Posted on 02/25/2008 5:28:10 PM PST by shrinkermd
Well, partially, the idea was Mexico would see an economic boom and then their economy would grow to US/Canadian levels, and then they could buy stuff made in the US or Canada.
Truth is, it never worked like that, not only did the Maquiladores not produce, but costs were even cheaper in China, and what growth there is in Mexico does not equate to increased spending on US/Canadian made goods.
Did you notice the last bullet point that the Fed put out?
“Increasing productivity that requires fewer employees to achieve”...
There are reasons why Free Trade is no longer popular, yet there is a hardened handful that won’t see it, you can see the same names time after time, saying the same thing, on threads like this one, it never occurs to them they have lost the debate....
Sure. So rather than pushing a broom at a factory, or cleaning turnings off of lathes, they're working at restaurants, or handling insurance claims, or working sales for the new products.
The low-level unskilled labor jobs still exist - they're just in different industries.
“Would you rather excel at a late-20th/early-21st century techology, like pharmaceuticals, computer chips, computer software, and aviation/avionics, or would you prefer to excel at a late-19th/early-20th century technology, like automobiles?”
Why are those thing better than cars? Cars are a very complex product that is high value added.
We build those factories now. If you ever get a chance, you should see the QSC Audio factory in Southern California. The level of automation is stunning. They turn out ultra-high quality product - built in the US - at very competitive prices. And use 1/50th the labor they used to use.
Go get a Behringer amp, and it's made in China the way we used to build things here - 100 people on an assembly line, each doing their little task, day in and day out.
QSC employs a LOT fewer people in manufacturing their product. But it still costs more than the Behringer gear. Automation costs money - tools and machines and robots to buy, and engineers to hire to design and program and maintain that stuff.
Does that mean that QSC has shipped its jobs overseas? No, it's eliminated the need for those jobs by automation. So if you want to compete, you either do the same thing (automate) or go overseas - it's the only way you can be competitive in the market.
The weak dollar makes companies like Cat, Cummins, Detroit Diesel and others highly competitive on the international market. BTW, transplant auto assembly plants generate huge value-added here as well, along with their suppliers.
Hillary and Obama are not trying to stop NAFTA, the only want to open it up and put in protections for labor and the environment. No different from Reid wanting to put labor and environmental protections into the pending FTAs with Panama, Columbia, etc.
Go to Alabama. Or the Carolinas. Or Georgia - you'll find your car factories running full-tilt there. For BMW, Mercedes, Honda, Toyota.
The jobs are there, they've just moved from where they were. Rather than be locked in to the deadly UAW contracts like GM/Ford/Chrysler, these brands located somewhere new, where they can control their costs, pay great wages, and still make a buck.
MI, OH, and PA going down the tubes is about their own ineptitude as states, not about loss of manufacturing from the US. It just moved elsewhere.
Eventually, all the goods the world requires will be manufactured by one guy, who will be very productive. Everyone else will watch him on TV.
It is closer than you think, catch the rerun on discovery of the newest BMW plant in Europe, the whole plant is nearly robotic.
At one time we were the world’s largest buggy-whip manufacturer, too...
The mill is probably built overseas in a wholly-owned factory. The PLC is designed - and the chips at least - built in the US. We still can make tools; for crying out loud we DESIGN the things!
But walk through Harbor Freight - think you can get a decent US built drill press for under $100, like you can at HF?
It is one thing to source manufacturing in lower labor countries. It is quite another to export the 'know how'. Sure, an automated punch press bought overseas can produce manufacturing output with fewer workers--but how are the holes produced, what are the limitations of the material being punched, does the punch pattern make sense for the application?
Or, to put it another way--since the early 1990's, fields such as tool and die manufacture have seen a lot of knowledge exit the field-there is only a certain distance book learning can take you. Actual experience counts big. What is being lost in some sectors is *knowing* how things work-it is the difference between taking a driving course for automobiles and actually getting behind the wheel.
Certainly, in the short term, profits go up, one can report productivity gains. But in the long run, things start to resemble (tangentially) 'Atlas Shrugged', where use of technology is understood, but when things break down, no-one (or very few) know how to make things work again.
The danger is if the balloons go up. What if the tool and die manufacturing know how now exists in a place that decides it needs our resources and is willing to use force to obtain them? Hypothetical, but a valid concern.
