12:50PM (#32486384)

          It's good for the world that labor in china is getting more expensive in every way except the most short-term "I want my shit cheap right now" way.

          Well, they are going to be using a lot more resources - eating more meat, driving more cars, more precious metals, all that good stuff. Energy costs will soar when the global economy recovers. But don't get me wrong, I can hardly complain when their consumption is on average still a fraction of mine. And maybe their armies of engineers will figure out a post-fossil-fuel economy.

        • by CAIMLAS (41445) on Monday June 07, 2010 @01:11PM (#32486640) Homepage

          Nationalistic bickering aside, this is very good news. As living standards rise around the globe, labor will get more expensive, sure, and our iPods might cost 20% more or something, and in return, human beings on the other side of the planet have food on their table and work to do. It's good for the world that labor in china is getting more expensive in every way except the most short-term "I want my shit cheap right now" way.

          That's a bit shortsighted.

          Gadgets are not something like food; their novelty/luxury items. If (when) the cost goes up across the board, people will spend less of their hard-earned money on the things they don't need - ie, gadgets. (Perceived) quality will need to go up a similar proportion as the increase in cost for the product to remain competitive (remember the 'high quality' Erickson, etc. cell phones from a decade ago? - they were supplanted by other products offering a better price value).

          In return for the decreased demand, there will be less manufacturing done; this will further increase the manufacturing cost per unit, likely leading to a loss of jobs in the foreign plants (unless they're able to cut costs). Increasing costs to your customers NEVER results in more business unless it is paired with a (perceived) equitable increase in the product.

          As for respecting China's culture... sure, I'll get right on that. My first cultural taboo to learn to respect is child labor. After I've gotten over that, I'll work on violent persecution of belief systems I don't agree with (Christianity, Islam, etc.). Then I'll work on agreeing with overt state-controlled censorship, and finally, the wanton destruction of the ecosystem and disregard for dumping toxic waste. In fact, I might start on the toxic waste thing: it's easy, because all I'll have to do is pour some waste oil into the municipal sewer. I figure that by this time next year, I'll have matured enough as a person to start accepting China's particular brand of threats and imperialist encroachment - just in time for their wholesale invasion of Taiwan or Tibet, maybe.

        • by Random2 (1412773) on Monday June 07, 2010 @01:13PM (#32486674) Journal

          You should educate yourself on Chinese policy. I'd recommend the USCC (Unites States China Commission) as a start. They're only being nice to us until they can build a bigger military, infrastructure, and 'catch up' with the rest of the technological world.

          Yes, letting the renminbi float would drastically help world markets, which is exactly why they won't do it. Not until it's actually to their advantage to do so.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      How about South America?

      1. Cheap labor to be found (the capitalists love the idea)
      2. They're our neighbors (free trade pitbulls will love it)
      3. Shorter trip to get those cool "akihabara" gadgets (Geeks will love it)
      4. Easier for our government to strongarm environmental guidelines (greenies will love it)
      5. Brings jobs to South America (some people in South America will love it)

      seems pretty logical.

      • by sethstorm (512897) * on Monday June 07, 2010 @12:30PM (#32486102) Homepage

        No thanks.

        Never mind the corruption(making Chicago look saintly) and contempt for the US that still exists there.

        • by $RANDOMLUSER (804576) on Monday June 07, 2010 @12:35PM (#32486164)
          Riiiight. Because China is corruption-free and they love us there. And Chicago is far less corrupt than, say, Washington DC.
          • by sethstorm (512897) *

            I'm not defending China by any means here. Just that South America isn't that much better(nothing that isn't more than a rounding error in amount).

            Right now, Chicago and DC are morally equivalent.

            • Nonsense. I'm tired of people trolling about Chicago who don't know a goddamn thing about it. Al Capone has been dead for a while now. Chicago is run more honestly (and WAY more efficiently) than many big US cities.
              • Re: (Score:3, Informative)

                by jimbolauski (882977)

                Nonsense. I'm tired of people trolling about Chicago who don't know a goddamn thing about it. Al Capone has been dead for a while now. Chicago is run more honestly (and WAY more efficiently) than many big US cities.

                79 local elected officials have been convicted of a crime, including three governors (soon to be 4), one mayor, and 27 aldermen in the last 30 years. Between 1995 and 2004, 469 politicians from the federal district of Northern Illinois were found guilty of corruption. The only districts with higher tallies were central California (which includes L.A.), and southern Florida (which includes Miami). ref sun-times.

        • Re: (Score:3, Insightful)

          by Anonymous Coward

          No thanks.

          Never mind the corruption(making Chicago look saintly) and contempt for the US that still exists there.

          For what it's worth, It's already going on.

          If you happen to own an Xbox 360, there's a good chance that it was assembled in Mexico. It wouldn't be a far stretch to imagine the entire thing being manufactured there.

      • The problem becomes one of population. China has been using the rest of the world to haul it's own development levels and therefore standards of living up. I've been predicting this for quite some time; each outsourcing job results in a number of internal jobs starting up, thus the labor pool is emptied faster than many think.

        Back on South America as a potential labor pool - China has 1.3 Billion people. India, which the same thing is happening to(and they're perhaps a bit further along), is 1.1 Billion.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Just as I'd suspect anyone from another country would prefer their country to be the country of assembly for their next gadget.

