Microsoft's Wilsonville Jobs Are Going To China, Underscoring Travails of Domestic Tech Manufacturing (oregonlive.com)

An anonymous reader tips us a story: Just two years ago, Microsoft cast its Wilsonville factory as the harbinger of a new era in American technology manufacturing. The tech giant stamped, "Manufactured in Portland, OR, USA" on each Surface Hub it made there. It invited The New York Times and Fast Company magazine to tour the plant in 2015, then hired more than 100 people to make the enormous, $22,000 touch-screen computer. But last week Microsoft summoned its Wilsonville employees to an early-morning meeting and announced it will close the factory and lay off 124 employees -- nearly everyone at the site -- plus dozens of contract workers. Panos Panay, the vice president in charge of the Surface product group, traveled from corporate headquarters in Redmond, Washington, to tell the staff that Microsoft was moving production to the same place it makes all other Surface products. Though workers present say he didn't disclose the location, Microsoft has previously said it makes its other Surface computers in China. The company hasn't explained, in public or to its Wilsonville employees, why it gave up on domestic manufacturing so quickly and didn't respond to repeated inquiries for comment. But the only thing surprising about Microsoft's decision is that it tried to make its computers in the U.S. in the first place.

Comments

Re:What this is

[TechyImmigrant]

>NO mater how much robots you put to screw a screw, you robots can't compete on cost with Chinese.

This is wrong. You can't compete with the Chinese on flexibility and responsiveness in manufacturing. Well you could, but you would have to get a lot better at it and have the government on your side. The Chinese chose to be good at manufacturing and in particular contract manufacturing and they have a large infrastructure dedicated to that. Chinese labour costs are lower than the US, but that only counts for labour intensive manufacturing.

Cost is one thing. Dealing with a million other crappy things is also a differentiator. My wife gets yarn manufactured around the world and imports it to be sold in yarn stores. It is substantially easier in terms of red tape, to get it made in China and import it than it is to get it made in Washington state and delivered to an address in Oregon. Also, the best makers of bamboo yarn are in China so it's not question that we would get that made in China. It's work to get them to manufacture to our packaging standards and in configurations that work for US markets, but that's easy compared to dealing with the tax departments of 50 US states. The highest quality yarn maker in the world is in the UK. Their stuff is costly more due to shipping from the UK than from the cost of manufacture. I've seen their factory floor and from processing incoming unprocessed sheared wool, to spinning to coning or balling involved 4 people.

Outsourcing vs. Protectionism

[sycodon]

When someone can pick up a plant from China and plop it down in WA, pay the same wages, follow the same work rules, dispose of their waste in the same manner, THEN you can say outsourcing is a fair thing to do.

The fact is that you can't. And you can't for reasons that most people agree are reasonable...health and safety of the workers, environmental protection, workplace environment rules, etc. Most people would agree that these rules are in place for what they might call moral reasons, or, it's the right thing to do.

But for some reason, it's no longer the right thing to do when that plant is in China or other third world places. Somehow, what is considered immoral pollution here is not immoral pollution in China. Intolerable work environments here are some how perfectly fine in the third world. But, US consumers and manufacturers are more than happy to take advantage of the low costs of product even when that is only possible in a factory that would be sued out of existence were it in the US.

Outsourcing to China and other places isn't "competition" it's exploitation. But try and do anything about it and you will be called a protectionist or worse.

Thanks, Trump!

[Locke2005]

My previous job was actually working at the Wilsonville factory on the software used to test the Surface Hub before it was shipped. All the factory workers were temps hired through Kelly Services. Almost all of them looked like immigrants to me. They put on double shifts in order to fill the warehouses with unsold product, so now they can shut down for a couple months while they shift production elsewhere. Why were they doing production in the US in the first place? Microsoft got the Surface Hub by buying out Perceptive PIxel, which was manufacturing it's large touchscreen in the same building Microsoft is now shutting down. Also, there was never enough parking at the plant; it was designed as a shipping warehouse. So the city of WIlsonville didn't allow us to use the entire upstairs portion of the building, since there wasn't parking for employees. Kelly services leased 2 buses to bus in factory workers from whereever they had them park.

Re:T is doing it wrong [Re:No Worries.]

[imgod2u]

I said Shenzhen. Not China. The thing people even in the US can't grasp is just how *vast* China's population is.

You can hop on the high-speed rail, cross 150 miles (in about 40 min) and go from bustling metropolis (Google for housing prices in Shenzhen, it's about comparable to San Diego) to a dirt-poor village. The income and cost of living difference can easily be 10-100x.

Of course, on a pure average level, China as a whole is still well behind the US in terms of income and cost of living.

But most companies who setup shop in China for at least skilled work (and there's a lot, increasingly more) are doing so in large cities with comparable costs of living to the US. And there's a reason they locate there. It's so easy to setup shop.

Also, I never mentioned regulation when it comes to "setting up shop". Because for the most part, regulations are a 2nd order effect. Companies will live with more or less regulations unless they're insane ones.

The biggest draw of Shenzhen is infrastructure and talent pool. We don't have enough mid-skilled tinkerers in the US. It's either poorly trained grunts or highly trained (and highly paid) professionals. You want basic CAD drawings, a simple business plan or just some entry-level technicians? Good luck hiring enough in the US. And even if you find them in the US, they require relocation packages.

In Shenzhen, you get millions of semi-skilled people traveling 100+ miles one way to go to a job. In less time than a typical Bay Area commute.

Compared to the effect of those, regulations are noise.

Re:The tax credit check cleared

[Locke2005]

The factory was inherited from Perceptive Pixel when they bought them out, not built by Microsoft. Was Perceptive Pixel doing manufacturing in Wilsonville for tax credits? Probably. I worked there, and all other hardware Microsoft sold was manufactured in China, including the pens used with the touch screen. So I frequently wondered when they were going to move the touchscreen manufacturing itself to China. Problem was, they had to fill the warehouses with unsold product first, so they could afford to shut down for a couple months to move product without impacting availability of the product. About the time I left a couple months ago, the warehouses were full to capacity, and the double shifts were being phased out.