Hardware startups should consider local manufacturing

The idea that people choose to go to China because it is cheaper is a bit naive. Yes, of course, once you are at scale (not huge, but making thousands of units) China can be cheaper. Why do smart entrepreneurs go to China then?

The ecosystem is there, not here.

If I handed you a bill of materials for a medium complexity product with, say, 250 components and asked you to source them in both the US and China you'd see exactly what I am talking about.

China is now setup with these "manufacturing cities" where everything you might need for a typical consumer product is in close proximity, easy to find and, yes, cost effective. Component manufacturers have huge presence in China in order to facilitate the process. In the US you are exposed to layers of separation and profit-making between you and the component maker. I should also mention that there are components you simply can't get here.

Oh, yes, there's the other reality: Your product is likely to use parts made in China. For the privilege of manufacturing in the US you get to pay the extra cost of shipping, warehousing, handling, supporting and managing the components in a US-based channel of distribution.

Then there's the issue of worker and business culture. Work in China and you'll quickly learn nearly everyone is willing to jump when you say jump. They simply want to get the job done. The US, in sharp contrast, can be surreal at times. For example, it isn't uncommon to send out RFQ's and get no response whatsoever. A couple of years ago I sent out 50 RFQ's to US machine shops for some metal parts. I got around five responses. In China shops would be tripping over each other to get you a quote.

This and other reasons is why it can be comical to hear politicians at all levels repeat the "get manufacturing jobs back" meme. It's ridiculous. This would require a cultural, legislative, labor law and ecosystem shift of such massive scale that it is just about impossible.

No, entrepreneurs don't go to China because it's cheaper. The go there because they need to get their work done efficiently and, yes, at a good price. And all the necessary conditions to meet these goals exist in China, not in Europe and certainly not in the US.

In the US, pretty much.

There are boutiques that cater to the very high-end crowd, but they're few and far between.

If you want units of 100's, that just isn't going to happen. It's simple economics--if you want 100K units, you have more than enough incentive to go to China. If you want 100's of units, you're either too small and will go bankrupt or you will change over to China next round because you have the volume. So, you don't get future work, and you tie up one of my machines.

It's very hard to explain to people that the economics of automation dictate that a machine should either be operated nearly 100% or 0%. 100% is the obvious production mode. 0% is the non-obvious one. You want 0% because you need to be ready for when you get the 100% order. The opportunity cost of not getting the 100% order due to lack of capacity, machine needing maintenance, etc. far exceeds the profit you would make on that order for 100 units.