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Radio Flyer to move production of wagons to China
Associated Press ^ | 3-30-04

Posted on 03/30/2004 1:07:20 PM PST by Oldeconomybuyer

Edited on 04/13/2004 2:46:15 AM PDT by Jim Robinson. [history]

CHICAGO (AP) -- Radio Flyer Inc., maker of the little red wagon loved by generations of children, plans to move its manufacturing operation to China.

The 87-year-old company said it would keep its headquarters and distribution business in Chicago but decided the Chicago plant where the metal wagons are built is too expensive to maintain. With the plant closing, Radio Flyer will lay off nearly half its 90 employees.


(Excerpt) Read more at sfgate.com ...


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events; Politics/Elections; US: Illinois
KEYWORDS: china; manufacturing; radioflyer
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To: Rebelbase
Norinco

Suprisingly enough, I hear their 1911's are a good bang for the buck. Then again, a ChiCom 1911 is just plain wrong.

41 posted on 03/30/2004 2:56:16 PM PST by AngryJawa (Whatever.)
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To: AngryJawa
What's that? A dude with a keen eye and an AK-47 at the end of the production line?
More likely a Harvard trained MBA who speaks five languages. Our Chinese brothers and sisters are not all barbarians, dude.
42 posted on 03/30/2004 2:59:10 PM PST by Asclepius (protectionists would oursource our dignity and prosperity in return for illusory job security)
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To: Rebelbase
You think the same factory that has been producing Radio Flyers since Noah's day is inferior to a Chinese production facility making the same wagon?
If they haven't updated their production methods since Noah's day, then yes.
43 posted on 03/30/2004 3:00:34 PM PST by Asclepius (protectionists would oursource our dignity and prosperity in return for illusory job security)
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To: Oldeconomybuyer
Cute...little red wagons made by the little red chinese...
44 posted on 03/30/2004 3:00:54 PM PST by Blue Scourge (Off I go into the Wild Blue Yonder...)
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To: Investment Biker
No, not in the macro ecconomic sense for the reason industries are sending engineering and design jobs over too. The "Creative Destruction" argument is spurious here because 1) you have not replaced this business with a new one and 2) the increases from the effcianes in capital allocation (note that this is is not a real productivity increase) will not be invested locally but in the the industrial and engineering facilities,staff and supply chains overseas.

This situation is due to artificial manipulations of purchasing power, FX and the like by governments, pseudo governments and extra-national enterprises. It is not to new modes of production or industries.

There is no reason at all to believe that those monies "saved" will necessarily find their way into new enterprises or jobs here.

There are two other fallacies here. First, the theory of "Creative Destruction" a priori implies that a new mode of production or a new industry forces replacement of the prior one that is being "destroyed." This is not the case here. It is putting the cart before the hours to say that we will move our factories overseas and then find a new model or business with which to replace them.

Buggy whip factories were destroyed by car factories. They did not move buggy whip factories overseas and the hit on the notion of building car factories with the "saved" monies. All you have done is move the business. Red Flyer was forced into this by trade policies, other infrastructure issues and political policies (some of which have nothing to do with commerce,) not some sort of "Creative Destruction" in the the classical economic sense of the term. It is a matter of trade relations,regulations, monetary policy and disparities in economic, social and political conditions across borders, nothing more.

The second fallacy is that those local monies to the buyer are "saved" due to lower prices. While it may be true in a micro economic sense in the Red Flyer case since we are talking about 90 employee and very little sophisticated engineering, it is not true in the macro sense that those monies would be "saved" in the long term because they would not be "earned" in the first place.

If we assume that the offshoring practice will be grow in scope and sector as time goes on, all, or least a quite substantial portion of meaningful middle class work other than direct sales and strategy will be sentsent oversea, or that competition to offshore wage earners deflates wages to a significant lower level. Thus the extra money is not earned so the extra money is not saved. What you really have is aggregation of capital oversea to the production and engineering facilities and staff, and in very few front office staff over here, and real wage and purchasing power deflation here. And it adds up as it percolates across whole swathes of highly integrated large scale manufacturing or technology service industries.

Even the local capital aggregation is deflated do to the price deflation and the shrinking pool of middle class buyers with any real purchasing power. In essence you have just not just much fewer middle class buyers but fewer millionaires too. So the industry that "creatively destroys" the offshored production is merely a luxury industry for the very rich here, but the "creative destruction" is indirect at best and the level of accumulation in aggregate is lower than it was before due to the fact that so much money is going oversea. And remember, it is deeply hard to repatriate that money given the overt and covert trade barriers in the market you have offshored too. In effect you have a transfer payment were a great portion of it remains in the forgien market.

It is important to note that the Ricardo/Smith notions of "Creative Destruction" and "Comparative Value" were predicated on the national state were supply chains and "value chains" were integrated at the level of the Nation State (and also their "colonies".) If we leave aside mercantile ans colonial examples, these sort in integrated global supply and value chains at the level that we are seeing now are a really new phenomena, and it is clear if applying the old theories have any more meaning than a purely metaphorical one.