      Corporations don't have any such preferations. They'll certainly not come back. They'll just swarm to the next flavour of the month outsourcing country.

      I don't know ... some other Asian country or maybe Africa or South America. Certainly not the USA. Not while other countries are worse off.

      • by Dan Ost (415913) on Monday June 07, 2010 @12:29PM (#32486092)

        Corporations don't have any such preferations. They'll certainly not come back. They'll just swarm to the next flavour of the month outsourcing country.

        Actually, as oil prices increase, it'll eventually be cheaper to manufacture low margin goods here than to do it overseas and pay for shipping.

        • by baldass_newbie (136609) on Monday June 07, 2010 @12:41PM (#32486252) Homepage Journal

          Actually, as oil prices increase, it'll eventually be cheaper to manufacture low margin goods here than to do it overseas and pay for shipping.

          Talked to a guy on a plane who has a Senior Exec for a manufacturing firm. He said that even with the high price of oil (it was much higher during this flight last year) it was still cheaper to build a plant with a 10-15 year lifecycle and ship everything back than to retrofit an existing plant in the US.

          It's going to take higher oil prices, plus significant increase in the renmibi (or yuan) and huge salary increases for it to even out - and you still won't have the increased costs of environmental legislation or the CODB for manufacturing in the tort-happy US.

          Pack a lunch. We won't be making much of significance for a while on these shores - especially if the Employee Free Choice or 'Card Check' legislation gets passed. In fact what little offshore company manufacturing done in the South will likely go even further south.

      • by sethstorm (512897) *

        What do you do when you've run out of hell-holes, and don't have enough robots or automated processes to cover?

      • Re: (Score:3, Insightful)

        by magarity (164372)

        Corporations don't have any such preferations. They'll certainly not come back. They'll just swarm to the next flavour of the month outsourcing country

        Contrary to a popularly repeated theme, corporations don't have preferences in a mindless vacuum; they prefer to make what their customers want. Since most (not all) customers in most (not all) markets want a product that meets functional specifications (first) for the lowest price (second) this drives companies to seek the lowest priced manufacture

    • by OrangeTide (124937) on Monday June 07, 2010 @12:18PM (#32485890) Homepage Journal

      It's tough to make gadgets in the US because it is hard to scale regional supply chains to the size you'd need for a popular gadget. In parts of China or Taiwan there are hundreds of companies available to select as component suppliers. They can put crates on a truck and have more available within the hour. There are lots of places to go for large scale PCB manufacture in these regions as well. Even in silicon valley we have trouble with companies if we want to scale past about 10k units. For enterprise equipment those volumes are acceptable, and there are a few companies that make expensive equipment in the US. There are also lots of places that do final assembly in the USA (Dell), or some components in the USA (Intel).
      It is possible to build up partners to get all the components you need. You can find everything (or nearly so) manufactured in some quantity in the US. And if there is money to be had, those businesses will scale up to meet your demands, eventually.

      • Re: (Score:3, Interesting)

        by mrmeval (662166)

        We moved our manufacturing back to the US. Equipment is cheap and the high tech parts were not available in china legally. We no longer have 20 percent or more of the parts we shipped to the assembler end up swapped for fakes, we can tailor our manufacturing more tightly since travel time is minutes not a month. We can more easily fix problems by inspecting small lots rather than have 3000 units come in that need reworked. The tipping point for us was transportation costs including bribes which convince ma

    • Re: (Score:2, Insightful)

      by bmajik (96670)

      There are two commonly held misconceptions in your post:

      1) the US manufacturing sector is in decline

      This is not true. US manufacturing _output_ has been going up for years. However, the number of US manufacturing JOBS has been going down.

      So, we're still making lots of stuff here, but we need fewer people to do it.

      2) The US economy is recovering

      [technically, you stated that we're not out of the woods "yet", which is true, but you seem to think that there is any evidence that we might be improving or headin

      • by seifried (12921)

        The United States Federal government, as well as the governments of 49 of the 50 states, are legally insolvent.

        I'm curious, which one is solvent?

      • What are your thoughts regarding a Soviet-style collapse? I've always hoped for this outcome as probably the best one possible in terms of minimizing suffering and loss of life. Do you think this is still possible? Can states that are close enough to solvency today shrink enough to be able to borrow money on world markets and thus operate credibly? Alternatively, could the American people be trusted to start over, to create something resembling lawful, Constitutional government(s), free of all the cruft
        • Re: (Score:2, Interesting)

          by Anonymous Coward

          Here's the thing about saying that 49/50 of the states are insolvent... sure California is insolvent, but if we were our own nation state, we'd be fine. CA pays out WAY more to the Fed than it gets back... if we could keep all that money locally, we'd have no problem being solvent.

          • Re: (Score:3, Interesting)

            by bmajik (96670)

            Without agreeing or disagreeing with you on the specific case of California, states don't really have the freedom to try alternative levels of public spending and public revnue generation, because the federal government takes from the individuals first, and gives some of it back to the states.

            Ask yourself why the lionsshare of your tax bill is to the federal government, when the majority of the services you need are provided locally?

