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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."
Since I live here in the US, I'd really like to see a return to the US for manufacturing. We're still teetering on the brink, don't let day to day market-droid speak fool you.
The US is not anywhere near out of the woods yet.
So...I'd like to see my next gadget have "Assembled/Made in the USA" on it.
Just as I'd suspect anyone from another country would prefer their country to be the country of assembly for their next gadget.
Sent from your iPad.
It's no longer efficient to do anything of substance unless it is required(and only to those requirements).
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
I'm not sure it's so much "out of the woods" as much as it's beginning to be "sweep the undesirables (long-term unemployed) under the rug" to make things look better.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
How will I ever afford electronics if the people making them are paid 50 cents a day rather than 25 cents a day? :(
The fact is, most of us can't afford to live in an america where everything is made by people who are paid $46,000 a year.
It's been said, a pair of $75 nike's would cost $300 if made by americans.
I think the next step will be more versatile machines (aka robots). Which leaves the issue of jobs for americans still unsolved.
Pay $50k for a robot, and run it 3 years, and you undercut even a $20k job. (not including social security taxes, etc.).
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
The Chinese are in a wonderful and unique position to take over as the number one superpower and number one consumer of goods, turning the USA into a number 2 or 3 within a few years. Let's start off with the fact that China now has a "middle class" of fairly affluent working class people that is over 300 million strong.
Let me repeat that in case you missed it: Their middle class is as large (or larger) than the entire population of the USA. This middle class is buying. China can now self-sustain. In other words, there are enough people now in China with the money to buy stuff made in China.
So, we, the USA, need the Chinese more than than China needs the USA. Furthermore, the Chinese are smart enough to both "outsource" to cheaper countries than themselves, while acting as middle-men to their USA 'bosses', and while we will eventually get around to cutting them out (as we did to Japan), it will be too late by then, China will be selling in the USA directly (as the Japanese do, with established brands), and, as I said, they can self-sustain.
China, however, may "import" slave-labor (or nearly so, within boundaries of international law), allowing the Chinese a more relaxed lifestyle while imported workers do the grunt work for low wages. This will allow them to keep prices low and maintain their existing infrastructure of factories.
We just need to be careful though that *we* aren't the slave labor they decide to import.
If telephones are outlawed, then only outlaws will have telephones.
Anyone remember "Made in Japan"? Then "Made in Taiwan"? Now, "Made in China". Manufacturing moves to the cheapest location. This is how globalization works, for better or worse. If China becomes too expensive, somewhere else will arise to take up the slack and open near-slave labor factories.
Hopefully, this results in a rise in living conditions for everyone - My personal pessimism has doubts.
curiously, as costs at the bottom rise, some manufacturing comes back to the home shores. sometimes it's shipping costs, sometimes it's snafus avoided, sometimes it's market pressure to have a made in USA alternative.
the rest of the market goes downhill further, as they move to green monkeys in Kenya, with the local human population pushing chips and solder into the trees, and catching the hot circuit boards as the monkeys drop them down.
when the monkeys need too many figs to keep working, it will go to pirahnas on the Amazon, or little green men from space who need busywork while their flux capacitors recharge, or whatever.
best you can do as a consumer is reward those who don't participate in the race to the bottom.
if this is supposed to be a new economy, how come they still want my old fashioned money?
I care where I get it. I've been getting more and more used instead of new. There are a lot of "trendy" types that sell things use at a insane rate. I got a iPhone 3Gs that was like new for $159.00 off ebay for her used.
I buy everything used now. you get more value for the dollar.
I end up with more stuff and more money. It's a Win-Win.
Do not look at laser with remaining good eye.
Globalization is the way that capitalism wrote an IOU to itself. That IOU is coming due.
No thanks.
Never mind the corruption(making Chicago look saintly) and contempt for the US that still exists there.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
My boss would have a field day with the summary.
As he likes to say, percentages mean nothing without harder numbers. Let's use one of the original articles for number basis:
Wage hike: $84 million per quarter over entire company (with a raise of 20%)
Workers: 300,000 at one plant.
Assume 300,000 workers are 1/4 of entire workforce
$84 million * (100%/20%) = $420 million
$420 million / 1.2 million workers = $350 per worker per quarter.
