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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.
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
>> 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
Penalties are the wrong way to go about it, period. You don't get an industry that's healthy by shielding it from competition. I can't believe I, as a liberal, have to explain this. All you get from erecting barriers to competition is lazy, complacent industries that offer no benefit.
Foreign competition *is* good competition. Any competition is good as it increases the incentive for improvement.
If you want to prop up your local industry in some area (and I'm agreeing that is a worthy goal), the most economically efficient ways to do that is worker training and infrastructure development. A business that's able to setup shop, hire the needed workers and have all of the communications, transportation, logistics and property protection will locate itself there. The price difference of wages is peanuts on their balance sheet.
Want to know why people locate to Shenzhen? Go there. The actual wages there are pretty damn high actually and the cost of living rivals most of the US. But if you have an idea for a gadget or product, you're up and running in easily 1/10th of the time it takes in the US and to ramp up production to the millions? That ain't happening anywhere in the US.
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.
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.
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.