            Even though the federal government may not have the legal power to assert c

      • by senorbum (1795816) on Monday June 07, 2010 @12:48PM (#32486360)
        Hmm, its a nice apocalypse theory but has really nothing to back it. The US dollar is no where near hyper-inflation. If you knew anything about Bernanke you would recognize that he is extremely anti-inflation and has been well before he took his current roll. Over spending is only a small issue in regards to the deficit. The current shortfall is due to a loss of Tax Dollars, not due to a major increase in spending. The U.S. Dollar is stronger today than it has been in a while. There is no magical 'pending socio-political-economic collapse' just waiting around the corner. If you haven't paid any attention to any of the jobs reports, in 1.5 years we went from losing 800k+ jobs per month to gaining 50-200k non-gov't jobs per month. And if you read the recent jobs reports at all you would have seen that wages increased and hours/week increased. Plus, productivity is finally flattening out which means that employers will be forced to hire new people since they can't get any more extra work out of their current people.
        • by 0123456 (636235) on Monday June 07, 2010 @01:03PM (#32486550)

          If you knew anything about Bernanke you would recognize that he is extremely anti-inflation and has been well before he took his current roll.

          This is the same Bernanke who said that if all else failed he would thrown money out of helicopters?

          Given that US money supply has tripled over the last couple of years, if he's anti-inflation then he's been a dismal failure. US policy appears to be based on throwing new money into the economy then removing it at precisely the right time during a recovery to prevent an hyperinflationary spiral without causing another depression, and if the government was smart enough to do that then we wouldn't be in the current mess.

        • by bmajik (96670) <matt@mattevans.org> on Monday June 07, 2010 @01:04PM (#32486564) Homepage Journal

          You mean the end-of-May jobs numbers that caused the market to crash when they were released?

          The one that said the only real job growth was the 400,000 temporary census workers?

          Take the minority of Americans who pay taxes [guess what: over half of AMericans are no longer net tax payers], and tax them at _100%_. Do it. Do the math.

          If you taxed all current tax payers at 100%, you could not raise enough revenue to cover us.

          It is a spending problem -- and only a spending problem.

      • Re: (Score:3, Insightful)

        by pluther (647209)

        Lemme guess... Glenn Beck fan?

      • Bullshit (Score:5, Interesting)

        by copponex (13876) on Monday June 07, 2010 @01:03PM (#32486548) Homepage

        There are two commonly held misconceptions in your post:

        1) the US manufacturing sector is in decline

        The US export per GDP is now #179 in the world. That sounds pretty bad to me. Now, we have such a large economy that the raw numbers look great, but saying the US manufacturing sector isn't in a decline is pure nonsense. If I remember correctly, we're on the same performance level as Burma.

        The US economy will cease to exist as you know it within your natural lifetime. I say "natural" lifetime because with the pending socio-political-economic collapse, many people will probably come to unnatural ends much sooner than they expect... ...The United States Federal government, as well as the governments of 49 of the 50 states, are legally insolvent. Not only is the federal government out of money, but the largest area of spending growth is debt servicing...

        And more bullshit. Our external debt level is not even at an all time high (which was 120% after WWII). People are flocking from the Euro to the Dollar as we speak. No, really:

        Global investors flock to US debt at record speed [telegraph.co.uk]
        Gregory Daco, economist at HIS Global Insight, said the investment trends were clear evidence of trust in the US. "As the sovereign debt crisis in Greece intensified in March, foreign investors mostly sought refuge in the safe-haven US Treasury bonds and notes," he said.

        "Nonetheless, government agency securities and corporate debt provided very attractive alternatives for investment – an encouraging sign that investors have faith in the US recovery."

        • Re:Bullshit (Score:4, Insightful)

          by bmajik (96670) <matt@mattevans.org> on Monday June 07, 2010 @01:23PM (#32486776) Homepage Journal

          the year over year output of US manufacturing has gone up.. for a long time.

          Doing this "ratio stuff" you are doing is what is irrelevant. Burma doesn't have a financial services sector to speak of. Of _course_ the contribution of domestic manufacturing hasn't grown as fast as the GDP growth of finanical services.. we just got smashed by the long-standing financial sector bubble in this country. We also just got smashed by a real-estate speculation bubble. We also have the worlds largest software industry. Blah blah.

          You are using all kinds of different bars and measures, but you keep calling it "us manufacturing".

          If what you meant is "us manufacturing jobs are declining", just say so. If what you meant was "US manufacturing, as a precentage of the total US economy, is declining, as we transition to a service-based economy [btw, that ship sailed]", just say so.

          Regarding our debt situation: people are flocking to the USD because while we're screwed, the Euro is screwed even more.

          The US has been the proxy manager of the European economic system for about 100 years now. But that doesn't mean our governance has been inerrant. We are currently on our 3rd or 4th "arrangement" with Europe's monetary system... previous arrangements being Bretton Woods, dollar/gold convertability, etc.

          Euroean investors are going crazy trying to put money anywhere they can. It's like watching rats on a sinking ship. Did you know that the Austrian mint was _out_ of certain of its bullion products? In 1 month they moved more hard-metals merchandise than they had in the enter previous year?

