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Why Amazon Can't Manufacture a Kindle In the US
theodp writes "Ever wonder why all those job listings for Amazon subsidiary Lab126 — the internal group behind the Kindle and, by all accounts, an upcoming Android tablet — have travel requirements? Over at Forbes, Steve Denning explains why Amazon can't make a Kindle in the U.S., and why that really does matter. 'The idea that there is a lot of outsourcing going on is hardly news', writes Denning. 'The idea that it is irreversible and destructive of the economy's ability to grow is less well known. Even so, it's not exactly new news: the HBR article that I cite is two years old. What is really new news is that (1) these fairly obvious truths haven't yet dawned on economists at the Federal Reserve Bank of San Francisco, CEOs, accountants, politicians, among others and (2) the way to manage in a radically different way to deal with these issues is now more fully articulated than it has been before.' Denning concludes his trilogy-of-management-terror by noting that the decline is also occurring in software."
...it dawned upon them a very long time ago. But at the end of the day they'll get a bigger paycheck if they outsource something to lower the costs. Let's be honest, there's always someone somewhere on this planet who does it cheaper...and now guess what Capitalism is about.
Not really. The US used to have much better manufacturing plants than Taiwan, South Korea, China... what happened is that companies decided to outsource for slave-labor wages.
What is killing US manufacturing now is both slave-labor wages in other countries and the fact that the fab plants have moved there. This wouldn't have happened in the first place if the dickfaced politicians on the take from an elitist multibillionaire class hadn't been so gung-ho on "global free trade", aka Slavery Exported.
Read the article - it seems you completely missed the point. When you trade entire industries, you are also changing the comparative advantages of the remainder. If you get stuck in a feedback loop you will essentially keep going until you have gutted entire sectors of the economy - this is exactly what the West have been doing for many years.
The Yuan is not floated like many countries currencies are. This gives China a significant competitive advantage over all countries to produce goods and services in their country. China take the long view. They know that his will weaken manufacturing in several countries and drive demand to their economy where labour laws and conditions are under their control. Incrementally they will capture those markets.
The irony in all this is that China is still a communist country using capitalism to destabilise democracy.
My ism, it's full of beliefs.
The highly polished injection-molded case is made in China because the US supplier base eroded as the manufacture of toys, consumer electronics and computers migrated to China.
Considering I've worked on advanced injection molding machines IN the US this is such pure bullhockey.
The controller board is made in China because US companies long ago transferred manufacture of printed circuit boards to Asia.
Another BS line, again I've worked with an assembly line making PCB's and finished boards, right here in the midwest.
The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers.
The worlds largest lithium-ion battery facility is just being finished outside Dearborn, Michigan right now.
This whole article reads like some rant by a coastie who has no idea that we still make things here in the midwest, and if the MBA's would stop deciding to chase short term profits at the cost of long term brand erosion and control we would be happy to keep doing it. Over the next decade increased fuel costs paired with a decoupling of the Chineese Yuan from the dollar will lead many companies to pull manufacturing back to the US.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
Would it have been better if that slavery would not have been exported?
Yes, because the bleeding hearts couldn't stand seeing it locally, so they got rid of polluters, sweatshops, abusive management. IF we could export those guys to China, they would clean up China, which is pretty much a hellhole. Better than it was 10 years ago, but still a hellhole..
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
Exactly! How dare those damned poor ask for a wage where they can afford rent AND food.
The audacity of it all... Rent AND Food? Next hey will ask for heat and running water. WE need to just put them all down for the sake of humanity.
I have to waste time today hiring a Plant manager to beat my employees... The last one developed tennis elbow from swinging the bat the wrong way so I had to fire him.
Do not look at laser with remaining good eye.
The arguments that retooling is hard, just doesn't make it. Planned retooling is now designed into the manufacturing process. The U.S. helped develop the the Japanese manufacturing base by ignoring Demming. The Japanese were known for poor quality, so even with their lower labor rates. The Japanese improve their quality by following Demming and eventually overtook U.S. manufacturing and steel production. The remaining U.S. industries learned to focus on statistically analysis integrated quality control, and designed retooling became part of the process. So what drives the decision to outsource: 1) lower environmental standards, 2) lower overall employee costs, 3) tax benefits, 4) economic stability.
I think the underlying article hits the problem straight on. These economic factors are enticing from a cost accounting perspective, but not from a competitive one. Eventually, the knowledge is transferred to the low cost producers and they no longer need the costly U.S. managers to drive the business. We see that now with the rise of Haier and Chinese manufacturers who are beginning to dominate the lower end market. Eventually, they will displace the high margin businesses.
The U.S. main advantage in the past has been easy access to capital via efficient markets. With the current crisis and the idiotic standoff over debt, these markets may give rise to competing capital markets in SE Asia. The Chinese are flush with cash and it won't be long before they start to bypass the Western capital markets.
So what do we do? First, stop letting corporations drive the political agenda, because their short term focus is killing our industry. If we changed our focus to research that will enable lower cost production even with high labor rates, we can pull back manufacturing. This will have to be done at a grass roots level, because Wall Street will not invest in this kind of retooling when they can invest in companies that outsource. This means that we need to stop electing corrupt corporate lackies and uneducated religious nutcases, and change the rules so we encourage companies to invest here. Here a though, remove ALL corporate loopholes, and offer tax incentives only to those companies that in-source production and service jobs. Offer tax breaks to companies who invest in basic research programs that will innovate product and keep the technology here. This incentive can extend to University research which is most corporate funded anyway.
