U.S. Manufacturing costs are almost as low as China’s • Hacker News Board

Re: U.S. Manufacturing costs are almost as low as China’s

#131

Post by mistermann » Mon, Jun 29, 2015, 3:22 AM UTC

s73v3r wrote: post #57

chrischen wrote: post #11

Earlier quoted context omitted.

What are you exactly suggesting everyone do? He could pay them $0/hr by not giving them the jobs. You're not offering any constructive feedback while criticizing from your pedestal of inaction. I assume you used a throwaway because you didn't want to attribute that to your personal identity. Billions of Chinese were lifted from poverty by American globalization, granted at the detriment of American jobs. However it f…

"He could pay them $0/hr by not giving them the jobs." I've always found that to be the absolute shittiest of rebuttals, given by those who have absolutely no point whatsoever. This person is not "giving" anyone a job; they are not being seeing a group of people and saying, "Hmmm, they look like they could use some work. I will create some and give it to them." No. This person needed some work done, and they were off…

I would very much like to hear a somewhat detailed overview of how you think the "right" way to go about this is - and please don't use meaningless terms like "fair" instead of numbers, otherwise it's a total waste of your time.

Re: U.S. Manufacturing costs are almost as low as China’s

#132

Post by shoo » Mon, Jun 29, 2015, 3:24 AM UTC

unquietcode wrote: post #51

There are health and environmental costs to fracking which are not being adequately addressed, and which are unsurprisingly ignored by this article. China was able to get a leg up through dirty coal and oil operations, but there are consequences to this. Some of their cities are today near uninhabitable, some are just unbearably smoggy. We definitely do not want to pat ourselves on the back for an economic boom that…

> China was able to get a leg up through dirty coal and oil operations, but there are consequences to this. Some of their cities are today near uninhabitable, some are just unbearably smoggy.

There is some interesting reading regarding China's "green GDP" accounting project. Here is one recent account:

http://www.businessspectator.com.au/article/2015/4/9/china/c...

Here is my brief summary:

1. pick a relatively simple yet crude (or perhaps misguided) metric of progress - GDP

2. reward / punish regional leaders for their ability to maximise this metric

3. spend effort creating a more accurate metric of progress - "green GDP" - that accounts for the costs of pollution

4. trial the new metric and observe that the more accurate indication of progress reveals much less progress than the original metric - perhaps negative progress in some cases!

5. regional leaders are deeply resistant to introduction of the this new, more accurate metric, as it shows they have not actually being doing a great job

6. adoption of the new accurate metric fails for political reasons, as it is very unpopular!

You have to laugh, otherwise you might cry. The article above ends with a few positive notes, so there may be some positive change looming in future!

I personally think there is more potential for China to make dramatic, sweeping positive changes than certain other countries (e.g. Australia, where I live).

Re: U.S. Manufacturing costs are almost as low as China’s

#133

Post by mistermann » Mon, Jun 29, 2015, 3:30 AM UTC

hifromsz wrote: post #61

jaredhansen wrote: post #25

Earlier quoted context omitted.

Hey, while we're wishing, for my part I wish that everyone made $1B/hr! (After accounting for inflationary effects, of course.) Private jets for everyone! But back in real life, while $3/hr may not be a lot compared to what some folks make, it's $3/hr more than someone making $0/hr makes, and it's triple what someone making $1/hr makes, and indeed a full 50% raise for anyone making $2/hr. If I could wave a wand and g…

I'm not sure you would be as quick to sarcasm if you spent some time in Chinese factories. It's a though life, even in the good ones. As the purchaser you have a lot of power over the process, not just at one factory, but in which factory you choose. To me that also means you have a responsibility. The least anyone working with Chinese companies should do, is to go and look at the factories.

I think a lot of western consumers would be more than happy to pay just a little bit more if the $ was going into those workers pockets. But how do you make sure it gets there rather than into the pockets of the factory owner / local politician, where you will already find many, many hundreds of millions of dollars (that "could" have been paid to the poor Chinese factory line worker, rather than to such things as buying some 18 year old son studying in Vancouver a new Ferrari).

Do leaders (political & economic) in non-western countries ever deserve any responsibility for their countries overall well-being?

Re: U.S. Manufacturing costs are almost as low as China’s

#134

Post by mistermann » Mon, Jun 29, 2015, 3:36 AM UTC

lugg wrote: post #84

21p wrote: post #77

Earlier quoted context omitted.

I agree with you that the world is nowhere near "doomed" or even heading in that direction. It's not fair to claim racism here, however. The poster did not mention anything about race.

Last I checked you didn't need to use the word race to be a racist. I think you're nit picking at a point that was admittedly shaky.

You don't even have to be actually racist to be considered a racist these days either.