          I am not concerned with the strength of the US economy as compared to others. I am interested in its absolute strength and solvency. Telling me that "at least we're doing better than Europe" isn't very comforting: europe has imploded multiple times in the last 100 years.

          The picture of the woman shoving wadfuls of marks into the furnce should be burned into everyone's mind.

    • by chill (34294)

      The question is, how much of a premium would you be willing to pay for that? If you're going to be replacing labor that costs $0.25 per hour with labor that costs $8.00 per hour, most products will see a large rise in cost.

      • by NF6X (725054)

        The question is, how much of a premium would you be willing to pay for that? If you're going to be replacing labor that costs $0.25 per hour with labor that costs $8.00 per hour, most products will see a large rise in cost.

        I'll happily pay a premium of $7.75. :D

      • If that increase translates into a higher-quality product (and less suicides in Potemkin villages like Foxconn's), then it is indeed worth it.

      • Re: (Score:3, Interesting)

        by MBGMorden (803437)

        Depends on how many man-hours it takes to assemble the gadget. If an iPad takes 4-5 hours assembly time (remember that assembly lines dramatically cut down on total assembly time, so a few hours isn't stretching it at all - it's probably lenient) then I certainly wouldn't mind another $50 in cost added to the device for domestic manufacture. When you factor in the savings in shipping, then it'll be an even better deal.

        There is the minor problem though: $8 an hour for a manufacturing job here might be fair

        • Re: (Score:3, Interesting)

          by AndersOSU (873247)

          What you say is true. But something that takes 1 man hour to assemble in the US may take 4 or 5 to assemble in China. The reason is simple, when labor is cheep you fix problems by throwing hours at it. In the US one operator can frequently run an automated line several times faster than out-sourced labor can. This of course means a larger capital outlay - but that's how the economy grows.

    • Re: (Score:2, Insightful)

      Are you willing to pay at an increase in price upwards of 300%?

      Because thats what its going to take to get products made in a country where the hourly minimum wage could buy a motorcycle in a developing nation.

      If you look at the entire lifecycle of a product before it reaches your hands, it goes through a lot of people and a lot of time, and a lot of effort goes into it. How is it possible that handheld radio at Radioshack is only $10? The cost of the materials alone should be in excess of that. Then the ma

      • by Hognoxious (631665) on Monday June 07, 2010 @01:17PM (#32486708) Homepage Journal

        Are you willing to pay at an increase in price upwards of 300%?

        Depends. If it'll last three times as long I'd certainly consider it.

        I hate cheap disposable shit and the attitudes that go with it.

      • by vlm (69642) on Monday June 07, 2010 @02:21PM (#32487730)

        Are you willing to pay at an increase in price upwards of 300%?

        Check out the amateur metalworking hobby/market. I'm talking about a current live market of sort of comparable products.

        Sherline manufactures some great lathes and mills in California. Generally the Sherline stuff has a beautiful finish, works right out of the box exactly as specified, its "aerospace grade", like metalworking jewelry. I've never heard of breaking or wearing out under normal use. Nice stuff! Looks nice, works nice, lasts forever.

        Similar Chinese lathes and mills are basically considered a parts kit, precision moving surfaces and ball bearings come with genuine Chinese sand at no extra cost, nothing works out of the box without some level of remanufacture, the products are generally larger, the paint job is applied with a spatula. Everyone has either broken, burned out, or worn out junky Chinese machine tools / parts / electric motors, or they know someone whom has done so. Its assumed you'll have to do a full teardown, cleaning, and reassembly after purchase and before use.

        The standard slashdot car analogy is its very much like comparing a 1970's American car with a 1990's Japanese car, except in this case the american mill is the japanese car, which now completely confuses things.

        The market seems to have stabilized, with comparable big ticket Chinese stuff being about 30% lower cost. None of this 300% increase daydreaming. Ultra small ticket stuff, at the other extreme, like the worlds cheapest chinese endmill manufactured out of zinc if not chrome plated plastic with about a 1 minute usable lifetime cost about 50% less than genuine american made endmills that'll run for days on end.

        I have owned a Chinese 7x12 lathe and a CNC converted Sherline mill for a couple years. You never really stop buying accessories, so I keep close track of the market.

        In conclusion, in a real live market, not daydreaming, the USA stuff runs about a third to about twice the cost, but you simply cannot buy similar quality product from China.

        I have no idea why in one industry the Chinese cannot manufacture a decent machine tool but they can manufacture all the worlds SMD electronics.

    • by Abcd1234 (188840)

      We're still teetering on the brink,

      Err, the brink of what, exactly? No, really... what, domestic apocalypse? Dirty-30's style depression? What?

    • Just as I'd suspect anyone from another country would prefer their country to be the country of assembly for their next gadget.

      Not really.. I like cheap things. I'd be pretty happy to pay an extra 10% on gadgets if I knew the workers were getting fair wages, but if stuff was being made here in the UK then it probably would be even more expensive. Especially at first since we're not geared up to produce lots of gadgets.

