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

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

#151

Post by bpt3 » Wed, Apr 09, 2025, 4:58 PM UTC

kjkjadksj wrote: post #113

bpt3 wrote: post #55

Earlier quoted context omitted.

Can you propose something better that provides money and purpose? Keep in mind that most people are unwilling and unable to sustainably maintain self-employment.

Something like a grant from the government to work on your project of interest with no expectation that it be commercially successful. You want to be an artist the government gives you a grant to support yourself while contributing to the cultural lexicon. Scarecity is manufactured today for profit and not real; nobody needs to work at a 7/11 but they are essentially trapped into those sorts of jobs because they are…

Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?

Scarcity is very real, I'm not sure why you would feel otherwise. Fortunately, we have largely eliminated scarcity of the necessities of life due to economic policies that are as far from your suggestions as possible, but that doesn't mean that they are produced at no cost or that scarcity in general does not exist.

And you don't need to go back 100 years for precedent. We basically paid people to sit at home during covid, and I didn't see some sort of renaissance as a result. Why would this be any different?

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

#152

Post by hx8 » Wed, Apr 09, 2025, 4:58 PM UTC

ty6853 wrote: post #131

pfannkuchen wrote: post #105

Earlier quoted context omitted.

That doesn’t really make sense to me. The market cares about dollar returned vs dollar invested. If some piece in the middle of the chain goes up and end customer prices go up as well, that doesn’t directly affect investors at all. The way it could and likely will affect investors is if people start buying fewer shoes, but that is a different process than what you are describing. If I’m off base can you help me under…

Take this to the logic absurdity, you have a car you previously sold for $2 for $1 COGS. Tomorrow COGS is $1M for the car. Could you sell it for $1M+1? No you would lose your ass because your line of credit and investments would not be able to be supported by the returns, in fact if this is your only option you would probably stop making cars altogether and invest in another business and sell your assembly line, even…

But you might not sell the COGS for $2M, you might do just fine with $1.5M.

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

#153

Post by allturtles » Wed, Apr 09, 2025, 4:59 PM UTC

hx8 wrote: post #83

> 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. I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe…

There was a very good exploration of this in the context of boardgames here: https://stonemaiergames.com/the-math-of-tariffs/

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

#154

Post by hamburglar » Wed, Apr 09, 2025, 4:59 PM UTC

hx8 wrote: post #139

hamburglar wrote: post #124

Earlier quoted context omitted.

Surely you can see that putting in $75 to make $150 for a $75 profit is significantly different than putting in $10075 to make $10150 for the same $75 profit, yes?

Sure, I can see the difference. I hope you can see how spending $75 to make $150 revenue and $75 in profit is a much better position than spending $50 to make $100 in revenue and $50 in profit, if you are limited to how many transactions you can make in a day by physical infrastructure. I think it's understandable for the store to charge more for their shoes, and for the stores to make more than $50/profit per shoe t…

From an investment perspective, $50 -> $100 is exactly the same as $75 -> $150. The difference in the number of transactions that actually occurred is trivial. I see the point you’re making but I don’t agree that it matters until the transaction value shrinks to the point where you’re selling things in huge batches (e.g a 5 cent part you sell for 10 cents, but you sell them by the 1000s)

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

#155

Post by snarf21 » Wed, Apr 09, 2025, 4:59 PM UTC

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 agree and if people want an example of this that isn't about a "what if ..." future, they need only look at Detroit. While we still manufacture cars in the US, the auto industry will continue to automate any jobs that they can.

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

#156

Post by jacknews » Wed, Apr 09, 2025, 5:00 PM UTC

explodes wrote: post #34

jacknews wrote: post #16

Earlier quoted context omitted.

