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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.
Frankly, there needs to be some compromise in the government. Let workers unionize, but also slap 300% tariffs on companies that do this.
maybe one day they will accept that.
What this is is a hard landing for "Manufacturing 4.0" advocates and dotcom monkey.
NO mater how much robots you put to screw a screw, you robots can't compete on cost with Chinese.
While labour costs in China are nowhere near being laughable as they were a decade ago, they still outcompete any Western high tech manufacturer. Western manufacturers have no trouble getting orders from DoD to make banal power converters for 10k a pop. Why would they even try competing with Chinese?
Making a top tier factory is a no joke enterprise that takes years, billions, patience, and serious people. You can't simply roll $10 billion USD and have a TSMC-level fab delivered by mail order, nobody in the world will do it for you. It is only possible for an entrepreneur who is ready to spend his life sitting butt naked on an ant pile, building a company along with its technology base - each TSMC fab is a miracle, a work of art, a creation, not something anybody in the world will teach to build or run
This has little to nothing to do with American manufacturing. The product was a joke, I doubt it sold in quantities large enough to make it even worth anything. Nobody is paying $22K for a 55" TV with touchscreen.
I bet the only ones they sold were to cable news channels as that's the only place I've ever seen them.
The profit margin on the $22k Surface Hub wasn't quite high enough using U.S. employees.
Don't be fooled by your company's slogans; "profits" not "employees" are the company's most valuable asset. Remember what Veronica said in Better Off Ted (S1 E4: "Racial Sensitivity"), which was refreshingly honest:
"Money before people," that's the company motto. Engraved on the lobby floor. It just looks more heroic in Latin.
[ And, no, I'm not against companies making money, but there's more to it than that. ]
It must have been something you assimilated. . . .
Microsoft tried to make some Surface units in the U.S. because they thought of it as marketing.
Microsoft has ended the local manufacturing because the marketing doesn't seem to be returning the cost of the effort.
In short, Microsoft never actually cared about helping to regain some manufacturing in the U.S. They just wanted to *look* like they cared. None of it is a surprise in any way.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Large trade imbalances are a problem; not just for jobs, but because the financial imbalances it causes, and a host of other risks. For example, if we gut our manufacturing base, we could have insufficient manufacturing facilities during an extended war. Venezuela's problems have a Yuuuge lesson: don't put all your economic eggs in one basket. Variety is a backup system, even if it causes short-term inefficiencies.
BUT, Trump is doing it wrong; or at least not in a coordinated way.
An imbalance penalty tariff should be applied to trade with a level based on the imbalance amount: the bigger the imbalance, the bigger the penalty. We'd have to tell the WTO to shove it, though; or get them to change the rules.
However, the penalty shouldn't suddenly be applied in full, but gradually ramped up to give the country and companies time to adjust. We don't want to shock the system. Trump doesn't have the patience for gradual ramp-ups; and the full effect may outlast a presidential term even. It would have to be a coordinated political effort.
Table-ized A.I.
There are PLENTY of poor American in West Virginia and eastern Ohio who can work cheap.
It isn't the USA that is unaffordable, it is the coasts and cities that are unaffordable.
We have two at work (one 84" and one 55") and so far they have worked pretty well for what they are supposed to do. It is up to management to decide if it was worth the cost in the end, but so far I haven't see any issues with them. Other companies MMV of course, but we have a lot of remote employees so it has worked out well for company wide video conferencing, white board for meetings, connecting laptops to it, etc.
It may simply be the case that Wilsonville's capacity can't meet the demand. You can't even buy a Hub on the Microsoft store right now, and Ars wrote that MS was caught off guard by the popularity.
>> The company hasn't explained, in public or to its Wilsonville employees, why it gave up on domestic manufacturing so quickly
I'm guessing the factory was built to collect an Oregon tax credit or to otherwise mollify some state-level lawmakers. Now that the tax credit has been cashed in (or related legislative/regulatory policy has been created/averted), it's time to pull the plug.
Or maybe this was just the minimum time required to figure out and outsource all manufacturing. There's a June 2015 NYTimes article which pretty much said the same when the factory opened (via acquisition):
"Mr. Hix had a downbeat assessment for what would happen to the manufacturing of the Surface Hub if the product took off and the production process was refined. 'Once they get all the problems out of it, it will go offshore,' he said."
https://www.nytimes.com/2015/06/11/technology/microsoft-picks-unusual-place-to-make-its-giant-touch-screen-the-us.html
cable news channels as that's the only place I've ever seen them
and on NCIS re-runs. Investigations into homicides and counter-terrorism; but the show seemed pretty convincing as a career that won't get outsourced, believe it or not.
WARNING: Smartphones have side effects--most of them undocumented.
The new coal mines are for the manufacture of steel. Please tell me how to make steel without coal.
If you're scared of your govt then you need to further restrict its powers
Vote 3rd Party in 2016 and beyond
Correct. People scream bloody murder about the offshoring of jobs, and then head to Walmart to buy more cheap Chinese shit.