    • by Locke2005 (849178)
      Our best hope is to make transportation so expensive that it no longer makes economic sense to ship raw materials to China, have them made into cheap knockoff products there, then ship them back to us.
    • by Locke2005 (849178)
      Just as I'd suspect anyone from another country would prefer their country to be the country of assembly for their next gadget. Some African countries have such a low opinion of their own manufacturing capabilities that their residents would rather NOT see "Made Here" on their gadgets. And Walmart is still in business because US consumers aren't willing to pay more for a product with "Made in the USA" proudly displayed on it.
    • I'd really like to see a return to the US for manufacturing.

      You're in luck [wikipedia.org]

    • by russotto (537200)

      Since I live here in the US, I'd really like to see a return to the US for manufacturing. We're still teetering on the brink, don't let day to day market-droid speak fool you.

      It won't come back to the US in any great quantity. It might go to Mexico and Central America, though (Intel has a large presence in Costa Rica, for instance.. closer than China and more stable than Mexico)

    • Re: (Score:3, Interesting)

      Hell yes.

      I'm Canadian, and my preference for goods are those manufactured in Canada. My money stays here. Made in the USA is a close second; I consider that to be almost as good. It's less likely to be made by slave labour. I will actually pay MORE for a good if it is made in Canada.

      The only reason most manufacturers use people at all is because Chinese workers are cheaper than NA robots. If your iPod could be built by a robot here for cheaper, we'd never see "Made in PRC" again.

  • by sethstorm (512897) * on Monday June 07, 2010 @12:07PM (#32485736) Homepage

    It's no longer efficient to do anything of substance unless it is required(and only to those requirements).

    • by MozeeToby (1163751) on Monday June 07, 2010 @12:18PM (#32485908)

      Yep, another hell-hole almost definitely. But, is that really a bad thing? It seems to me that outsourcing menial labor is the one international aid package that has a long term history of success. There's a lot of countries that are prosperous, developed nations today that were poor, developing nations when we started sending jobs there.

      I'm betting that the next manufacturing center will be Africa, maybe even Somalia (no taxes! (Only joking obviously)). Guess what, anywhere that people can work for pennies on the dollar compared to the competition is going to be a tempting target for industry. And generally anywhere that people are willing for so little is by definition a place where very little is better than what they have now. Eventually, after enough money gets dropped into their economy pennies isn't enough anymore and we move on, but the factories, businesses, and trained workers remain and their economy is much better for it.

      I'd love to see manufacturing jobs return to the US, but that isn't going to happen until automation is cheaper than developing nation manual labor. And when that does happen it's going to put the brakes on every developing country who relies on rich countries outsources to them for cheap labor.

  • ... the rest of the world's countries can just rehire all of those skilled workers and reopen the factories we shut down.

    Oh, wait.

  • Nooooo (Score:3, Insightful)

    by Korin43 (881732) * on Monday June 07, 2010 @12:13PM (#32485822) Homepage
    How will I ever afford electronics if the people making them are paid 50 cents a day rather than 25 cents a day? :(
  • by Maxo-Texas (864189) on Monday June 07, 2010 @12:15PM (#32485840)

    The fact is, most of us can't afford to live in an america where everything is made by people who are paid $46,000 a year.

    It's been said, a pair of $75 nike's would cost $300 if made by americans.

    I think the next step will be more versatile machines (aka robots). Which leaves the issue of jobs for americans still unsolved.

    Pay $50k for a robot, and run it 3 years, and you undercut even a $20k job. (not including social security taxes, etc.).

    • by NJRoadfan (1254248) on Monday June 07, 2010 @12:24PM (#32486002)

      It's been said, a pair of $75 nike's would cost $300 if made by americans.

      Those $75 Nikes have quite a markup. They could be made and sold here for around that price, but Nike's profit margin would suffer. There are shoes still made in the USA, and they are affordable.

    • by Skuld-Chan (302449) on Monday June 07, 2010 @12:26PM (#32486042)

      No - the obscene profits companies make would have to go down if things were made in America - that is all this is about.

      Those 75$ nike's cost a dollar to make...

    • by moogied (1175879) on Monday June 07, 2010 @12:29PM (#32486086)
      Or, we could stop buying new nikes every 6 months. You know what shoes of mine have lasted the longest? American made work boots. Thats what shoes. They cost me 140$, but they are frigen bomb proof.
      • by Locke2005 (849178) on Monday June 07, 2010 @12:34PM (#32486148)
        I gave up on buying $60 cowboy boots and started buying $200 boots a long time ago. The reason? They are not only more comfortable, they last so much longer that they are actually cheaper in the long run. Tony Lamas are still made in El Paso, and are much cheaper at the factory stores there.
        • by MozeeToby (1163751) on Monday June 07, 2010 @01:27PM (#32486820)

          Sam Vimes' Boot Theory of Economic Inequality:

          "A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet."

          Sometimes Pratchet and authors like him are so busying trying to make a joke that they don't even realize that they've stumbled onto an essential truth of our society.

      • But for those of us who prefer running, certain sports, etc. "Workboots" just don't cut it. My last pair of shoes were some simple DC skater-style shoes. They lasted me two years until I wore the sole down so far it burned a hole through the bottom. I went to buy another pair of DC because they were so good to me but I sadly found that my local store didn't have any leather ones anymore. Only synthetics and the sole on the new shoe was thinner than some parts of my two year old shoes...

