Cheap China!

1BWANA1

Senior member
Hey Yogoblue, is your screen name a reference to the Montana Yogo Gulch Blue Sapphires? I set up a large factory in China in the early 1990's to cut these sapphires.
 

TManiaci

Engineer
Lifetime Supporter
The world is already going to the cheap labor in Vietnam.
In a good asian accent... "VC NO GOOD!"

Nope... Vietnam is already done. Toast, Over. Their problem is they have no natural resources, and the labor rates are already many times those in China. We had product coming out of 'Nam for a few years, quality was TERRIBLE, and they were very unreliable. When China opened up, they were done. Same for Korea...

Look to India and Thailand for some some growth, but both are weaker. China is a HUGE country, and they have abundant natural resources of all kinds that are only just being discovered and exploited. The biggest difference is the Government. China has committed everything to being the world economic leader of the 21st century... and they will succeed... unless we make some very difficult changes.
 

Mithrandir

Circus Staff
Lifetime Supporter
in 5 years, production will transfer to the most recent country to join the 3rd world club.....








California!!!
 

TManiaci

Engineer
Lifetime Supporter
Here you go... what was I saying about those Chinese guys! Look out DA and 3W! Here it is, the DLE 222!

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BRUTUS

Plank Junky
Lifetime Supporter
Wow Cody, hav'in a bad day?

Maybe you won't get what I'm saying... it's really hard to look at a society without imposing your own ideals and standards.
I get it 100%, I'm grateful every day for my 'lavish' lifestyle- even when we can't make the bills and are eating Ramen twice a day wondering how long our landlord will forgive our late payments. We still live well compared to other people in other countries. I'm just saying that if it were up to most business leaders Americans would be living the same lifestyle as the Chinese if it weren't for someone stepping in and pulling back the reigns. I'm all for Capitalism- it is simply the most efficient economic structure, hands down. It's how we "won" the Cold War and bankrupted most of Eastern Europe.

I just don't have very much faith in Business leadership to look out for any ones bottom line but their own. Plain and simple. The people with the most money and power have the least qualms about exploiting their workers for higher profit margins.

Greed (profit maximization) is the driving force of American Business. I learned that on my first day in Micro Economics.
 

Tired Old Man

Staff member
Corporate leadership in America has exactly the same attitude about their labor force as China. Simply view the tremendous disparity between upper management compensation and labor compensation. The only reason they compensate labor as well as they do is because they have to. Given the opportunity, and that is slowly happening, they would rake even more off the top. Governments are owned by high volume contributors and those that will employ the government officials after they leave office, so the favor will go to the contributors.

There is no possible way to defeat the changes that are taking place. You can only learn to profit from them.
 

crazyjoe

Well-Known Member
I'm with Cody and TOM. I just saw the new Michael Moore documentary. I think everyone should see it weather you agree with him or not. Very interesting. I have talked to so many people lately that are losing their homes. Then I come home and my kid is watching some reality program were these wealthy teens are on a shopping sprees with dads credit card spending in excess of $30,000.00 No one should get money sitting on their ass but there are **** load of people hurting that are willing to work. Jobs are being cut and people are loosing everything so fat cats can buy more **** they dont have time to use. Democrat Republican hell they are all the same both controlled by big bussiness. That is all.
 

TManiaci

Engineer
Lifetime Supporter
There is a middle road here. Opening our borders to the world market has taken away any moderation of equality for internal economic differentials. When a society has evolved, like ours, and wages/costs are higher because the standard of living is higher, you will be at a disadvantage.

Capitalism works. Even if the big corporations are taking a fat cut, when they prosper, so does everyone down the line, right to the individual person that lives in that economy. When corporations make money, they spend money, employ people, advance technology, money moves and ultimately everyone gains to some degree.

The problem is that the public, i.e. you and me, always wants the best price for a good. This naturally drives the buyer to the cheapest product that suits their need. So, when you have a low cost producer, they win. That has nothing to do with who the producer is.

So, if you want your economy to grow and prosper, to provide jobs and to be self reliant, to invest in R&D... you must somehow level the playing Field. The only answer is to politically protect your economy to mitigate the cost structure differential between primitive and mature internal and international economics.

How do you do that? Simple, you place a duty (Tariffs) on goods from other countries that normalizes the trade imbalance. The tariffs are adjusted for each country of origin, so that a general balance is attained. This is how it used to be in the past.