Re: U.S. Manufacturing costs are almost as low as China’s

#135

Post by tarr11 » Mon, Jun 29, 2015, 4:05 AM UTC

maneesh wrote: post #117

g8gggu89 wrote: post #90

Earlier quoted context omitted.

I want a tour of your dorms and factories. Can you post pics of a bunch of the buffet meals, please?

Here's a tour of a few factories in Shenzhen that I made when I began doing my factory search for my company, http://pavlok.com http://www.youtube.com/watch?v=S0_blmix2IU

I'm really curious how you do qa on an electric shock device? Do you have extra standards for medical devices that you have to meet for this product?

Re: U.S. Manufacturing costs are almost as low as China’s

#136

Post by ChuckMcM » Mon, Jun 29, 2015, 4:05 AM UTC

sien wrote: post #60

This has been predicted for a while. This has been said as early as 2010 and possibly even before that by about 2015 costs would equalize. In 2013 there was an article in The Economist on this: http://www.economist.com/news/special-report/21569570-growin... Here is a key quote from the article: "BCG used to argue that companies unwilling to send their manufacturing to lower-cost countries were putting their very futu…

I was going to mention this as well, thanks for finding the economist article. Manufacturing costs are more than just the price of parts, sending people to and from the factory several times, communicating requirements, Dealing with tariffs and customs. For smaller runs it is definitely getting competitive in the US, but so far the parts suppliers haven't yet picked up on this. I'm expecting a midwest town or two with good air/rail transport to figure this out and start a mini-manufacturing boomlet. Will be interesting to see.

Re: U.S. Manufacturing costs are almost as low as China’s

#137

Post by chrischen » Mon, Jun 29, 2015, 4:20 AM UTC

s73v3r wrote: post #57

chrischen wrote: post #11

Earlier quoted context omitted.

What are you exactly suggesting everyone do? He could pay them $0/hr by not giving them the jobs. You're not offering any constructive feedback while criticizing from your pedestal of inaction. I assume you used a throwaway because you didn't want to attribute that to your personal identity. Billions of Chinese were lifted from poverty by American globalization, granted at the detriment of American jobs. However it f…

"He could pay them $0/hr by not giving them the jobs." I've always found that to be the absolute shittiest of rebuttals, given by those who have absolutely no point whatsoever. This person is not "giving" anyone a job; they are not being seeing a group of people and saying, "Hmmm, they look like they could use some work. I will create some and give it to them." No. This person needed some work done, and they were off…

The situation is much much simpler than you're making it. And as someone said, if you were part of a company that provided these jobs in a direct or indirect way, you'd see it much more clearly.

Basically there are people there that need to make a living wage to pay for food, medicine, education, etc. The reality is without the $X/hr jobs they have no other options or worse options.

An external actor like you, me, or a business can sit around talking about how shit it is, or go in and offer something at least slightly better. You're basically trashing the people who decide to take any action at all (giving them a low paying job). If the action isn't taken, they go back to their worse option. From your perspective you are failing to empathize with the Chinese because you don't see their other crappier options or can't imagine that they could possibly have crappier options.

Re: U.S. Manufacturing costs are almost as low as China’s

#138

Post by caublestone » Mon, Jun 29, 2015, 4:21 AM UTC

bobjordan wrote: post #86

caublestone wrote: post #81

Earlier quoted context omitted.

What are the credit terms that you extend to your customers?

Generally, most favorable terms my company gives are 30% down and balance before shipment from China. Of course everything is negotiable and if I really want to do a job then we'll accept more risk.

U.S. Manufactures have access to capital such that they extend net 30 terms. That impact on our working capital is tremendous and outweighs the percentage cost savings.

Re: U.S. Manufacturing costs are almost as low as China’s

#139

Post by Animats » Mon, Jun 29, 2015, 4:49 AM UTC

As the tables in the article show, but the text does not, energy cost is a small fraction of manufacturing cost. It's only significant for certain kinds of heavy manufacturing; if you run a steel mill or aluminum smelter, it matters a lot. If you make smart watches, it's insignificant. Also, oil prices are worldwide, not local. (Natural gas is more local.)

Labor costs matter far more. As a rule of thumb, it takes a 4x labor cost advantage to justify outsourcing to China by a US company. (For a China company to sell into the US requires less of a labor cost differential.)

Re: U.S. Manufacturing costs are almost as low as China’s

#140

Post by burnte » Mon, Jun 29, 2015, 4:52 AM UTC

caublestone wrote: post #138

bobjordan wrote: post #86

Earlier quoted context omitted.

Generally, most favorable terms my company gives are 30% down and balance before shipment from China. Of course everything is negotiable and if I really want to do a job then we'll accept more risk.

U.S. Manufactures have access to capital such that they extend net 30 terms. That impact on our working capital is tremendous and outweighs the percentage cost savings.

It's also much less risky to extend such terms to a customer in the same nation. It's harder for a Chinese factory to sue a recalcitrant customer in the US.