        You're right saying c

    • by blueg3 (192743)

      The fact is, most of us can't afford to live in an america where everything is made by people who are paid $46,000 a year

      That America doesn't exist. The median income for individuals 25 and older in the U.S. is $32k (or $39k among only full-time workers) -- a bout 70% of the U.S. population earns less than the figure you quoted. Minimum wage is about $12k/year.

    • by King_TJ (85913) on Monday June 07, 2010 @12:36PM (#32486182) Journal

      This also illustrates why in the USA, *small business* success is so critically important to any hope of "economic recovery".

      When we talk about such items as $75 Nikes that "would cost $300 if they were made in a factory full of USA union labor, paid $45K plus per year", we neglect the possibility that SMALL companies making unique shoes could compete nicely - providing a truly USA made shoe at more like an $85-100 price point - while still earning respectable salaries for the people working there. Sure, they won't employ nearly as many people as a big factory, or even sell as much product -- but the point is, MANY smaller companies can co-exist, all offering alternatives for footwear.

      Sometimes, I think we're so fixated on the concepts of "economies of scale" that we forget it's not a universally beneficial thing? When a business grows to a certain size, they have to spend a LOT of money on advertising/marketing to convince people their product is the one they want to buy/keep buying. (And how is all of THAT paid for? Yep ... rolled right back into the price tag of the product.) They also tend to make so much product, it starts making economic sense for them to automate/mechanize all sorts of processes that allow hiring cheaper labor (employees who don't need as many skills or as much intelligence, because they're pressing a button or pulling a level repeatedly, instead of *understanding* how to do whatever process happens as a result). That leads to a lot of low-paying jobs, vs. a relatively small number of higher-paying ones.

      With many smaller businesses turning out similar, competing products - you tend to encourage people to buy more regionally/locally from whichever supplier is nearby -- and they can sell to those folks without needing to launch multi-million dollar marketing campaigns with celebrity sponsors, etc.

    • Re: (Score:3, Informative)

      by careysub (976506)

      >

      It's been said, a pair of $75 nike's would cost $300 if made by americans.

      But it hasn't been said correctly then. See: http://www.consumersinternational.org/files/99672/FileName/RealDealRunningShoes-FINALFINAL300609.pdf [consumersi...tional.org] .

      The article does a breakdown on the cost of a 100 Euro running shoe. Of this 0.4% is worker's wages, 1.6% is other productions costs, 8% is materials, and 2% is factory profit. Of the remaining 88%, 11% is product development (probably done in the expensive country) and everything else is advertising, Euro taxes or profit for someone in Europe.

      So only 12% of the

  • by tekrat (242117) on Monday June 07, 2010 @12:17PM (#32485870) Homepage Journal

    The Chinese are in a wonderful and unique position to take over as the number one superpower and number one consumer of goods, turning the USA into a number 2 or 3 within a few years. Let's start off with the fact that China now has a "middle class" of fairly affluent working class people that is over 300 million strong.

    Let me repeat that in case you missed it: Their middle class is as large (or larger) than the entire population of the USA. This middle class is buying. China can now self-sustain. In other words, there are enough people now in China with the money to buy stuff made in China.

    So, we, the USA, need the Chinese more than than China needs the USA. Furthermore, the Chinese are smart enough to both "outsource" to cheaper countries than themselves, while acting as middle-men to their USA 'bosses', and while we will eventually get around to cutting them out (as we did to Japan), it will be too late by then, China will be selling in the USA directly (as the Japanese do, with established brands), and, as I said, they can self-sustain.

    China, however, may "import" slave-labor (or nearly so, within boundaries of international law), allowing the Chinese a more relaxed lifestyle while imported workers do the grunt work for low wages. This will allow them to keep prices low and maintain their existing infrastructure of factories.

    We just need to be careful though that *we* aren't the slave labor they decide to import.

    • by Joey Vegetables (686525) on Monday June 07, 2010 @12:34PM (#32486150) Journal
      While your point is valid overall, I would point out that the definition of "middle class" in China or any developing country is not the same as in the West. The whole structure of production and prices of available goods and costs of living is wildly different. For instance, middle-class workers in China or India are very unlikely to be able to afford two cars, a huge house in the suburbs, and wide screen TVs in every room. On the other hand they are much more likely than we are to be able to afford nannys, maids, drivers, etc., because the cost of domestic labor is much cheaper there compared to here. These differences make it very difficult to compare purchasing power, especially when currency exchange rates, interest rates, and labor costs are not allowed to clear in most countries for political reasons.
      • by tekrat (242117) on Monday June 07, 2010 @01:45PM (#32487118) Homepage Journal

        As the other reply pointed out, most "middle class" Americans can only "afford" these things because they juggle debt. Most of what you described (sans the house) is paid for on credit cards, and even the house is based on a mortgage that is paid off over 30+ years (and look how many defaulted).

        I'm considered middle class (and I live in the USA).
        I cannot afford a huge house in the suburbs, and a wide screen TV in every room, unless I am willing to incurr crushing debt.

        I'd like to point out however that the Chinese middle class are buying houses (or rather high-rise apartments) and cars. Remember how GM axed the Pontiac brand but kept Buick? Did you ever wonder about that decision?