That's the HARD part that I mentioned before. Now that we have become acclimated to buying these Cheap China goods, can we ever go back? It would be painful to just re-establish balancing tariffs all at once. The migration happened slowly over a number of years. It would be very disruptive to the economy to suddenly cause prices to rise abruptly 30-40%. That's called inflation.

Unfortunately, I'm afraid if we don't do this, we are screwed. Most of the world is behind America in industrial evolutionary maturity. The ultimate natural result of the conditions that persist today naturally leads America to become a consumer country where we are no longer a producer.

I estimated a 50 year cycle to achieve economic equality with China. I firmly believe that is very conservative. That's a LONG time. In that time, other China-like economies will spring up in India, the Soviet Union and anywhere else where there is a large population with vast resources, low wages and a government that places a priority on being a producer state.

The solution? Not easy. It's way more complex than my simple explanation here. But, the right path probably is based on a slow, stepwise incremental move back to some level of protection by tariffs.

The rub here is that this philosophy of economic health is considered conservative. In our apparent slide into socialism with our growing liberal minded society, making moves back toward a more balanced business freindly environment is not happening. The liberal mind-set is to destroy capitalism and strive for equality. Not a good picture in my eyes. Noble in concept, but terribly flawed in economic terms.

DOOMED....
 
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TManiaci

Engineer
Lifetime Supporter
INCIDENTLY...

Do you know why there is not a flow of USA made products going BACK to China?

Economic isolation.

The Chinese government has placed extremely high tariffs on goods from the USA. I believe they are on the order of 20-25% for most goods.

Not only do they have a radically lower cost structure, but they are isolating their economy from intrusion too!

Here is a glaring fact that blows people away... It costs around $3000 to get a 40 ft container of goods from China to port in the US. It costs about $300 to get a container of goods delivered back to China ports. What does that say about the volume and direction of trade?
 

Tired Old Man

Staff member
A prolem arises with the introduction and implementation of tariffs. nfortunately China holds the upper hand with all of our debt they hold. if e try to impose any tariffs they could, and probably would, call the debt. That they hold a tremendous quantity of U.S. bonds mean they effectively control our economy. We let this go much too far before thinking about reigning it in.

That Michael Moore movie about greed and other fun stuff bothers me. If he wasn't just as greedy he would have made the movie and presented it for free.....
 

TManiaci

Engineer
Lifetime Supporter
I haven't, and I won't. Like his last media turd, I won't pay to line that wacko's pocket. Maybe some day on HBO when it's free.
 

BRUTUS

Plank Junky
Lifetime Supporter
Actually, it's his corporate producers that get the lions share of the cash. He mentioned the irony of having corporate sponsors to make a movie that goes against corporations in a radio interview of his that I heard. He also said that when his idea's do catch on he will likely be dropped by said sponsors, but that the profits are just too good for them to drop him... Or something like that.
 

Mithrandir

Circus Staff
Lifetime Supporter
Another problem is the excess capacity for production of everything world wide.....

we need to go to a 3 day or 32 hour work week... world wide!
 

sandman

Well-Known Member
The root of the problem is that Americans are greedy. Want, want, want. So: buy, buy, buy, even if you don't need it and have to borrow to acquire it.

In contrast to TMan's assertions, for our company China is our largest single cutomer. Why? Because we make products that perform tasks that cannot be done by other devices. How? We always invest about 20% of gross sales on R&D. This helps us to maintain a technological and scientific lead of several years ahead of our competition. Unfortunately many American companies have not done the same. Rather than invest in R&D to maintain an advantage, they cut R&D to increase short-term profits.

In my opinion, it is the increasingly short-term view of business operation that has been a major contributor to the decline of many American corporations, particulalry those that are publicly held. The most important discussion in many meetings is not how to ensure long term growth but how to meet the daily/weekly/monthly/quarterly/yearly forecasts. When short-term and long-term are discussed, short-term usually wins.

Why does short-term win even if that means that long-term will suffer dramatically? The answer in most cases is quite simple: salaries and particularly bonuses are based almost entirely on short-term goals not on long term goals. Basing bonuses on long-term goals may be impossible because the employee and/or the company may not even have any long-term goals other than to still be in business some time in the future.

In contrast, the Chinese government has long-term goals. These are not simply written down, they are enforced, often if short-term goals must suffer. Student who will practice certain professions are selected for those professions at a young age. When they do achieve professional status, they are told what city in which they must live and that they must work at a particular company for some minimum number of years. They may not quit and move to another city without government permission - which require that the government planners agree that there is a need for that profession in the new city.