If you believe our problems stem from big government and the fear of socialism, then you are an idiot. Socialism is beating the f..king pants off of us right now, so that can't be the main issue. We as citizens must drive the political agenda and encourage Wall Street to invest in companies who develop our local economies. Otherwise, start learning Chinese because they are destined to be your overlords.
It isn't Unions, socialism, or big government that is killing us. It is the short term thinking of Wall Street. Once Wall Street was temporarily taken out of the picture at GM where they perpetuated a management culture that was adverse to change, the company was able to shed its high cost assets and return to profitability. In essence, it took government action to force the correct change in direction.
The US used to be better at manufacturing electronic components then the US. This is no longer the case.
How long do you think it will be before the US is no longer top dog in making planes? Tell me... which is the biggest passenger plane in the world? Airbus came out of nothing and is build with EXPENSIVE european workers and the US can barely compete. How do you think it will fair against Chinese build aircraft in 2 or 3 decades?
This discussion is nothing new, a few days ago I asked people to name a US consumer electronics firm. People named Motorola (been selling off its divisions since the 70's to asia) and Apple (a design company that has everything build in Asia).
There is the dream in the US that you can outsource all the drudge work and keep marketing, sales and design... and run the economy on that. 300 million people, all selling, marketing and a handful of designers...
If you can't see just how silly this concept is, well, then there is no hope for you. Vote tea party and pray the end comes swift.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Which also happens in the US.
Apple are the heavyweight in cheap consumer electronics, and American owned. We should be asking why they aren't building in the US, especially as most of what they "build" is putting together other companies' components.
And we should be defining what "make (or made)" and "build (or built)" mean. If I buy a motherboard from taiwan and build a computer from it in the US, is it "Made in America"? What if the motherboard is from taiwan, CPU from Arizona, hard drive and case from China, power supply from California and I build the computer in Dallas, is it "Made in America"? What if the parts are mostly from the US but they're assembled in Mexico, what is that? And we can take it further, what if the parts are made in the US but the rare earth elements used in those parts are from China, where is it "made"?
Car manufactures have been playing this game for years, buying parts from overseas but assembling the car in the US and calling them "American made". It's so bad that there's a American-Made Index where they rate cars based on how many of their parts come from the US and vehicles like the Toyota Camry and Honda Accord are more "American made" than the Chevy Traverse or Ford Explorer and American icons like the F-150 and Silverado don't even make the list, so people buying trucks from Ford or GM thinking they're supporting America really aren't, they'd be better off buying a Toyota Tundra.
Obviously if the metal, chemicals and other rare materials were mined in the US to make the parts in the US used to assemble the device in the US then it's 100% American made, but that's almost never going to happen so we need to clear this up before we can call something "Made in America".
my karma will be here long after I'm gone
The problem is that even if unions led to good things in the past, you have to recognize that they can also go very, very wrong. To be 100% pro union or 100% anti union is an unthinking position. People in those camps are no better than a cardboard sign.
I guess people want to work 12-18 hours a day, every day... and that is just their kids in the coal mines who will get black lung disease before 18.
I'm sorry, but that is just a fuckheaded thing to say. No, people are seeing some very corrupt and broken unions today, and want it fixed, but people like you can't raise yourselves out of the muck of extremist bullshit rhetoric. It's all false dichotomies and dilemmas with you people.
Nothing is perfect, but unions have made life a lot better than it was before. But because they are unions and get in the way of profits, I guess they are bad.
Can you not even understand that they can be both? That different unions are different things? You demonstrate the #1 problem with this country today. No one can see any nuance or individuality. Instead of seeing the different unions out there and judging them individually, it's just "DERP! UNIONS GOOD!" and "DERP! UNION BAD". You are part of the problem. I hope you're fucking proud of yourself.
How long do you think it will be before the US is no longer top dog in making planes?
It will be quite a while (if ever) before the US does not have world class aircraft manufacturing. There is of course no guarantee that the US will maintain dominance in this industry but it isn't going to go away quickly.
Tell me... which is the biggest passenger plane in the world? Airbus came out of nothing and is build with EXPENSIVE european workers and the US can barely compete.
Airbus has been around since 1970 and was form out of a consortium of existing aerospace manufacturers - hardly out of nothing. I'm pretty sure that the folks at Boeing would be very surprised to hear they they cannot compete with Airbus. The 747 is built with expensive US labor and Boeing is still selling plenty of those. Both companies have delivered similar numbers of planes for the past 20 years and there is no reason to believe that will change soon. The fact that the A380 is larger means very little by itself.
There is the dream in the US that you can outsource all the drudge work and keep marketing, sales and design... and run the economy on that. 300 million people, all selling, marketing and a handful of designers...
The US has a $3.7 TRILLION manufacturing sector. That is larger than the GDP of all but about 5 countries in the world. Even China does not manufacture anywhere near as much stuff as the US does. The notion that the US has exported all its manufacturing is simply not supported by the facts. There are (and always have been) some industries that are dominated by firms in other parts of the world. That does not however translate to the US outsourcing all its manufacturing expertise.