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How much do you think it costs to make a pair of Nike shoes in Asia?

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Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#61

Post by toast0 »

greatgib wrote: post #5

All around the "developed world", the shop/retailer/supermarket/distribution part of the price of a product is around 50%. Whatever the product or its price. I'm wondering if part of our issue with crazy inflated prices despite low margin for industry and manufacturing actors is not because of this abused margin for retailers. That have also a huge power as it is difficult to negotiate when you depend on your product…

If you look at the retailer margin on an individual product, it looks pretty big. But if you look at their overall financial report, their overall margins aren't anywhere close to that.

There's a lot of cost to running a retailer. If it was so easy to avoid the costs and the margins, you'd see more brands going direct to consumer exclusively, but most brands do a little direct to consumer and most of their sales through retailers.

Movie theater economics basically suck and have gotten worse over time. The projectors are very expensive, the pricing to show a film is bad, so ticket and consession prices go up and people stop showing up. Big chains have more negotiating power for film terms and equipment, which can help them survive. Sometimes the independents band together for group purchases, but I think that doesn't always happen.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#62

Post by darknavi »

ersiees wrote: post #44

So, 100$ Nike shoes will soon be 125$.

The specific (fictitious) example they gave was $100 -> $150 due to a ~$23 tariff.

> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.

The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#63

Post by TheJoeMan »

megaman821 wrote: post #25

For me this glosses over on why would see the same 100% markup on the customs duties as they rise. A 100% at a low tariff rate is just pricing in the increased paperwork and accounting, but at a super-high tarrif rate this become pretty unjustifiable. Why is not more likely customs becomes mostly a passthrough cost?

I think the shoe graphic after the $75 cost is disingenuous to be still shown as $100 base instead of $150 base. This would show that this basic "100% markup" is just scalping. Expenses and overhead would not double so it's just more in the profit bucket.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#64

Post by bryanlarsen »

bpt3 wrote: post #59
rayiner wrote: post #42

Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries. We need to anticipate a future where China is equal to America on a per capita basis, but f…

Their population is declining, and they are a long way away from parity with the west on a per-capita basis. I think China missed their opportunity. Also, the UK hasn't dominated finance for a century and has never been dominant in services, so it doesn't seem like an apt comparison.

> Their population is declining

Not where it matters. China has a much larger under-employed population base than the US has. They still have a few hundred million peasant farmers whose children can and are getting educated and moving to the city. Their pool of labour is growing while the US's is stagnant.

Not that it needs to grow -- over the last decade or so China's factory employment has been relatively constant while output has surged dramatically. Their factories are rapidly automating.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#65

Post by bryanlarsen »

tmaly wrote: post #57

I think the one thing I am not seeing much discussion on is, will the end consumer pay for these $150 sneakers or will they simply switch to lower cost alternative brands?

The assumption in the modelling is that sales will decline proportional to the price increase. IOW, they'll sell 2/3 as many shoes at 150% of the price.

Probably not a great model, but it's simple and a reasonable guess. Remember all the competitors will have price increases too.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#66

Post by danaris »

999900000999 wrote: post #47
JSR_FDED wrote: post #4

It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter. Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.

They'll start forcing us to make Nikes in prison. Even then the quality wouldn't be up to par. Since we've collectively agreed we don't need to have due process anymore, I guess I can look forward to making shoes will I'm being indefinitely detained.

But even that is impossible in the near-to-medium term.

The US just doesn't have the supply chain that China does. You need to be able to source the materials, and they have, effectively, entire cities dedicated almost wholly to producing those "intermediate" raw materials—eg, things like the grommets for the shoelaces, the big sheets of faux leather that can be cut to the right size & shape to make the body, etc. They also have the industrial capacity to do the molding for the soles, and produce the laces, at scale.

None of that exists here—in some cases not in the scale required, but in most cases not at all.

With across-the-board tariffs, the only way to fully avoid them is to start from the raw materials on up—mine and purify the minerals, raise the animals for their leather, pump and refine the oil for the plastics, harvest the trees for their rubber (are we still getting rubber that way...?). All here in the US.

