Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

America underestimates the difficulty of bringing manufacturing back

molsonhart.com

Post reply on HN
Print view View original

261–270 of 1001 posts

Re: America underestimates the difficulty of bringing manufacturing back

#261

Post by axegon_ »

The true and sad truth is that manufacturing can be moved anywhere but the people that keep parroting about it's importance are in complete denial about the primary issue: costs. These costs have very little to do with infrastructure and building factories or logistics. Those are a contributor, sure, but that only scratches the surface. While China has seen insane growth in the last 20 years, that growth is at the expense of workers. No doubt they have a lot of value in terms of skills(which take a long time to acquire) but you also need to remember that there is a difference between the significance of working in Asia and Europe/north America. To us Europeans (and North Americans) work brings stability and security. In Asia, work is the difference between life and death, regardless of how skilled you are-you are legally expandable. Does anyone seriously believe that iPhones will be made in the US? The basic salary at foxconn is just under 320$/month or $1.81/hour. That is around 10x less than the US. This is ignoring the atrocious working conditions and far above the 40 hour work week. If we do factor in that as well, the difference is likely in the 25-30x range. I come from a country with a minimum hourly wage of around $3.6, let me tell you, as soon as the clock hits 18:00, people will drop everything where they stand and go home. The only way to compete with China is to automate everything and let machines do all the work, which is not a terrible idea but also nearly impossible to achieve. And even if you spend two decades doing all that, there are costs to all the R&D to get there. No one is going to buy a $15k iPhone, nor will they buy a $20K laptop. A logo that says "Made in X" won't justify the price. This comes from someone that uses a dual-xeon workstation as a personal computer.

Here's another example: a market that has been completely dominated by China: consumer drones. Believe me when I say this, I hate DJI and while I have one, I refuse to use it because of all the security implications. How many European and US companies are competing with them? Quite a few actually but the big names off the top of my head are Parrot and Skydio. I own both a Parrot and a Skydio and the quality of both is amazing. Yet they are still barely keeping up with DJI and at 5x the cost despite the demand - DJI still holds 90% of the market share. I can justify the price because of my privacy concerns but that's 1/1000 people. For most people it's always going to be a trade-off between price and quality+privacy.

If you want to enforce all that through tariffs, just put 5000% tariffs so that the local manufacturing cost will be the same as the cheap import and you solved the problem. How many people will be willing to spend 100 bucks for a pair of socks? That's a different story. The soviet union attempted something similar for several decades while trying to copy western technology. Anyone that knows a bit of history can tell you how that ended. Spoilers: not a success story.

Re: America underestimates the difficulty of bringing manufacturing back

#262

Post by corimaith »

npiano wrote: post #91
ChrisMarshallNY wrote: post #38

This pretty much mirrors what a friend of mine said (he is a recently-retired Co-CEO of a medium-sized manufacturing business). He's been telling me this, for years. It's not a secret. The information has been out there, for ages. I'm surprised that the administration didn't understand this.

A genuine question, presuming no correct answer: what is to be done about it? China is reportedly on track to run more than 50% of global manufacturing by 2030, if the World Bank is correct. What would you do to act against this? Is doing nothing acceptable?

Under normal circumstances, when a country is running a massive surplus, their currency should appreciate, weakening their exports and thus recalibrating trade balance back to zero. That isn't happening right now, because China (and other surplus nations like Germany and Japan) relies on buying massive amounts of US treasuries to weaken the Yuan. That's one of the reasons why the US dollar is the reserve currency. It has to be, because only the US has an economy large enough to provide high-yield, low-risk treasuries and is willing to do so.

Trump's tariffs would theoretically rebalance trade on the long term, albeit in a highly destructive manner. But the more diplomatic solutions as proposed by other commentators like Catherine Tai, Yanis Varoufakis or Michael Pettis would be the introduction of capital controls to stem the demand for US treasuries, or better, the reintroduction of Keynes' proposal of the International Clearing Union back in 1945. The ICU's role would be to actively balance global trade surpluses via the international currency bancor, of which would have fixed control of FX rates rather than relying on FX markets to punish surplus nations and help deficit nations respectively. As for nations outside the Union, they would just get treated similar to the USSR.

Re: America underestimates the difficulty of bringing manufacturing back

#263

Post by pjc50 »

presto8 wrote: post #225
pokot0 wrote: post #176

Earlier quoted context omitted.

Can someone explain to me why EU VAT is considered a tariff, while US sales taxes are not? They both seem a sale tax to me.

Because VAT is collected at the border on imports, some people (wrongly) consider VATs a tariff. Considering that VAT is rebated on exports, VATs are trade neutral. Sales tax as implemented in the US is not as tax efficient as VAT due to the impact of sales taxation on intermediate transactions during manufacturing. VAT only taxes the incrementally the value added at each transaction) whereas sales tax applies to the…

Does the US charge sales tax on B2B transactions? Really? Well no wonder you have problems with domestic manufacturing.

Re: America underestimates the difficulty of bringing manufacturing back

#264

Post by pjc50 »

freeone3000 wrote: post #230
pjc50 wrote: post #189

Earlier quoted context omitted.

Only people who are wrong consider VAT a tariff. Yes, importers have to pay it, but so do local manufacturers. VAT has basically the same effect as sales taxes with a much more complicated tax incidence.

At an individual level, it’s not more complicated: it’s reimbursed instead of exempted. And if you’re charging it, it’s easier , since you simply always charge instead of maintaining your list of exceptions.

