We'll we DO make high end microprocessors, in fact most processors are still made in the US or Japan.
On of these days the country is going to realise that our contries strong suit has always been invention and patents and try to help r&d firms and idea men instead of fighting a losing battle to keep factories open. We could turn this whole boat around, we've just got to literally work smarter and not harder.
I took your comments to imply that the US should become a development and "intellectual property" workhouse. That is, we shouldn't make much of anything since our labor costs are so expensive but instead focus solely on "pure" R&D.
Indeed we DO make high end microprocessors (though not many of the ones you're perhaps thinking of - most of Intel's chips are made in Israel while AMD is moving to TSMC in Taiwan since Global Foundries apparently can't meet their needs). TI has some very good, almost brand new fab facilities in Texas, for example. They got around the expensive labor problem by largely automating the place. They only need a few highly skilled individuals to run it, and such individuals can be relatively easily found in the US. IBM also makes lots of their finished dies in the US, but they apparently can't find anyone in the US to package them (not the cardboard boxing, but putting the die into a package with pins), so they ship the complete dies overseas for that.
I would argue there's little reason for the US to stop making things like this, but your comments would seem to imply otherwise.
But I don't think you understand how low end products work. You churn them out and sell them. If they break the consumer is screwed. Therefore quality is irrelevant. Also low end products are so much cheaper in China that a US seller can order 5-10 for the price of one, and expect the consumer to return it multiple times.
When nobody else has the means/know-how then the product is made in the US but IMMEDIATELY after it becomes possible to make the product in a "lesser" country like China or Mexico the bulk of production is going to be moved there. It's cheaper and most corporations only care about money, there is no "fixing" that. So companies chruning out the same ancient-tech based products year after year shouldn't complain when the Chineese take their jobs, especially the unskilled labor on the production line. The key to keeping a US factory in business is to continually chrun out new cutting edge products that other countries simply can't produce. The minute you sit on your laurels and rely on the same product is when your whole labor force gets canned.
This is an artifact of either someone making a totally commodity product that's well off the cutting edge of the technology curve, incompetent management, or someone who is paying well more than "cheap Chinese labor" rates (or, most likely, a combination). While there's a tendency to make cheap ---steaming pile of meadow muffin--- as cheaply and quickly as you can, quality be damned (because many American consumers will put up with it), you can't do that with extremely high end stuff. If my $5 SD card adapter breaks; I'm mildly miffed, and I go buy another one. If my $10,000 oscilloscope breaks, I'm "---smurfing--- pissed", and the company that made it is going to be making things right per their 5+ year warranty on the device. Under those conditions, it makes no sense whatsoever to save $10 on labor if it means your stuff breaks (which, in the referenced application, is a real possibility from untrained or poorly equipped manufacturing labor/facilities). Even if the company makes things right, users of stuff like that expect the utmost reliability and will seek other makers if there are perceived reliability problems.
There is a market for high value products that essentially require high end labor (skill, training, etc.) and facilities. This market is no doubt smaller than the low-end consumer market, but it certainly exists, and many companies make good money playing in it. The labor needed for this market is expensive anywhere, not just the US. There are still differences in the cost of such labor, of course, but it's not as drastic as on the low end since semi-fixed costs in the US (benefits, compliance, etc.) prop up the effective cost of low-end US labor but don't have as much of an effect on high-end labor where salary/wage starts to dominate. If you're a US company, why build your expensive facilities and train your expensive labor force overseas when you can do it for about the same price right next door and have it be easier to work with? That is the current value proposition of US labor. While it's very expensive, highly skilled labor is readily available, and it's right next door.
What I'm saying here is not that you can justify making 50c "same as everybody else" widgets in the US. It's possible, but it's tough. If the cost of labor (as in paying a person to physically be somewhere and do stuff) is a substantial chunk of the product cost, then it's tough to not to seek the cheapest labor rates, and China is competitive while the US is not. If, however, you're making stuff where advanced facilities and employee training are most of the cost, the labor rate itself is less of a factor. You'll then look for other factors such as stability, ease of management (and distance, timezone, and language are definite factors, here), availability of your general skills in the labor market, etc. This substantially alters the analysis and can easily push one to go with US based production. Similar arguments hold for much of Western Europe and Japan, especially for countries based in those areas.
Example: I need to spend 500 million dollars on a factory and essentially one-time employee training (barring some slow turnover), and I'm only going to use it for 3-5 years with relatively few employees due to the steady march of progress in my industry combined with good automation. In this case, I may not care if the employees want $1/hr or $40/hr as that factor in the overall project budget is not overriding: 1000 employees at $40/hr differential cost for a year is only about 83 million dollars, so I'd need ~6 years to break even assuming that's the only factor, and that's beyond the problem-stated life expectancy of the plant. Given that I may have other reasons to place the facility in the USA, doing so may be a very viable decision. This is a somewhat contrived example, but this does come up.
That's not to say that you can't do things like this in China or wherever. Apple makes fairly high end, high margin consumer goods in China and Taiwan. You can still save some on the labor, but you have to buy facilities no matter what (even if you're contracting the assembly out to someone else with facilities, they're rolling the price of them into your cost), and it definitely costs more to manage and train people halfway around the world which has to be factored in and can be difficult to estimate up front.
You also cannot discount the knowledge learned from making a million of something. Ramping up a manufacturing process in the US then offshoring it when it's "stable" is a fairly popular practice. I've done mid-volume production runs of things. You learn a LOT over the first thousand or so units (and things keep cropping up even into the tens of thousands). Many major developments over the past century have been manufacturing processes themselves, often born out of a deficiency noticed while trying to make a bunch of something. It's relatively easy for me to visit a facility and learn what's up and what might be able to be done to make things go smoother if they're across town or even across the country. If they're on the other side of the world, with a 12 hour time difference and speaking a different language, it's a more than little harder to do that, and lots of things will just go unnoticed/unfixed.
So like I said, R&D is where it's at and production doesn't mean squat. You can of course carry a US-based production force on the backs of the R&D guys but only in the way I described above.
I would argue that's very short sighted. Aside from production often resulting in substantial forms of development, there are still situations in which it's perfectly economical and probably even advantageous to utilize US-based production. Low-cost consumer goods are not typically going to be amongst them, but lots of stuff happens outside that world invisibly to the typical consumer.
There's also the old worry about people stealing your IP. The nature of research breakthroughs is that, once somebody's figured it out once, it's usually easy to copy it for minimal cost. Many cheap-labor countries have little protection against this, especially for foreign entities. If your entire company relies on its research, fully outsourcing production, there's little to stop the company you outsourced to from just keeping on making your stuff without paying you. Sure, you can eventually block imports of their stuff into your country and a few other friendlies, but good luck getting any damages out of them. If you don't even know how to make them or need years to tool up to do it, you're screwed at this point.
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Topic: I can guess why electronics are cheaper in Japan, but.... (Read 7318 times)