At the very least, If my analysis is right and yours is wrong than we are in very deep trouble. If it is otherwise, then fine, but if not it will be quite hard to raise the cane up when it is in the field.

45 posted on 03/30/2004 3:06:50 PM PST by CasearianDaoist
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To: CasearianDaoist
"and it is clear if applying..."="and it is unclear if applying
46 posted on 03/30/2004 3:15:42 PM PST by CasearianDaoist
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To: CasearianDaoist
another company to put on the sH## list
47 posted on 03/30/2004 3:20:34 PM PST by conservativefromGa (www.AWBanSunset.com)
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To: Asclepius
Our Chinese brothers and sisters are not all barbarians, dude.

No, of course the Chinese people are not barbarians. But their government cornered the market on barbarism when they put down the Tiananmen protests. Let's not forget that the true Chinese beneficiaries of this factory shifting are many of the same animals that sent in the PLA.

48 posted on 03/30/2004 3:23:45 PM PST by AngryJawa (Whatever.)
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To: conservativefromGa
WHen I was a boy we had a large hill in a woods outside of the farm where we would ice up paths in the winter and ride one of these things down it. It was too rough for a sled.

It is a canary in a mine shaft. We really need a national debate and conclusion as to what we want to do about the disaster known as "globalism." This cannot go on much longer before something gives.

49 posted on 03/30/2004 3:26:00 PM PST by CasearianDaoist
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To: CasearianDaoist
I stand by my comments.

While it is true there is no innovation in technology that is bothering the manufacturers in the US it is also true that a rigid, cost fixed system is being destroyed. Now this system can not compete with a global system that seeks out lower costs. This is happening in many many industries not just manufacturing. They are creatively being destroyed by systems that are more flexible and lower cost. So when I refer to creative destruction you think buggy whips and I think rigid systems.

Further I never said that the local consumer "saves" the difference. I can't see that savings or spending makes any real difference. But there is still $60 left over from the consumers standpoint and they will spend on something that otherwise will not have a consumer with $60.

And last, from a macro sense the China factory now has their portion of the $29 to spend. Now where can they spend US dollars other than the US? So ultimately these dollars return either in investment or consumption in the products that we have an advantage in. So you can talk about "capital aggregation" and other complex economic terms but these are simple truths of the transaction. Rigid labor systems go the way of the buggy whip. We all benefit.
50 posted on 03/30/2004 3:51:34 PM PST by Investment Biker
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To: Oldeconomybuyer
Let me guess; Radio Flyer's Chicago facility was a union shop.
51 posted on 03/30/2004 4:10:02 PM PST by steveegg (It takes more than just a bit of double-secret probation to keep a good website down)
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To: azhenfud
" Ladio Flyler "

You mean Ladio FRyer !
52 posted on 03/30/2004 4:33:20 PM PST by sushiman
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To: Buffalo Bob
Another "this is great for the American economy" bump.

Hey, if one more kid in America can get a wagon because the prices are kept reasonable with the new labor model, who are we to say it's a bad thing?

53 posted on 03/30/2004 10:05:27 PM PST by ClintonBeGone (John Kerry is the Democrat's Bob Dole)
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To: Calpernia
What a bunch of propoganda.
54 posted on 03/30/2004 10:06:56 PM PST by ClintonBeGone (John Kerry is the Democrat's Bob Dole)
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To: GreenLanternCorps; Willie Green
And the 70 Americans it employs would be out on the street.

They don't care. Most of the people you're going to find on this thread are like the union stooges you might be familiar with - rather than have everyone take a 5% pay cut, or not get a raise during a difficult economic time, they would rather see 10 people layed off or the company go out of business altogether. Bunch of economic cave men.

55 posted on 03/30/2004 10:09:11 PM PST by ClintonBeGone (John Kerry is the Democrat's Bob Dole)
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To: Investment Biker
Now I can see buying american but I am going to buy american with the $60 plus tax I have left over.

LOL There is so much truth in your statement. I wonder how many here will appreciate it.

56 posted on 03/30/2004 10:10:14 PM PST by ClintonBeGone (John Kerry is the Democrat's Bob Dole)
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To: Asclepius
Chinese firms generally have better quality control than American. It's no big secret.

And fortunately for them, they don't have union thugs or the NLRB to deal with.

57 posted on 03/30/2004 10:12:41 PM PST by ClintonBeGone (John Kerry is the Democrat's Bob Dole)
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To: AngryJawa; Asclepius
But their government cornered the market on barbarism when they put down the Tiananmen protests.

I think a few germans and russians might have a beef with you on this.

58 posted on 03/30/2004 10:14:51 PM PST by ClintonBeGone (John Kerry is the Democrat's Bob Dole)
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To: ClintonBeGone
And fortunately for them, they don't have union thugs or the NLRB to deal with.

The Chicoms are very "compassionate".

59 posted on 03/31/2004 7:31:26 AM PST by Willie Green (Go Pat Go!!!)
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To: Asclepius
Chinese firms generally have better quality control than American. It's no big secret.

Japan - yes. China - no way.

60 posted on 03/31/2004 11:42:22 AM PST by hedgie
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