Reshoring

[persisting1]

Businesses quitting China and moving their manufacturing back home. A good read about a small in-ear headphone company and their woes with building in China.

http://finance.fortune.cnn.com/2011/...ries-in-china/

[woofersus]

Good read, thanks.

There's been a bit of a backlash from the early outsourcing rush in the 90's as companies realize there are offsetting issues and costs that sometimes make it not actually a better deal to manufacture wherever that might be. (it's not only China and shoddy quality isn't from the only issue, at which the article hints) The transition is slowing down, but stories like this are still happening.

The U.S. isn't all bad for manufacturing operations. In fact, despite the sensationalist cries you read some places, the U.S. still leads the world in total manufacturing output by a fairly large margin. We're just transitioning to different types of goods that are more advantageous for our particular set of resources and economic conditions. (largly low weight/high value like microprocessors for exports and heavy items like cars and trucks for internal consumption) Of course the service sector has grown and the manufacturing sector has shrunk since the late 70's, but a majority of the lost manufacturing jobs have been lost to efficiency, not outsourcing.

[engtaz]

Good read. great news for the unemployed.

[PhenomeNhan]

It's refreshing that the global market is sorta correcting itself. Hopefully, the world will be rid of those unscrupulous low-quality Chinese companies. Note that not all Chinese companies are bad - there are many that produce high-quality products that may be suffer one way or another by all these scrub companies.

I'm glad to see there is also a market correction happening in the US, as well. Prices for most things were going up too high and too fast, forcing consumers to look elsewhere. The voices of the value-conscious consumers are starting to be heard.

[django1]

There is good news in the article. But "workers eager for jobs" and " A box that used to be quoted for $4 to $5 in the U.S. before was quoted at $3 now." seems to mean that "reshoring" is importing low paying jobs from China... Still, a job is a job...

[django1]

An alternate view. Why manufacturing won"t come back:

http://www.forbes.com/sites/edwardlawler/2011/08/17/forget-manufacturing-the-jobs-arent-coming-back

[woofersus]

I agree with the author that we aren't going back to the days of low value added, manual-labor type manufacturing jobs and that most of our manufacturing job losses are to efficiency, (although I sorta think Ford and GM are poor examples due to the obvious labor cost inequities with their competitors and subsequent renegotiation of those contracts) but that doesn't necessarily mean the process of reshoring isn't happening at all. Reshoring is just the process of the market evening itself out a little after an early surge toward offshoring. CHT is a good example of a company that learned there were hidden costs to overseas manufacturing (not necessarily just quality, but the communications difficulties, the cultural differences, and the need for hands-on control on the other side of the world) and decided they would come out ahead paying just a little more to have stuff built domestically.

That doesn't mean jobs that aren't economically feasible in our economy any longer won't be leaving though - just that it's not the primary source of our losses. Here's an interesting article with the statistical breakdown on that shift: http://www.forbes.com/sites/jonbrune...b-infographic/

[dvenardos]

Wooferus pretty much has it nailed.

Although China has induced exports by its huge investment in US treasuries, low cost manufacturing will remain in lower cost countries until those countries standard of living rises to the level of the US.
International trade is mutually beneficial to the countries involved, but economic theory has not adequately dealt with the significant impact of job displacement and reallocation of resources.

As a programmer I should be worried about offshoring to India, however, one study that I read says that US programmers are five times as expensive as Indian programmers and ten times as productive. My real world experience has proven that to be true. The most cost effective outsourcing is for non mission critical systems that require low value programming resources.

I don't know where this leaves us in regards to low skilled labor, but I do know that as audiophiles we have much better equipment than we could have ever dreamed of owning ten or twenty years ago.

[django1]

Interesting read. "These gains in productivity have been most pronounced during recessions, when manufacturers tend to lay off workers and then replace them with machines as the economy grows again and demand increases." That is ,as the article says, good news for the economy but very bad news for workers. The unemployment graph would seem to mirror the productivity one. And of course money gets concentrated in fewer hands...

[tesseract]

Seems like Thailand is the place to be. :doh! 1:

Anyone here that works in a factory?

[dvenardos]

And of course money gets concentrated in fewer hands...

Well not really, pretty much everyone is a capitalist now through their retirement accounts.

[django1]

Well not really, pretty much everyone is a capitalist now through their retirement accounts.

Have a look at this Don (second graph). How's the new job?

[craigsub]

Scrapping the current income-FICA-Medicare tax system (which is aligned with policies like the earned income tax credit which punishes lower income earners for working overtime) and replacing it with a National Sales tax would go very far in helping the lower 50% of wage earners to amass more wealth.

The current system takes away more money from the lower 50% on two fronts: a reduction in what comes back from the government when one earns more plus a higher tax rate.

Under the National Sales Tax, the lower wage earner who wants to improve his situation can do so just by making more money which he then elects to save.

This is called incentive, something which our current system lacks.

[SomeCiscoGuy]

Wooferus pretty much has it nailed.

Although China has induced exports by its huge investment in US treasuries, low cost manufacturing will remain in lower cost countries until those countries standard of living rises to the level of the US.
International trade is mutually beneficial to the countries involved, but economic theory has not adequately dealt with the significant impact of job displacement and reallocation of resources.

As a programmer I should be worried about offshoring to India, however, one study that I read says that US programmers are five times as expensive as Indian programmers and ten times as productive. My real world experience has proven that to be true. The most cost effective outsourcing is for non mission critical systems that require low value programming resources.

I don't know where this leaves us in regards to low skilled labor, but I do know that as audiophiles we have much better equipment than we could have ever dreamed of owning ten or twenty years ago.

I have to strongly disagree with the statements in bold. As someone whose managed Indian based product development; call center; and infrastructure resources for several years (and have them well integrated with their counterparts here in the US), if you have effective management and take the time to understand how cultural differences come in to play, you can make your off-shore resources almost as effective as your on-shore ones. There's no question that there's some loss in efficiency due to time zone; communication; and the aforementioned cultural differences, but knowing how to manage around those makes them almost a moot point when accounting for the lower cost basis. Granted, I spend 1.5 - 2 months a year there to help them get to that efficiency level, but that's necessary not only from the efficiency perspective, but also from the relationship building aspect.

[dvenardos]

Have a look at this Don (second graph). How's the new job?

New job is going well, thanks. Lots of smart people to work with. :cool:

I think people have forgotten how to save. I see lots of people buying new cars every three years. That alone is enough waste to build a lifetime of wealth. If you spend 105% of your income no matter how much it is you will never build wealth. It doesn't take a lot of money, just consistent investment over a lifetime, but it does mean sacrifice.

I have to strongly disagree with the statements in bold. As someone whose managed Indian based product development; call center; and infrastructure resources for several years (and have them well integrated with their counterparts here in the US), if you have effective management and take the time to understand how cultural differences come in to play, you can make your off-shore resources almost as effective as your on-shore ones. There's no question that there's some loss in efficiency due to time zone; communication; and the aforementioned cultural differences, but knowing how to manage around those makes them almost a moot point when accounting for the lower cost basis. Granted, I spend 1.5 - 2 months a year there to help them get to that efficiency level, but that's necessary not only from the efficiency perspective, but also from the relationship building aspect.

Not my experience, but okay.