If capitalism and free trade work so well, how can the Chinese system of socialistically managed capitalism be kicking our ass?

It has been claimed on this forum that capitalism works. Perhaps it has, but only for a slightly longerthan three hundred years in any form similar to what has been practiced in America for the last two centuries. And it has evolved continuously during that time. Socialism/communism as we now know it is less than a century old: it is also evolving. In a hundred years, it is quite likely that neither form will exist in the forms which we now recognize. We are becoming more socialistic (even those on the right are doing so) and the communists are becoming more capitalistic.

The wise person recognizes all of the opportunities, invests primarily for the long term but is happy to realize a short-term gain if it does not conflict with the long-term. And, most importantly continues to learn more about as many topics as possible so that decisions can be made with the best possible knowledge.
 

TManiaci

Engineer
Lifetime Supporter
Sandman,

I would be nice to live in a world of isolation like you. Wish the majority of the US production machine was in that position. Unfortunately, that's not the case. We don't all do high-tech ****. You are indeed fortunate, but that has clearly slanted your view of the world.

We invest 3-4% of our gross sales into R&D. This investment supports about 5-7% of our more advanced customer base. The lions share of our products are commodities, easily knocked off and simple in design. Advancing that art is pretty much done, just like most consumer goods. Any more investing in R&D would be wasted on such a small segment of the market, it would be foolish to spend on that, you will never recover the development costs on such low volume.

Most commodity industries are mature. How can you make a can of beans better? As long as the technology is not beyond the capacity or skill-set of the Chinese manufacturers, they will end up either doing the business for the product owner, or stealing it with copies.

If capitalism and free trade work so well, how can the Chinese system of socialistically managed capitalism be kicking our ass?
You forget? They have a wage base below $1 per hour! They have very little, if any, tax and regulatory costs!

This is mostly about cost structure, not technology... you live in a small world Sandman.
 

sandman

Well-Known Member
Sandman,

I would be nice to live in a world of isolation like you. Wish the majority of the US production machine was in that position. Unfortunately, that's not the case. We don't all do high-tech ****. You are indeed fortunate, but that has clearly slanted your view of the world.

We invest 3-4% of our gross sales into R&D. This investment supports about 5-7% of our more advanced customer base. The lions share of our products are commodities, easily knocked off and simple in design. Advancing that art is pretty much done, just like most consumer goods. Any more investing in R&D would be wasted on such a small segment of the market, it would be foolish to spend on that, you will never recover the development costs on such low volume.

Most commodity industries are mature. How can you make a can of beans better? As long as the technology is not beyond the capacity or skill-set of the Chinese manufacturers, they will end up either doing the business for the product owner, or stealing it with copies.



You forget? They have a wage base below $1 per hour! They have very little, if any, tax and regulatory costs!

This is mostly about cost structure, not technology... you live in a small world Sandman.
So, the moral of the story is to get out of commodities that can be easily duplicated and get into products that require technical expertise!

By sitting on our collective butts and thinking we had the world's best cars we gave away the automotive industry - not to low prices but to foreign cars that had better quality and were what the consumer wanted.

By sitting on our butts and not reinvesting in modern capital equipment for production we gave away the steel industry to foreign competitors with more efficient production.

We have given away industry after industry to foreign competition because we chose short term gains over incremental improvements over the long haul.

I chose not to work for any employer who is content to keep making the same old stuf the same old way and thereby opening the door to foreign competitors who are willing to look for better methods and better technology. We all have the freedom to make that choice - but it may require a personal commitment to invest in ourselves for the long term by continuing to learn new skills and acquire new knowledge to move forward.
 

Steppenwolf

FOM SR.
So, the moral of the story is to get out of commodities that can be easily duplicated and get into products that require technical expertise!

By sitting on our collective butts and thinking we had the world's best cars we gave away the automotive industry - not to low prices but to foreign cars that had better quality and were what the consumer wanted.

By sitting on our butts and not reinvesting in modern capital equipment for production we gave away the steel industry to foreign competitors with more efficient production.

We have given away industry after industry to foreign competition because we chose short term gains over incremental improvements over the long haul.

I chose not to work for any employer who is content to keep making the same old stuf the same old way and thereby opening the door to foreign competitors who are willing to look for better methods and better technology. We all have the freedom to make that choice - but it may require a personal commitment to invest in ourselves for the long term by continuing to learn new skills and acquire new knowledge to move forward.