UK VAT certainly has a complicated list of exceptions, especially "non-luxury food" (see the Jaffa Cake case https://www.astonshaw.co.uk/jaffa-cake-tax/)

Re: America underestimates the difficulty of bringing manufacturing back

#265

Post by acyou »

This article seems to be full of propaganda and downright lies. For instance, there are plenty of tool and die makers left in the USA, plenty of injection molding machines. I have personally seen them and met the tool and die makers as well as the machines making the molds.

It's difficult to address the giant article full of misrepresentations point by point. It's tough to see it up at the top of HN. Wish that I could do something to correct the misinformation that is being disseminated.

This person has a vested interest. They manufacture cheap crap in China (or Vietnam, I don't care) for American kids to suck on. What more do you need to know?

Re: America underestimates the difficulty of bringing manufacturing back

#266

Post by lasermatts »

sct202 wrote: post #123
imbusy111 wrote: post #48

Earlier quoted context omitted.

But the important question is - is it worth it? Should we be doing something more valuable instead?

I've seen this brought up with board games that are now primarily made in China, because injection molding is cheaper there especially for small quantities. The US could make the board game minis, but everyone who is capable of it in the US is producing high value high quality aerospace, industrial, medical parts. It's a waste of their time to produce small runs of toy parts.

mold making is also pretty complicated -- anything in the 1,000-1M parts produced will _probably_ be an aluminum mold (cheaper than steel) but they're still heavy and large to keep around.

I haven't met any injection molding shops in the US that do a huge amount of specialty parts like toys. The industry tries to get as many medical device jobs as possible.

Re: America underestimates the difficulty of bringing manufacturing back

#267

Post by Workaccount2 »

numbers_guy wrote: post #120
lenerdenator wrote: post #51

America? No. The shareholder class underestimates it. A lot of Americans realize that it's going to be hard, which is why we should have made an example out of the first guy to profit off of sending manufacturing off to the shores of a geopolitical rival.

Question: if the jobs were off shored, but the resulting profits were shared more equally, would Americans still complain?

Yes, definitely yes.

America suffers from a flattened income curve. There are many many more people earning $100k+ today than in 1960 (inflation adjusted). America has an envy problem first, equality problem second, spoiled child problem third.

Re: America underestimates the difficulty of bringing manufacturing back

#268

Post by elbasti »

franktankbank wrote: post #259
elbasti wrote: post #156

Like OP, I work in manufacturing (after 15 years in startup land). I'm not as experienced as him, but I work in manufacturing that makes similar products on both sides of the US/Mexico border. Let me add some thoughts: 1) Capacity, not cost, is the main driver for nearshoring . All things being equal, a manufacturer would rather produce a product in the US than overseas. The cost of modern products is mostly parts &…

The cost of manufacturing your stuff is not labor dependent only because you are probably putting together low cost components made with cheap labor. What if you had to make the spring or the resistor or the little painted metal box? Could you do that without labor being the big cost?

I actually make pretty high cost products with relatively expensive labor (welders, electricians).

Even then, materials & parts dominate.

Re: America underestimates the difficulty of bringing manufacturing back

#269

Post by FirmwareBurner »

ZeroGravitas wrote: post #243
FirmwareBurner wrote: post #190

Earlier quoted context omitted.

> The kind of slow and steady protection and promotion of home-grown industry that China and most of Asia so successfully used to grow their economies was completely absent as even a talking point The slow and steady way that post-WW2 Korea and Japan did needs a unanimously agreed 10-20 year long game plan between industry and government, which is incompatible with democracies who change colors and strategies every 4…

There's various forms of democracy and many are not as chaotic as the US kind in regards to long term plans. A good example is the general global approach to Net Zero. It's slow, methodical, science based, negotiated. But if anyone brings up planning for 2050 it's usually in the context of "It's all bullshit, politicians are crap, they're just lying to you and kicking the can down the road till they retire" (and if y…

Countries change policies all the time based on the whishes of industry lobby groups or voters, not just the US. People focusing exclusively on what Trump is doing are myopic or arguing in bad faith.

And the global approach to net zero is not global, nor is it binding, it's more of a gentlemen's agreement bet which is basically worthless. Ideologically it sounds good, the issues are always when the tires hit the road, and then some spanners get thrown in on top: wars, pandemics, revolutions, natural disasters, political feuds, etc.

So yeah, outside of bubbles of privileged mid-upper class people in safe rich countries, nobody gives a crap about what's gonna happen in 2050 when they can't pay next month's rent/mortgage or their car doesn't start and their bank balance is red.

Capitalism got us chasing next quarter returns at the expense of what's gonna happen in 2050, so we'll be kicking the can down the road until everything falls apart, first very slowly, and then very suddenly.

Re: America underestimates the difficulty of bringing manufacturing back

#270

Post by dfxm12 »

PaulHoule wrote: post #127

I think of environmental conflicts that disappears in the US thanks to manufacturing moving to China. In the 1990s there were numerous manufacturing plants in the US (two on the South Hill of Ithaca alone) that were found to be contaminated with solvents like https://en.wikipedia.org/wiki/Trichloroethylene People thought it was great stuff, you wouldn't believe how hard it is to get cutting grease off things after yo…

Why would obsession with anime and (I assume Jaoan is a typo for) Japan lead to sinophilia?

You know sinophilia means "love of China", and that anime and Japan are not Chinese, right?

Post reply on HN