Slashdot Mirror
Where Will Your Next Gadget Be Made?
hackingbear writes "The New York Times is warning of the possibility of price inflation for gadgets, cars, and many other items, not from our skyrocketing government debt, but rather the increasing cost of doing business in China. Coastal factories are raising salaries, local governments are hiking minimum wage standards, and if China allows its currency, the renminbi, to appreciate against the US dollar later this year, the cost of manufacturing in China will almost certainly rise. (The report missed the biggest cost factors in China — electric and water utility costs.) 'For a long time, China has been the anchor of global disinflation,' said Dong Tao, an economist at Credit Suisse. 'But this may be the beginning of the end of an era.' The shift was dramatized Sunday, when Foxconn, the maker of the iPhone and everything else, said that within three months it would double the salaries (rather than the rumored 20% increase) of many of its assembly line workers."
"And last week, the Japanese auto maker Honda said it had agreed to give about 1,900 workers at one of its plants in southern China raises of between 24 and 32% in the hopes of ending a two-week-long strike, according to people briefed on the agreement. However, while big and famous manufacturers, like those in the US and Europe, may worry about their PR images and give in to labor demands, it is unclear if thousands of smaller ones will follow. And given the millions of people waiting for work in other countries, from India to Vietnam, the only thing that may have changed is the prevalence of Made in China labels of your gadgets."
Hmm, its a nice apocalypse theory but has really nothing to back it. The US dollar is no where near hyper-inflation. If you knew anything about Bernanke you would recognize that he is extremely anti-inflation and has been well before he took his current roll. Over spending is only a small issue in regards to the deficit. The current shortfall is due to a loss of Tax Dollars, not due to a major increase in spending. The U.S. Dollar is stronger today than it has been in a while. There is no magical 'pending socio-political-economic collapse' just waiting around the corner. If you haven't paid any attention to any of the jobs reports, in 1.5 years we went from losing 800k+ jobs per month to gaining 50-200k non-gov't jobs per month. And if you read the recent jobs reports at all you would have seen that wages increased and hours/week increased. Plus, productivity is finally flattening out which means that employers will be forced to hire new people since they can't get any more extra work out of their current people.
When did Mexico become part of South America?
"People who think they know everything are very annoying to those of us who do."-Mark Twain
Are you willing to pay at an increase in price upwards of 300%?
Check out the amateur metalworking hobby/market. I'm talking about a current live market of sort of comparable products.
Sherline manufactures some great lathes and mills in California. Generally the Sherline stuff has a beautiful finish, works right out of the box exactly as specified, its "aerospace grade", like metalworking jewelry. I've never heard of breaking or wearing out under normal use. Nice stuff! Looks nice, works nice, lasts forever.
Similar Chinese lathes and mills are basically considered a parts kit, precision moving surfaces and ball bearings come with genuine Chinese sand at no extra cost, nothing works out of the box without some level of remanufacture, the products are generally larger, the paint job is applied with a spatula. Everyone has either broken, burned out, or worn out junky Chinese machine tools / parts / electric motors, or they know someone whom has done so. Its assumed you'll have to do a full teardown, cleaning, and reassembly after purchase and before use.
The standard slashdot car analogy is its very much like comparing a 1970's American car with a 1990's Japanese car, except in this case the american mill is the japanese car, which now completely confuses things.
The market seems to have stabilized, with comparable big ticket Chinese stuff being about 30% lower cost. None of this 300% increase daydreaming. Ultra small ticket stuff, at the other extreme, like the worlds cheapest chinese endmill manufactured out of zinc if not chrome plated plastic with about a 1 minute usable lifetime cost about 50% less than genuine american made endmills that'll run for days on end.
I have owned a Chinese 7x12 lathe and a CNC converted Sherline mill for a couple years. You never really stop buying accessories, so I keep close track of the market.
In conclusion, in a real live market, not daydreaming, the USA stuff runs about a third to about twice the cost, but you simply cannot buy similar quality product from China.
I have no idea why in one industry the Chinese cannot manufacture a decent machine tool but they can manufacture all the worlds SMD electronics.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger