Skip to comments.Why you can't compete with Chinese labor
Posted on 01/13/2013 5:53:02 PM PST by navysealdad
Maybe He get's paid in candy??(video)
(Excerpt) Read more at uvideo100.com ...
Oh, but we can....and are. There is now a lot of manufacturing being brought back into the U.S., thank God....and for good reasons.
Just a couple of them: the rise of the middle class in China.
When China first became “manufacturer for the world”, you could pay their untold zillions of workers a chicken a month or something and they’d be cool with it. With success comes greater expectations (gee, who knew). China now has a HUGE middle class, not to mention a phenomenal number of millionaires/billionaires....and they demand more. Much more.
In short, they just ain’t as cheap as they used to be. Gee golly, who saw that coming?? (ahem...cough....Japan....cough....)
How many customer service/call centers were outsourced to India? Many...most. Well guess what the geniuses who did that did NOT look into? Indian law. Their “privacy laws” are vastly different from our own. Many U.S. companies learned this the hard way and have paid a HEAVY price. Screw it; not worth the exposure....bring it back.
Those are just two small examples....there are many others.
Let’s add one more: the cost of energy in this country is dropping and will continue to drop. We are now a HUGE producer of natural gas and, thanks to fracking, oil. This reduces cost of business domestically. Why pay to ship stuff from the far corner of the globe....it’s expensive....when power is cheap here, labor is plentiful, even if at a higher rate? The economics just aren’t as “obvious” as they were a decade ago (in favor of overseas manufacturing).
I got this in my email today, and I don’t believe it. It’s possible that he’s a midget. However, I’ve traveled in China and they have their own unemployment problems. There’s a waiting list for the Army, FGS. They don’t need to employ children in heavy industry.
Not that they don’t employ child labor, but that’s usually for jobs that require fine motor skill and sharp eyesight, such as bad work and silk embroidery.
You forgot the lowest expense population ~ forced inmate labor.
This recently came to light in a message secreted in Halloween costumes .
The only things that really help their case are the lack of individual freedom, the tight binding between business and state(where you can’t really tell which is which), and the ability to efficiently dispose of opposition.
The same thing can be found in the other “cheap” countries as well - just in different forms. The only thing that China has in its favor now isn’t so much cost as much as it is having the largest pool of labor that is also the most easily controlled.
Not just candy... new Trident layers.
Sorry, I’m apparently a sucker for a commercial taglines.
All good points
I think the days of Free Trade Communism/Globalism are over. You cannot create a job in the United States of America by shipping the American job to Communist China, Drug Cartel Mexico, or Rape Factory India....that is just plain economic fact
Eventually, as Communist China’s birth rate declines, they will have fewer workers. Their cost of labor will increase....to the point of it being too costly to continously ship goods 7000 mi back to the USA. Also, Communist China produes little of quality, and the only way they were competitive is by being cheap.
I can still remember a time when, if you ever stated that “Free Trade with Communist China is good”, you were considered seditious and treasonous. I think the GOP, instead of pandering to Hispanics via Illegal Alien Amnesty...would win back many of the Conservative “Reagan” Democrats in the Rust Belt states by dumping Free Trade and re-instituting Tariffs....tariffs sure worked for our nation before they were replaced by the Income Tax
Shipping manufacturing overseas was a bad economic move, and a bad national security move, as so much of our high tech and war material is now made in Communist China. Of course, you will still have those who support, willy-nilly, shipping everything over to Communist China. Hey, they are just like Sean Penn kissing up to Hugo Chavez in Venezuela
Jobs were eliminated by the millions ~ but we should be able to underprice everybody in the world on anything requiring machine processing within maybe 5 to 10 worlds.
The union bosses and OSHA would not approve. Unless they got a big cut of the candy !
That all of the people in the U.S. making service calls could not understand what the F**k they were saying!
I’ll belive it, I ran a skip loader when I was 9 loading sand into my fathers trucks.
He started teaching me to use power tools when i was 4. When I was 8 I taught myself to weld and channeled a 32 5 wiondow coupe and built a 3/8 3/8 flathead for it for the 16 year old numb nuts kid across the street.
Drove a flathead rail at Santa Ana when i was 12.
Kids today are not only lazy but idiots with no work ethic.
“Hello to you.....my name is....Cheep [”Chip”] and I will for to be helping you this day. Please to tell me your name and spell it for me please if you will....ok and now please for to tell me your problem.”
This is the kind of thing farm boys stateside routinely do. I am impressed by how well he operated the equipment though. I had thought the Chinese mostly used wheel barrows and manual labor to do construction. I’m surprised that they have heavy equipment.
A few years back, I read an article in a business magazine about a Chinese factory owner. His company made light fixtures. He was closing his factory in China and moving it to Vietnam. Why? Because he could pay his labor in Vietnam $100 a month.
You must not have watched to the end.
The cameraman climbs into the cab at about the 8 min. mark.
If you watch the kid climb up, it’s clear HE’s a KID!
My thinking is that I have no problem with this, except for the operator not being able to wear a seat belt. One false move and he will be pitched to the ground, possibly in the path of one of the wheels. But there’s probably a lot of kids that would like to have that job.
He doesn't look like a midget. Midgets tend to have distorted features. I suspect he's just working in the family business. The Chinese have never been big on child labor unless they were living hand to mouth. It's a prestige thing. Everybody wants to have a scholar in the family. It's even better if he makes a lot of dough in the process, but having a kid with credentials is some kind of aspirational thing with them going back thousands of years.
“My thinking is that I have no problem with this, except for the operator not being able to wear a seat belt”
You couldn’t make me wear a seat belt!!!
I attended ConExpo in Las Vegas in 2011 - I believe it is one of the largest tradeshows in North America and is held every three years. The focus of the tradeshow is construction equipment. Sany, a chinese equipment company, was easily one of the largest exhibitors there, bigger than Cat, bigger than Deere. They had almost no presence (that I can recall) at the previous ConExpo of 2008.
Heee Heeeee exactly right!
Another reason to bring work back to the US or other western countries: intellectual property. You build your factory, give them the designs, the parts lists, the assembly instructions. After starting production and building up the supply chain, a manager of your factory goes down the street, uses your designs and assembly instructions and starts building YOUR product. For less than you. And then starts selling it for a little less money and a lot more profit.
Even in “The World is Flat”, the author states that non-compete agreements didn’t seem to translate into Chinese.
Then keep their slave-labor garbage out of our country.
Most of the Asian Tigers (Korea, Taiwan, Singapore, Malaysia & Thailand) had limited individual freedoms during their fast-growth years. And the state remains a major player in those countries. China's advantages relative to countries with similar or lower wages are (1) its relatively business-friendly policies, (2) its relatively low level of corruption, (3) a highly-motivated and intelligent work force and (4) relatively good infrastructure, including roads, rail, power, water supplies and communications. Based on nominal GDP per capita numbers, the average Chinese wage is 5x the average Indian wage. Its GDP per capita rank is in the upper half of the 200-odd nations on the list, up from nearly rock bottom 30+ years ago. The ruling party's wholesale adoption of the Singapore model of development appears to have paid off in spades. Singapore's former prime minister (and still probably the eminence grise in Singapore), Lee Kuan Yew, recalls his meeting with Deng Xiaoping in 1978:
ONE founded a tiny nation of two million, and succeeded in turning it into an economic powerhouse.
The other reformed a once-great empire of more than 900 million, and was trying to grow its economy after years of poverty and isolation.
One had grown up in an Anglicised family, spoke English better than he did Mandarin, and fought the Communists.
The other spoke only Mandarin, with a Sichuanese accent, and was a Communist leader.
Yet both men saw what was needed to create order out of chaos, and were not afraid to make radical changes to achieve what they wanted for their countries.
For this, they shared a mutual respect and admiration that cemented a ‘special relationship’ between Singapore’s founding father Lee Kuan Yew and China’s reformer Deng Xiaoping, according to a new biography of the Chinese leader.
By the end of Mr Deng’s first official visit to Singapore in 1978, says its author Ezra F. Vogel, the two men had developed a bond that, ‘like that between Zhou Enlai and Kissinger, enabled them to communicate with mutual respect on a common wavelength’.
Modern China’s first premier Zhou and then US Security Adviser Henry Kissinger were instrumental in taking the United States and China towards resuming diplomatic relations in the 1970s.
Likewise, Mr Lee and Mr Deng’s relationship paved the way for diplomatic and economic ties between Singapore and China.
In his newly published book, Deng Xiaoping And The Transformation of China, the eminent Harvard University academic Vogel reveals for the first time the depth of Mr Deng’s admiration for Mr Lee, and describes both men as having much in common.
They had come of age fighting colonialism, were both ‘straightforward realists, utterly dedicated to their nations’, and believed in the need for strong leadership.
‘Deng had close ties with many foreign leaders, but his relationship with Lee reflected a greater depth of mutual understanding,’ writes Professor Vogel. Only one other person, Hong Kong tycoon Yue-Kong Pao, he says, had bonded with Mr Deng the way Mr Lee did.
‘From Deng’s perspective, what made Lee and Y.K. Pao attractive was their extraordinary success in dealing with practical issues, their first-hand contacts with world leaders, their knowledge of world affairs, their grasp of long-term trends, and their readiness to face facts and speak the truth as they saw it.’
According to Prof Vogel, Mr Deng admired the Singapore leader’s accomplishments in the young Republic, while Mr Lee was equally impressed by how the Chinese leader was dealing with problems in the Communist giant as it tried to enter a modern world.
Prof Vogel, who has written a number of influential books on the rise of Japan and Asia, is best known for his 1979 book Japan As Number One: Lessons For America. Aware of Mr Lee’s familiarity with Mr Deng, he flew to Singapore to interview the former prime minister when researching his latest book.
Then Vice-Premier Deng and Mr Lee first met in 1978, when Beijing was seeking support from South-east Asian nations amid strengthening ties between Vietnam and the then Soviet Union. By this time, the two Communist giants had fallen out, and China was afraid that Malaysia, Thailand and Singapore would swing over to the powerful Soviets.
Prof Vogel says that when Mr Deng visited Singapore on Nov 12, 1978, both men were already ‘aware of the other’s reputation’, and made special efforts to bridge the cultural gap.
Mr Lee prepared a spittoon for Mr Deng and offered him an ashtray, knowing the Chinese leader’s habits. But Mr Deng, having found out Mr Lee’s views on smoking, made sure not to spit or smoke during their meeting.
When Mr Deng laid out his fears about the Soviet Union, he was surprised by Mr Lee’s frank reply that Asean nations were more worried about the ‘China dragon’ than the ‘Russian bear’, as Mr Lee recounts in his own memoirs.
But Mr Deng recovered quickly, and asked what was wanted of China – a question that ‘astonished’ Mr Lee, who recalled the meeting in his two-part memoirs, The Singapore Story.
‘I had never met a communist leader who was prepared to depart from his brief when confronted with reality,’ he wrote, ‘much less ask what I wanted him to do.’
Mr Lee too paid tribute to the Chinese reformer: ‘He was the most impressive leader I had met. He was a five-footer, but a giant among men. At 74, when he was faced with an unpleasant truth, he was prepared to change his mind.’
Indeed, their meetings – Mr Deng and Mr Lee met again in 1980, 1985 and 1988 – ultimately led to significant changes in the relationship between China and Singapore.
Up till then, Beijing and its propaganda had refused to recognise Singapore’s independence, and condemned Mr Lee as a ‘running dog’ of the West.
But, writes Prof Vogel: ‘A few weeks after Deng visited Singapore, this description of Singapore disappeared… Instead, Singapore was described as a place worth studying for its initiatives in environmental preservation, public housing, and tourism.’
Who needs The Arsenal of Democracy when it conflicts with Free Trade Zealotry?
Yours was a good post.
If I recall correctly, the Vietnamese minimum wage back then was $50 a month, so they're not getting the dregs for $100 a month. That's the beauty of operating in cheap labor countries - you can get several college grads for price of 1 stateside high school dropout. The problem is that those foreign college grads tend to go into business for themselves, whereas the high school dropout will probably never compete with you.
Tariffs and industry-wide unions = Brazil. The reason the country prospered in the mid-40's through the 70's was because the world's big industrial nations had had their plants burned to the ground and spent decades rebuilding. Once they got out of their funk, the writing was on the wall for many unionized industries stateside - featherbedding work rules and pie-in-the-sky wages contributed to the inexorable of so many industry stalwarts. While I don't have an issue with tariffs per se, the continued existence of industry-wide unions like the UAW along with tariffs would cripple our international competitiveness.
According to Forbes, it's a fraction the size of Cat (at $5.2b in revs vs Cat's $60b), but the margins are way better than Cat's, at 17% vs Cat's 8%.
Look at how it’s done in Russia!
Automation + energy savings means that most manufacturing will probably return back to a local model. Then there are companies like Amazon building local distribution centers for timely shipping who also may see an upside in local suppliers.
Bottom line, agriculture is now done by 1 to 3 percent of the work force thanks to automation. Manufacturing is now going through the same shrinkage. At some point everything the world needs produced will be done by lights out automated manufacturing centers and probably employ about 1 to 3 percent of the work force. China and India will not be able to compete against this and will follow suit in their own countries.
Imitation is the sincerest form of flattery. :)
That's been the pattern when US companies outsource to "cheap" foreign countries: as soon as the people in the foreign operation learn all your trade secrets, intellectual property, and general know-how, they quit and start up their own operation, selling the same product for less to WalMart or some such.
But it does improve the CEO's numbers for the first few years.
The problem is that nobody is immune to this kind of thing, whether or not he sets up a plant in China. Any given Third World company can hire your ex-employees to set up a plant for them. There are developed country consultants who specialize in this kind of thing. A fair number of retired Japanese workers from the major keiretsus are making a good living doing consulting work for Chinese companies. After all, it's not exactly a big deal to run ads in Japanese newspapers or set up an account with Japanese headhunters for former big company talent.
The kicker is that few companies make their own production equipment, so a lot of the machinery a Third World company needs to make anything it wants can be bought. Capital equipment accounts for most of the developed world's exports to Third World countries. In many cases, they're not just buying the equipment to make stuff for the local market.
The only way for companies that make run-of-the-mill stuff to survive is to move to a cheap labor locale, whether it's China or elsewhere. Because its domestic and foreign competitors certainly will, and in that arena, product pricing extremely competitive.
If you have a product that's patented or is manufactured using trade secrets essential to its manufacture, domestic production is the way to go. The question is - how many companies are in such a position?
Wages would have to shrink considerably for that to happen. Port to port shipping costs peanuts, thanks to the invention of the shipping container. Last I heard, it was about $0.10 per pound per refrigerated container. It actually costs less money to ship something from a major Chinese port to any given US port than to ship it from the West Coast to the East Coast. US wages are now about 10x Chinese wages, and about 40x Indian wages. That's such a big gap that it's not really surmountable by total automation. Another problem is that machine tools are expensive and special purpose. When circumstances change, humans can be retrained, whereas machine tools might be sold for little more than scrap value.
Ultimately, as the Third World gets more productive, their wages will rise, and the gap will narrow. But until it gets to the point that Western wages are no more than 3x foreign wages, manufacturers of run-of-the-mill stuff will continuing moving there in order to remain price-competitive.
Automation will take over. I saw a piece on robotic workforces. They had a robot that could do intricate manual tasks and it cost 3.40 an hour to operate (including purchasing cost) it would last at least 3 years maybe longer AND the machine that would replace it will be more efficient and most likely cost less or nearly the same.
It don't take breaks it won't join a union it won't need health insurance and it doesn't call in sick, it doesn't get overtime and it will work all holidays and even when the weather is bad. It just needs occasional maintenance.
They had another piece showing a warehouse. Each Robot there could do the work of one and a half people 24/7 (only down for recharging time) They were even cheaper.
Manufacturing jobs are not coming back in big numbers. Robotics will replace most humans in these jobs.
Sorry. I phrased that badly. I was trying to say that Sany took up the largest exhibition space there, not that they were the largest company. It was a huge change from the 2008 ConExpo. FWIW, they are supposed to be the 6th largest heavy equipment manufacturer in the world.
Thanks for the clarification. I did understand your initial point, though. I found it interesting that they appear to be making a play for the North American market.
Guy I know bought a Chinese-made lathe and was pretty impressed at what he got for the price. I know next to nothing about heavy machinery. What was your impression of Sany's stuff - was it throwaway junk or was it somewhat usable?
I'm not a heavy equipment operator, so my opinion isn't really worth anything regarding their quality. But you are right, they definitely appear to be trying to make a big impression in North America.
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