        It turns out that Buick is a well-respected brand in China. Buick is considered classy, and well-to-do, kind of like how Cadillac was percieved here in the 70's. The Chinese middle class are buying a lot of Buicks. So GM kept that brand rolling off the assembly line for the Chinese.

        • by Joey Vegetables (686525) on Monday June 07, 2010 @02:01PM (#32487392) Journal
          Good points. Much of the current U.S. standard of living is ultimately unsustainable due to debt among other reasons. Meanwhile, the Chinese continue to save and to live within their means, accumulating capital that will increase their productivity going forward. While I still think we are way ahead, for now, that will change over time as the Chinese continue to become more prosperous through their own efforts, while we continue to consume our seed capital and demand that the world hand us a living, which, until and unless we start producing more and/or consuming less, it most certainly will not.
    • Re: (Score:3, Insightful)

      by russotto (537200)

      The Chinese are in a wonderful and unique position to take over as the number one superpower and number one consumer of goods, turning the USA into a number 2 or 3 within a few years.

      No, they aren't, and the reason is the currency. They've been subsidizing the rest of the world on the backs of their own people by keeping their currency undervalued and not freely convertible (by Chinese people). The only way they could "take over" as number one consumer would be to eliminate that policy and allow their cit

    • by Troggie87 (1579051) on Monday June 07, 2010 @12:54PM (#32486428)

      The idea that China is anywhere near the United States in development is largely propaganda. There are huge, frightening issues that the Chinese know about and are trying desperately to fix, all the while trying to come off as a superpower.

      Take, for example, agriculture. Chinese agriculture is a hundred years behind the United States, and not just because they can't afford to upgrade. The government forces manual labor simply to try and keep living inland viable. Were they to mechanize the labor needs of the central part of the nation would plummet, and massive migrations to coastal areas would take place: coastal areas that are already largely squalid pits. This has been commented on off the record by Chinese officials, but they would never openly admit it.

      Infrastructure in China is hugely underdeveloped, to the point where the government there is raping local ecosystems in a desperate attempt to keep up with growth. The United States did the same thing, though spread over a longer period and with 1/5 the population. This will catch up with them in the not-too-distant future, and there will be hell to pay.

      Then there is the problem of population imbalance. Most of us know about the "one child" restriction many Chinese are under. Most of those children born are boys, for cultural reasons. The male/female gap in China is in the tens of millions. And those young men are just reaching relationship age. What happens when 50 million men realize it is mathematically impossible to have a family? Talk about a social experiment.

      Combine these with the typical problems associated with repressive governments, and we have ourselves an interesting pot of instability. The "growing middle class" is just the cream floating on top of a vat of very rotten milk, and I suspect we are going to see just how unsavory it is in not too long. I'd say India is far more likely to become a power than China, if we were betting. Though in reality, we might be looking at a superpower-less world in the near future...

      • by mochan_s (536939) on Monday June 07, 2010 @04:58PM (#32489802)

        Take, for example, agriculture. Chinese agriculture is a hundred years behind the United States, and not just because they can't afford to upgrade. The government forces manual labor simply to try and keep living inland viable. Were they to mechanize the labor needs of the central part of the nation would plummet, and massive migrations to coastal areas would take place: coastal areas that are already largely squalid pits. This has been commented on off the record by Chinese officials, but they would never openly admit it.

        Maybe they don't want everyone's main diet to be high fructose corn syrup. Why do you think China has to go the exact same route the US went? China probably has no interest in building sprawling suburbia.

        Infrastructure in China is hugely underdeveloped, to the point where the government there is raping local ecosystems in a desperate attempt to keep up with growth. The United States did the same thing, though spread over a longer period and with 1/5 the population. This will catch up with them in the not-too-distant future, and there will be hell to pay.

        China has been building infrastructure and with their boom they have shown that the needed infrastructure can be built. You can say they don't have freeways, but they have a very good rail and mass transportation system.

        Then there is the problem of population imbalance. Most of us know about the "one child" restriction many Chinese are under. Most of those children born are boys, for cultural reasons. The male/female gap in China is in the tens of millions. And those young men are just reaching relationship age. What happens when 50 million men realize it is mathematically impossible to have a family? Talk about a social experiment.

        Why is this such a big deal. What will happen is that each girl will have numerous suitors and marriage would mean lots of money to the bride's family. Before males used to be in that position because of deaths in wars; but now it's the females. People won't think it's mathematically impossible, marriage will require at least a certain standard of success to be able to afford one. Then, marriage and family will be a combination of hard work, luck and skill rather than a given. Someone said as a joke the other day that in the US, a lot of young women have weight problems and are not attracting young males; and young males are not embracing the idea of families.

        Combine these with the typical problems associated with repressive governments, and we have ourselves an interesting pot of instability. The "growing middle class" is just the cream floating on top of a vat of very rotten milk, and I suspect we are going to see just how unsavory it is in not too long. I'd say India is far more likely to become a power than China, if we were betting. Though in reality, we might be looking at a superpower-less world in the near future...

        I think the problems of China are different set of problems. Since China was built on foreign know how, it has no value of knowledge and expertise and no incentive to produce homegrown industry and innovation. It's a businessman's world. There are no major companies or conglomerates that are Chinese. They make every product for Apple but don't have a remote competitor to Apple.