Assume 1 quarter is 13 weeks, with each week being 40 hours
$350 / (13*40) = $0.6731 per hour.
Assume that it takes 2 man-hours to build a motherboard
Assume $100 motherboard is marked up 70%
Motherboard Cost: $30
Percentage increase: (2*$0.6731)/$30=4.49% increase in costs
Assume price increase carried through the entire pricing package, The former $100 motherboard is $104.49 now. Not a world class problem.
I call it 'The Aristocrats'
This also illustrates why in the USA, *small business* success is so critically important to any hope of "economic recovery".
When we talk about such items as $75 Nikes that "would cost $300 if they were made in a factory full of USA union labor, paid $45K plus per year", we neglect the possibility that SMALL companies making unique shoes could compete nicely - providing a truly USA made shoe at more like an $85-100 price point - while still earning respectable salaries for the people working there. Sure, they won't employ nearly as many people as a big factory, or even sell as much product -- but the point is, MANY smaller companies can co-exist, all offering alternatives for footwear.
Sometimes, I think we're so fixated on the concepts of "economies of scale" that we forget it's not a universally beneficial thing? When a business grows to a certain size, they have to spend a LOT of money on advertising/marketing to convince people their product is the one they want to buy/keep buying. (And how is all of THAT paid for? Yep ... rolled right back into the price tag of the product.) They also tend to make so much product, it starts making economic sense for them to automate/mechanize all sorts of processes that allow hiring cheaper labor (employees who don't need as many skills or as much intelligence, because they're pressing a button or pulling a level repeatedly, instead of *understanding* how to do whatever process happens as a result). That leads to a lot of low-paying jobs, vs. a relatively small number of higher-paying ones.
With many smaller businesses turning out similar, competing products - you tend to encourage people to buy more regionally/locally from whichever supplier is nearby -- and they can sell to those folks without needing to launch multi-million dollar marketing campaigns with celebrity sponsors, etc.
Nationalistic bickering aside, this is very good news. As living standards rise around the globe, labor will get more expensive, sure, and our iPods might cost 20% more or something, and in return, human beings on the other side of the planet have food on their table and work to do. It's good for the world that labor in china is getting more expensive in every way except the most short-term "I want my shit cheap right now" way.
We are not going to be able to bully China into submission like we are used to doing around the world. How about if we start trading with her and learning to respect their culture? That doesn't mean ignoring human rights abuses, but it means respectful engagement.
Currently hooked on AMP
Well, they are going to be using a lot more resources - eating more meat, driving more cars, more precious metals, all that good stuff. Energy costs will soar when the global economy recovers. But don't get me wrong, I can hardly complain when their consumption is on average still a fraction of mine. And maybe their armies of engineers will figure out a post-fossil-fuel economy.
There are two commonly held misconceptions in your post:
1) the US manufacturing sector is in decline
The US export per GDP is now #179 in the world. That sounds pretty bad to me. Now, we have such a large economy that the raw numbers look great, but saying the US manufacturing sector isn't in a decline is pure nonsense. If I remember correctly, we're on the same performance level as Burma.
The US economy will cease to exist as you know it within your natural lifetime. I say "natural" lifetime because with the pending socio-political-economic collapse, many people will probably come to unnatural ends much sooner than they expect... ...The United States Federal government, as well as the governments of 49 of the 50 states, are legally insolvent. Not only is the federal government out of money, but the largest area of spending growth is debt servicing...
And more bullshit. Our external debt level is not even at an all time high (which was 120% after WWII). People are flocking from the Euro to the Dollar as we speak. No, really:
Global investors flock to US debt at record speed
Gregory Daco, economist at HIS Global Insight, said the investment trends were clear evidence of trust in the US. "As the sovereign debt crisis in Greece intensified in March, foreign investors mostly sought refuge in the safe-haven US Treasury bonds and notes," he said.
"Nonetheless, government agency securities and corporate debt provided very attractive alternatives for investment – an encouraging sign that investors have faith in the US recovery."
Built by nano assemblers on my desk.
Yes Francis, the world has gone crazy.