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

Human society has been optimizing for the wrong thing since 20,000BC. To that end, the future I want doesn't focus so much on money, but on needs. Letting a market dictate "needs" is clearly not working for the betterment of humanity a whole. While it helps with progress, I believe there is an upper limit when human behavior is brought into the equation.

exactly, the market doesn't deliver human flourishing

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

#157

Post by dizhn » Wed, Apr 09, 2025, 5:01 PM UTC

ajmurmann wrote: post #138

hx8 wrote: post #83

> 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. I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe…

In addition to the points others are making, there is also the increased cost of inventory that doesn't sell. The flipside to the high markups from retailers is the high discounts you get on last season's fashion. This is the "fixed percentage to avoid losses"

My local produce store was complaing about this. The prices increased about 20 fold. What was once a small loss due to spoilage now became significant.

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

#158

Post by ajmurmann » Wed, Apr 09, 2025, 5:01 PM UTC

slg wrote: post #121

milesskorpen wrote: post #104

Earlier quoted context omitted.

The piece to add there is that all this money is getting paid by the consumer. The overseas piece doesn't change, same number of US dollars going to the other country. The $24 increase in cost is paid by the US consumer.

It's just a sales tax. I don't know why people opposing tariffs never talk about them in this manner because sales taxes are something people innately understand if they have spent any time in the US and "tariffs" clearly aren't as well understood.

It's worse than a sales tax. Tariffs have a few market-distorting effects that a sales tax doesn't.

* Domestic consumers and companies are incentivized to potentially go for the 2nd best product. This over time can impact productivity as the tooling will decline over time as inferior solutions are bought.

* Reduced competition. We've seen this with the 25% "chicken tax" on pickup trucks. Arguably one culprit in US automakers falling behind is that they had a protected market around pickup trucks where it was hard to impossible for foreign competition to keep them on their toes. So US automakers retreated more and more into this safe haven.

* Destruction of economies of scale: If everyone wants the entire supply chain to be replicated in their country, we obviously loose economies of scale and thus efficiency. This sounds like it would be small but having multiple Shenzhen's is just not viable and we'll have to deal with higher prices and less product choice.

* Galapagos island syndrome: Over time separation of markets can lead to incompatible technologies which amplifies all other points.

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

#159

Post by crazygringo » Wed, Apr 09, 2025, 5:02 PM UTC

hx8 wrote: post #83

> 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. I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe…

It's a great question, and the answer is that you're missing the change in demand.

Let's say Foot Locker tries to keep the same absolute profit $50 and retails the shoes for $125 instead of the previous $100.

Now demand goes down, because more people will skip a new pair of sneakers. So Foot Locker's absolute profit goes down.

But they still have the same fixed retail space, advertising, and labor as you said.

So to try to keep their profitability, they need to increase the price more, which reduces demand even more, but it settles somewhere higher. And the place it settles (where total absolute profit is maximized) tends to be around the same 100% markup as before.

It doesn't need to be exactly the same, but as a general rule of thumb, these things do tend to work in proportional terms rather than absolute terms. And we're fortunate they do, because when manufacturing costs fall, that means absolute profit per unit can fall as well (while percentage remains the same), because it's made up for by more people buying.

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

#160

Post by Lendal » Wed, Apr 09, 2025, 5:03 PM UTC

999900000999 wrote: post #72

danaris wrote: post #66

Earlier quoted context omitted.

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. Th…

>cloud-cuckoo-land Welcome, this is where we're going to be for foreseeable future. Prison made inferior Nikes will end up costing 500$ a pair. Not that anyone is going to have money to buy them. As you mentioned we'd probably need to still source from other countries. The bigger issue here is the USD may lose its reserve currency status. The rest of the world might just trade in Euros and Yuan. Inflation will truly…

I think you underestimate them. They'll just buy shoes from another country, import them in secret, repackage them, and sell them as American made Nike. They could easily strong-arm Nike to make a deal to go along with this. They'll do a "tour" of the "factory" that makes nothing, and MAGA will eat it up. They'll show us doubters all how wrong we were to doubt the carnival-barking-clown savior of America. And then he'll get a third term out of it.