Some of those raw materials likely don't even exist on our land in sufficient quantities to supply all our industrial needs, even setting aside how much time, money, and manpower it would take to set up the mines (and ranches, and oil fields, and rubber farms), the several stages of refining, and all the different ways the materials need to be shaped or alloyed or combined or extruded or or or...

And where is the money to fund all that going to come from? Clearly not the federal government (unless, I suppose, you posit that it's one or more of Musk's companies doing all this—I suppose that could be one of the aims here; just give Musk a monopoly over literally everything we make...). Every domestic company is going to be cutting back six ways from Sunday, because every product is going to cost massively more, so even the people still making as much money as they were last year are going to be buying less. And many people will be making less, either because of those same cutbacks (through layoff or hour/wage reduction), or because they were part of the federal agencies getting wantonly gutted for no good purpose, or among the companies that did business with them and now have lost a major customer.

Bringing manufacturing onshore for any significant percentage of our consumer or industrial goods is barely even a pipe dream. It's pure cloud-cuckoo-land fantasy.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#67

Post by palmotea »

jacknews wrote: post #16
JSR_FDED wrote: post #4

It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter. Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.

i don't understand the obsession with jobs anyway people don't want a job, they want money and purpose most jobs barely deliver either

> i don't understand the obsession with jobs anyway

> people don't want a job, they want money and purpose

And society will not give them any of that without a job.

There, now you should understand "the obsession with jobs."

> most jobs barely deliver either

And no job delivers even less.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#68

Post by Clubber »

grayhatter wrote: post #51
xienze wrote: post #12

Earlier quoted context omitted.

That completely discounts the strategic value of self-sufficiency. I mean, why not outsource ALL manufacturing and agriculture if someone else can do it cheaper? Surely that wouldn't come back to bite us, right?

Explain the strategic value like I'm 5? I see people reference this idea all the time, but I'm unconvinced it's actually valuable enough to be worth it given all the other downsides. I don't actually believe it's a positive value proposition. I see the argument for things of military significance. The common one is electronic components. But PCBs manufacturing is easy to spinup quickly. Which leave the critical compo…

Imagine if China decided to invade Taiwan like they've been threatening to do for a while. They would instantly cut off all exports to the US, because that's the smart thing to do. They would probably blockade Japan and other countries as well to keep them from exporting to the US, because that's the smart thing to do. Now since our supply chains were greatly disrupted (remember COVID?) we can only go to war with the equipment we have and will struggle to produce any more equipment in a short period of time. No more uniforms, no more tanks, no more drones, no more missiles, no more artillery shells, no more medicine, etc, because all the materials for those things are largely sourced from Asia, which would now under a blockade.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#69

Post by Clubber »

ravelantunes wrote: post #6
Clubber wrote: post #3

>The second thing we see is that Asian manufacturing in Asia produces US jobs. You go to Footlocker to buy a pair of $100 shoes because you can afford them. This creates jobs for the Footlocker employees, Nike designers, marketing teams, and other US people throughout this chain. In all fairness, most of those jobs would still exist if manufacturing was brought onshore. The fact that they were manufactured in Asia ma…

The author’s point is that the lower cost of goods coming from Asia results in increased demand, which then generates more jobs in the post-manufacturing part of the chain.

I see your point. I suppose a counterpoint is now shoes won't be so disposable and professions for cobblers and the like will be in higher demand.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#70

Post by Clubber »

myrmidon wrote: post #60
os2warpman wrote: post #45

Earlier quoted context omitted.

Domestic production that is perceived to benefit national sovereignty is protected. See: farming, energy, and defense spending/subsidies. There is no point in history where any nation, anywhere, has needed to be self-sufficient in the production of Nike Air Maxes. That being said, my sneakers, New Balance 990v6s, were made in the US-- probably Maine. They're $200. The shoes I typically wear for work, Red Wing Iron Ra…

> I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit. I don't think its reasonable to expect lower prices for domestic production at all, because the demand for domestic products is only going up (from people that used to buy Vietnamese Nikes). Personally I think the whole tariff experiment is predictably going to fail, because "increased self s…

I've had it explained to me that now that manufacturers won't sell to China because of retaliatory tariffs, they're more product to sell domestically which would push down prices. Less demand due to tariffs from China = lower prices.
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