        • Re: (Score:3, Insightful)

          by Troggie87 (1579051)

          You didn't catch on to my points. Agriculture is just one example of an industry that could be more efficient and productive, but isn't due to population instability. There are others. The Chinese aren't able to modernize because without production sinks like agriculture, they would have an idle, jobless population. And that is bad. It has nothing to do with corn syrup and suburbian sprawl... (which doesn't make much sense as a counter argument, unless I'm missing something).

          If you think China has exce

  • by Akido37 (1473009) on Monday June 07, 2010 @12:17PM (#32485874)
    Anyone remember "Made in Japan"? Then "Made in Taiwan"? Now, "Made in China". Manufacturing moves to the cheapest location. This is how globalization works, for better or worse. If China becomes too expensive, somewhere else will arise to take up the slack and open near-slave labor factories.

    Hopefully, this results in a rise in living conditions for everyone - My personal pessimism has doubts.
    • In the future everything will be manufactured by robots.
      • by SOdhner (1619761)

        In the future everything will be manufactured by robots.

        Fine, fine, but where will the robots be made? And as for slave labor, well, there's always some job that won't be done with robots - the fact is that we have a long way to go before robots are cheaper to replace than kids. If we ever somehow pass that line (we won't) then I guess we can turn the poor into Soylent Green.

    • The Balkans, probably.

    • Re: (Score:3, Insightful)

      by goodmanj (234846)

      Hopefully, this results in a rise in living conditions for everyone - My personal pessimism has doubts.

      Look at Japan, Taiwan, and South Korea today, compared to 60 years ago. I think even the most cynical person would agree that they're *far* better off, by every measurement of human demography that matters, than countries like Thailand and the Phillipines that were not major centers of globalized manufacturing.

      Fun exercise: fire up gapminder.org. Set it to show GDP per capita and life expectancy, set the

  • Now that the Chinese are raising wages (not just Foxconn either, I read about Honda paying more to one of its parts makers there), this is going to spread. Sure you can move more to other countries, but none have the sure population that China has, except India, but I would argue they're well beyond China as far as worker rights and if China is getting more money they're going to want more.

    How long until they cost benefit you have from cheap labor + shipping back to the U.S. isn't worth it? It's only a matt

  • by swschrad (312009) on Monday June 07, 2010 @12:23PM (#32485990) Homepage Journal

    curiously, as costs at the bottom rise, some manufacturing comes back to the home shores. sometimes it's shipping costs, sometimes it's snafus avoided, sometimes it's market pressure to have a made in USA alternative.

    the rest of the market goes downhill further, as they move to green monkeys in Kenya, with the local human population pushing chips and solder into the trees, and catching the hot circuit boards as the monkeys drop them down.

    when the monkeys need too many figs to keep working, it will go to pirahnas on the Amazon, or little green men from space who need busywork while their flux capacitors recharge, or whatever.

    best you can do as a consumer is reward those who don't participate in the race to the bottom.

  • by Lumpy (12016) on Monday June 07, 2010 @12:25PM (#32486028) Homepage

    I care where I get it. I've been getting more and more used instead of new. There are a lot of "trendy" types that sell things use at a insane rate. I got a iPhone 3Gs that was like new for $159.00 off ebay for her used.

    I buy everything used now. you get more value for the dollar.

    I end up with more stuff and more money. It's a Win-Win.

  • Bigger picture (Score:3, Interesting)

    by MonsterTrimble (1205334) <monstertrimble&hotmail,com> on Monday June 07, 2010 @12:33PM (#32486138)

    My boss would have a field day with the summary.

    As he likes to say, percentages mean nothing without harder numbers. Let's use one of the original articles [marketwatch.com] for number basis:

    Wage hike: $84 million per quarter over entire company (with a raise of 20%)
    Workers: 300,000 at one plant.
    Assume 300,000 workers are 1/4 of entire workforce

    $84 million * (100%/20%) = $420 million
    $420 million / 1.2 million workers = $350 per worker per quarter.
    Assume 1 quarter is 13 weeks, with each week being 40 hours
    $350 / (13*40) = $0.6731 per hour.

    Assume that it takes 2 man-hours to build a motherboard
    Assume $100 motherboard is marked up 70%

    Motherboard Cost: $30
    Percentage increase: (2*$0.6731)/$30=4.49% increase in costs

    Assume price increase carried through the entire pricing package, The former $100 motherboard is $104.49 now. Not a world class problem.

  • Many former 2nd-world countries are scaling up their high tech production of ... just about everything. Just one example, my current blackberry was made in Hungary; but of course there are many many other similar examples of electronics coming from your favorite former soviet bloc country.
  • I find it unlikely that China plans to do that, and so does the US:

    http://www.uscc.gov/annual_report/2009/annual_report_full_09.pdf [uscc.gov]

    As pointed out in the article, not only does that fixed price help China's markets grow and build cash reserves; but high technology specifically is a critical aspect of China's plans. Thus, it's very unlikely that they're going to stop trying to bring over development of these high technologies until they finally hare a more integral process in their development.

    They've been s

  • by Mysticalfruit (533341) on Monday June 07, 2010 @01:07PM (#32486596) Homepage Journal
    Built by nano assemblers on my desk.

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