Nationalistic bickering aside, this is very good news. As living standards rise around the globe, labor will get more expensive, sure, and our iPods might cost 20% more or something, and in return, human beings on the other side of the planet have food on their table and work to do. It's good for the world that labor in china is getting more expensive in every way except the most short-term "I want my shit cheap right now" way.
That's a bit shortsighted.
Gadgets are not something like food; their novelty/luxury items. If (when) the cost goes up across the board, people will spend less of their hard-earned money on the things they don't need - ie, gadgets. (Perceived) quality will need to go up a similar proportion as the increase in cost for the product to remain competitive (remember the 'high quality' Erickson, etc. cell phones from a decade ago? - they were supplanted by other products offering a better price value).
In return for the decreased demand, there will be less manufacturing done; this will further increase the manufacturing cost per unit, likely leading to a loss of jobs in the foreign plants (unless they're able to cut costs). Increasing costs to your customers NEVER results in more business unless it is paired with a (perceived) equitable increase in the product.
As for respecting China's culture... sure, I'll get right on that. My first cultural taboo to learn to respect is child labor. After I've gotten over that, I'll work on violent persecution of belief systems I don't agree with (Christianity, Islam, etc.). Then I'll work on agreeing with overt state-controlled censorship, and finally, the wanton destruction of the ecosystem and disregard for dumping toxic waste. In fact, I might start on the toxic waste thing: it's easy, because all I'll have to do is pour some waste oil into the municipal sewer. I figure that by this time next year, I'll have matured enough as a person to start accepting China's particular brand of threats and imperialist encroachment - just in time for their wholesale invasion of Taiwan or Tibet, maybe.
~/ssh slashdot.org ssh: connect to host slashdot.org port 22: too many beers
The problem becomes one of population. China has been using the rest of the world to haul it's own development levels and therefore standards of living up. I've been predicting this for quite some time; each outsourcing job results in a number of internal jobs starting up, thus the labor pool is emptied faster than many think.
Back on South America as a potential labor pool - China has 1.3 Billion people. India, which the same thing is happening to(and they're perhaps a bit further along), is 1.1 Billion. Wikipedia places the population of South America at around 385 Million, and it's quite a bit more developed than China, on average. Africa is right around a Billion, making it perhaps a better choice, but it's still got issues with stability.
After China and India industrialize, I figure they'll go through the same process we did, and start looking to export labor. Thing is, I don't think 'cheap' labor will last long in the rest of the under-developed world once China and India are 'used up', ie brought up to close to European/American wage rates.
I think that Stability will be a much bigger concern at that point. A region gets ahold of it's problems long enough to convince businesses to take the risk will be hauled up VERY quickly.
I don't read AC A human right
You should educate yourself on Chinese policy. I'd recommend the USCC (Unites States China Commission) as a start. They're only being nice to us until they can build a bigger military, infrastructure, and 'catch up' with the rest of the technological world.
Yes, letting the renminbi float would drastically help world markets, which is exactly why they won't do it. Not until it's actually to their advantage to do so.
"Our goal each year should be to increase the number of goals we set for ourselves!"
Actually, I'm not sure of current numbers but I found a report from 2004 that says that we import more food here in the USA then we export. And since a lot of corn is now going to ethanol production, I'm assuming we export even less now.
http://www.organicconsumers.org/corp/exports111204.cfm
Just because we have a lot of farmland doesn't mean we are making any money from that farmland. Think about that $2 jug of apple juice you just bought at walmart -- you think the apples that made that juice were grown here??? Those apples were grown in China. I am not kidding.
If telephones are outlawed, then only outlaws will have telephones.
So why aid them by allowing US corporations to outsource a crap-load of labor over there? US corps seem to be of the ilk of "rape & pillage while the getting is good", so I don't see how we can take any sort of high ground.
They are building many nuclear reactors:
http://english.peopledaily.com.cn/90001/90776/90884/6640166.html
http://en.wikipedia.org/wiki/Nuclear_power_by_country#Countries_with_nuclear_power_plants
http://www.iaea.org/programmes/a2/index.html (search/highlight "China" on that page)
And I think they are trying to control the supply of materials used for motors and batteries.
Go figure :).
Heh.
My wife and I are raising our son in a 900sq-ft home, have a single car, and one TV. We mostly walk, bus, or cycle to work. My parents have been laughing at us choosing such a backwards lifestyle for the last decade.