And every morning they run their Chinese-made American flag up the flagpole while thinking about what a good American they are. The American dream is dead and Americans have no one to blame but themselves, as they enabled ALL of it.
Companies move manufacturing offshore due to labor costs. Less labor cost, more profit. Since the 80s, employees have been considered liabilities or cost sinks rather than assets.
Companies who hype up domestic manufacturing attempts are most likely doing it for the PR. Google did it when they opened the Motorola plant in Texas.
"Why???"
"Well, Donald Trump wants us to stay, so we've gotta go."
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
it's almost as if the free market didn't care for sentimental bullshit like "made in Oregon"...
And yet the CPUs are made in Oregon.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
Hmm, not a very American sounding name, is it...?
Just saying.....
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Dealing with technical people all the time, it never ceases to amaze me how few understand life outside their little comfort zone. Any time they have to deal with someone who's lower-skilled than themselves, it's an annoyance and they run back to their crowd as soon as they can. Just like a lot of people say everyone should have at least one menial job serving food, working retail or otherwise dealing with the public, I think it would do smart people a world of good to put in some time working in a social services office. Doing so may reveal to smart people that the vast majority of the world is not like them, and may convince them that we shouldn't shoot for 100% optimization if that leaves out a huge swath of the population.
The truth is that we need something at the level of a manufacturing job, that delivers a lower-middle class salary, has regular hours and can be done by people of average intelligence. I know AI is being overhyped now, but the vast majority of white collar corporate jobs are up for replacement next as well. Unless you want society to break down, you're going to need to give people jobs. I grew up in a Rust Belt city and watched every large factory move to the South or overseas, leaving a burnt-out shell of a city. Not Detroit-level, but it's only now coming back. You need employers like this to give work to the masses who can't be big data scientists or work in engineering.
Feel free to call me a Luddite, but leaving some slack in the system will be the only way to preserve it. We're at the point where people can't just move up to the next better job when automation takes theirs. For better or worse, most people are doing the equivalent of factory work, including corporate types.
H-1B.
They couldn't find any Americans to lay off 124 workers.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
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.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
What is an "American sounding name "?
The majority of Americans are descended from immigrants from all over the world.
Or are you suggesting they should have been fired by Chief Squatting Eagle ?
A house is being built right now in the lot next door to me and the mariachi music is filtering through my window as I type. Good luck with the construction job....
love is just extroverted narcissism
Leave him alone. He's just doing his business.
#DeleteFacebook
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.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
The product starts with an 84" 4K television set, which costs about $8000. Meaning it would be rather difficult to create a finished product that costs less than that after adding touch screen sensor, Windows PC, stereo speakers, 2 WiFi routers, 2 cameras, etc.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Turns out labor costs are trivial compared to the cost of building a $2 billion fab. Fabs don't even last forever, I believe they are decomissioning the Aloha fab, which I think was the first one they built in Oregon.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Home of the "American Standard" plumbing manufacturing company!
I've abandoned my search for truth; now I'm just looking for some useful delusions.
The new coal mines are for the manufacture of steel. Please tell me how to make steel without coal.
According to my Fundamentals of Metallurgy (ISBN 978-1-85573-927-7), metal oxides are most often reduced by carbon monoxide CO, or sometimes hydrogen. The reactions needed to refine iron oxide (iron ore) into iron involve both melting the ore and adding CO. Iron occurs predominantly in nature as hematite, Fe2O3. The reduction reactions include:
3Fe2O3 + CO --> 2Fe3O4 + CO2
Fe3O4 + CO --> 3FeO + CO2
Fe2O3 + 3CO --> 2Fe + 3CO2
Fe2O3 + 3H2 --> 2Fe + 3H2O
FeO + CH4 --> Fe + 2H2 + CO
3Fe2O3 + 5H2 + 2CH4 --> 2Fe3C + 9H2O
FeO + CO --> Fe + CO2
The above includes reactions using CO, H2, and CH4 (natural gas). Not all reactions are used in each process. Coal gasification and natural gas reforming are convenient and economical ways to generate the CO and/or H2 to process iron ore, but neither of these fossil fuels is strictly required for the redox reactions used to manufacture steel.
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
Most modern steel mills use electrical arcs to smelt instead of coke derived from coal
You still need a large quantity of either CO or H2 to reduce iron ore into iron. Coal gasification and natural gas reforming are convenient and economical ways to produce these gasses. They are not the only ways, but they may well be the only economically competitive ways at the current time.
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
Mc O'Brian. Fritzenberg. Dopwrzalkaschulski. Cazzopatate.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Final assembly of a product is merely one link in the supply chain. If you want that chain to run smoothly you group as many of those links as closely together as possible.
It is true - It was a harbinger. Just not the way people thought it was.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
Microsoft has become like the old IBM. Sell 'reasonably' priced clients, sell lockins to powerful servers to get your work done, 'innovate' exceptionally pricey hardware... But then, there is their XBox division. Hmm...
Always Be Evil(sm)