The market abroad learns new skills every time we release new items on the market, they have a personal commitment to invest their low labor forces to produce what we have delivered to the market, their long term goal is to make money so their investors and management can make millions on the backs of their own labor force, how is the overseas markets any different than ours? We did not give away our steel industry to foreign competitors with more efficient production; we gave it away to a market with a much cheaper labor force.

"We have given away" we didn’t give it away, our unions have helped the overseas markets gain the upper hand by no other way than labor costs. I started with a union when I first entered the work force and I always felt I was over paid, when the union wanted to go on strike to increase our wages I thought it was ludicrous. The unions have long outlived their usefulness, they served their purpose when there was slaved labor and children where forced into the work force, but they have now become part of the problem. They have become part of the bureaucracy that has found ways to get fat off the membership, in return for a promise of a higher standard of living for the members, but that higher standard of living comes at a great cost. We have lost, not given, our greatest resources to the overseas markets, not because they are so much better at producing but because they don’t have to worry about the unions telling the manufacturers that they want a cut of the profits. We gave away our markets because the industries that wanted to survive the strong arm of the unions took their production overseas.


I am not an advocate for child labor nor do I think forced or slaved labor is right but the overseas manufacturers have not developed the same moral standards that we have and it will only be a matter of time before they do organize their labor forces, I just hope their labor leaders don’t fall into the same greedy position that this country did. But then again if all labor rates around the world were the same we would't have this problem.



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TManiaci

Engineer
Lifetime Supporter
"We have given away" we didn&#8217;t give it away, our unions have helped the overseas markets gain the upper hand by no other way than labor costs. I started with a union when I first entered the work force and I always felt I was over paid, when the union wanted to go on strike to increase our wages I thought it was ludicrous. The unions have long outlived their usefulness, they served their purpose when there was slaved labor and children where forced into the work force, but they have now become part of the problem. They have become part of the bureaucracy that has found ways to get fat off the membership, in return for a promise of a higher standard of living for the members, but that higher standard of living comes at a great cost. We have lost, not given, our greatest resources to the overseas markets, not because they are so much better at producing but because they don&#8217;t have to worry about the unions telling the manufacturers that they want a cut of the profits. We gave away our markets because the industries that wanted to survive the strong arm of the unions took their production overseas.
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Well said Wolf. Although not all our high labor costs are necessarily directly due to Unions, it sure has had a significant influence. Our cultural maturity has a lot to do with that too. Definitly the Auto and Steel Industries biggest disadvantage for sure.

The average wage in a Union Controlled Automaker plant is approximately $81 per hour (reported by GM Sept. 2006). The average Wage in a US based Toyota Plant was $35 per hour at that time. These were fully burdened wage rates (benefit costs included). That's why GM and Ford moved most production into Canada and Mexico. Curious that NAFTA came along about the same time isn't it?

That's a HUGE disparity.

I agree, Unions had a place in our history. Now, they are useless and corrupt political bureaucracies that are destroying manufacturing in America. Greed and a complete disregard for the Employer's ability to compete.
 
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TManiaci

Engineer
Lifetime Supporter
So, the moral of the story is to get out of commodities that can be easily duplicated and get into products that require technical expertise!

By sitting on our collective butts and thinking we had the world's best cars we gave away the automotive industry - not to low prices but to foreign cars that had better quality and were what the consumer wanted.

By sitting on our butts and not reinvesting in modern capital equipment for production we gave away the steel industry to foreign competitors with more efficient production.

We have given away industry after industry to foreign competition because we chose short term gains over incremental improvements over the long haul.

I chose not to work for any employer who is content to keep making the same old stuf the same old way and thereby opening the door to foreign competitors who are willing to look for better methods and better technology. We all have the freedom to make that choice - but it may require a personal commitment to invest in ourselves for the long term by continuing to learn new skills and acquire new knowledge to move forward.
It's ludicrous to propose that a producer jump from one market type to another. That is like starting a new business! Abandoning all the infrastructure, equipment and experience that the company has to exploit is just a crazy idea. I don't know what planet you live on, but no company I know of could pull off such a stunt, particularly in financially unstable times.

As for an individual personal change in course, I see your point. It would take mammoth balls to abandon what you know, and a job where you have established a reputation, tenure and coveted position to pursue a new career. I know I have turned down a number of offers, purely because of the disruptive nature of the change. To even find a company/market that has the kind of technology isolation is a big challenge too, and they are not doing much recruiting. Scary indeed... not many willing to take such a risk in times like these.
 
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