We are the future!!!
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
I suppose that's one interpretation. Just because they start enjoying a better standard of living does not mean they have to have a catastrophic banking crisis brought about by poor government incentivizing in the marketplace. And I believe I explicitly said respecting their culture does not have to include the nasty bits.
Currently hooked on AMP
I have an Amana Dishwasher that was made in 1972. It works better than the dishwashers of today.
I bought an IBM ThinkPad in 1993, and it still works beautifully!!! I bought a Gateway in 2005 and the flimsy piece of shit is falling apart. It works, but I have to jiggle the monitor, fuck with the keys on the mouse as they're just about falling out.
Chrysler made solid automobiles. I own a GM (Camaro to be specific) It works great...150,000+ miles and still going strong(minimal repairs), and get this...the FUCKING BRAKES WORK!!!
I suppose it depends on your personal experience, but in my case I would way prefer "Made in the USA"
Specifically because their elasticity of demand is high.
After all, I am strangely colored.
You know, I used to really think that things that last "forever" were a good idea "all the time". Then I read the sci-fi book by John Ringo called "A hymn before battle". This had little to do with the story, but the general concept was a race that did make everything by master craftsmen and cost so much you had to mortgage them for ~ 150 years to pay for them, but part and parcel, they had a full warranty for the entire payment time and would last generally forever after they were paid for.
For some products and devices that would be great, but not for everything. The race was pretty much technologically stagnant.
Now, out of Sci-Fi for a minute. There are many things that wear out and have to be replaced that I wish I could just buy a better product. For instance, my charcoal grill rusted through and I had to buy a new one. Charcoal hasn't really changed for quite some time, and if the thing could be built to last outside for more than maybe 6 years, it would be great. I'd love to have it last decades. This holds for other items as well, such as a tractor wagon or wheelbarrow.
What it isn't so great for is things that could become demonstrably better somewhat frequently. For instance, I have a clothes steamer that I use to remove light wrinkles from clothes. I bought it about 3 years ago and it was fine. The issue is that it has a water reservoir that it heats up to create steam. This takes ~10 minutes to generate any steam at all and ~ 15 minutes to really get going. Then, it will shut off the heating element periodically to save power or prevent overheating... The problem is this basically shuts off the steam too. So I get 15-20 seconds of steam and 45 seconds of cool-down time.
I just bought a replacement steamer. It's a newer technology that uses some sort of pressurized system. It creates steam in 40 seconds and it's continuous. Now, the old one isn't broken, but I'm sure glad I didn't have a mortgage for x years for a "better built" one so I couldn't upgrade.
Another example is I have an Oreck Vacuum that I bought 2 years ago. It has a 21 year warranty. I see no reason to expect it won't last that long with them yearly (for free) cleaning it up and replacing any parts that are bad. But there are already new models that look prettier (aesthetics are important to many people, if not really to me) and have new features like UV lights on the bottom to kill germs. I don't personally think these features are or would be worth upgrading, but I put a lot of money into the existing vacuum and so wouldn't upgrade for a long time. In 10 more years I might well have to drop the existing investment that would work fine due to great maintenance, but is so far behind technologically I really want the new features.
One existing example is I have a ~ 6 year old Motorolla cell phone. It works fine, and I can replace the battery every 2 years or so for about $5 including shipping. It's strongly built and probably will continue to work for a few more years. However, it is absolutely blown away in functionality and uses by, say, an iPhone or Droid.
Finally, consider Cars. You already have ~5year loans to purchase one now. So look at how invested we are in oil to keep running our economy - wars etc because we can't get people to easily upgrade to a hybrid en-masse due to the cost and expected lifetime of most cars, which is over 10 years now on average, and I certainly see a lot of people going for 20 years. But people with a 20 year old car not only likely pollute more and require more gas, but don't have major safety features like anti-lock breaks, air bags, traction control, electronic stability control not to mention things like cruise control, back up cameras, auto-parallel parking, etc that are either standard or available on many cars now.
I don't like disposable junk, but there are good reasons to allow for reasonable cycles of new technology. I don't think it's a great idea to artificially try and freeze or slow down new tech either.
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