Recent headlines check:
Neillsville Employer Shutting Down (Leeson Motors move to Mexico)
http://www.wsaw.com/home/headlines/15895537.html
Anger and frustration over factory closing in Middlefield
http://www.wkyc.com/news/news_article.aspx?storyid=83824&provider=gnews
Modine to Close 3 U.S. Plants: Hundreds of Jobs to Be Cut As Work is Moved Abroad
http://www.redorbit.com/news/business/1241906/modine_to_close_3_us_plants_hundreds_of_jobs_to/
This is the tip of the iceberg, and the reasons are many, but one of the main reasons are corporate tax rates. Another is that Investment companies go in and buyout factories with the intent to close them and keep the “namebrand” as they shift production overseas. One gross example of this was for the dinnerware company Pfaltzgraff, and American icon in that industry. It was purchased by a large conglomerate from the local owners. It almost immediately shuttered the plant and sent the manufacturing to a chinese contractor. They still trade in Americana, but now it is made in China. No good reason, except that is how the purchasing conglomerate did business. It wasn’t bankrupt or going broke.
THen why isn’t there, like, 5 BMWs for every man woman and child in germany? I’m exaggerating, but you get my point.
No farm tractors, except of the 400 horse power monsters, are built in the united states, haven't been in years. And the large ones are assembled here because of shipping.
good riddance. any wax factory could make h-bars.
And the rest of your post is wrong as well!
The buggy whip analogy is utterly meaningless. We went from an ag based society to a manufacturing superpower....within our own shores.
You are spouting nonsense if you believe we have not given China the keys to manufacturing superpower status. What we don’t hand them on a silver platter, they steal. They are communists gaming the system, and we comply. It is stupid and suicidal:
China rapidly moving to high-tech manufacturing
As China gains high-tech research and product-design capabilities, Chinese companies are rapidly moving up the value chain, exporting higher-technology goods. More worrying perhaps for established players is that Chinese firms are beginning to monopolise the entire supply chain — from technology development to design to manufacture to export.
Emerging markets too will see stronger imports of high-tech goods from China. Domestic high-tech industries will start to face increasing competition from “Made in China” consumer electronics products, IT hardware, industrial machinery, and power generation equipment. Exports of high-tech goods have grown from relatively insignificant levels in 2001 to $250bn this last year.
Over the past decade, China has effectively monopolised its position as the manufacturing base for low-tech goods in the global product cycle. We see low-wage jobs moving from Mexico, Brazil and SA to China’s manufacturing hub, the Pearl River Delta.
Faced with escalating research and development costs at home, and eager to tap into China’s growing consumer base, many US, European and Japanese companies are now moving more of their facilities to China.
This has happened in much the same way as parts of the product cycle were outsourced to Japan, and then South Korea and Taiwan in the 1970s and 1980s. But in two ways China’s experience has differed significantly — it has taken historical shortcuts, benefiting from economic globalisation and the rapid transfer of ideas and designs over the internet. Secondly, it is unlikely that China will soon have to pass over the title of “outsourced manufacturer” to the next low cost sweatshop.
Instead, China’s size, and the inequalities between different its regions means that, as older manufacturing regions move up the value-chain, producers are able to shift low-cost production to other areas within China.
We see this happening as low-cost manufacturers moves from the Pearl and Yangtze river deltas to the new, inland manufacturing base around Chongqing. Ford recently opened a major new assembly plant there and has encouraged most of its suppliers to set up operations in the area.
Xu Guanhua, the Chinese minister of science and technology, recently said: “We must acquire as many key technologies as possible, as well as more intellectual property.” Many would argue that China has been in effect “stealing” foreign technologies. Despite recent high-level steps to counter this, intellectual property rights infringement continues on a massive scale and remains a significant barrier to further technology inflows.
But China has also been proactively promoting other sources of technology. Policy makers have used restricted access and investment incentives to try to coerce foreign firms to transfer key technologies to their Chinese joint venture partners.
With a rapidly growing pool of locally produced human capital and an increasing number of US-educated scientists to lead them, China is rebranding itself as more than just a low-tech sweatshop.
Policy makers have encouraged Chinese firms to work closely with China’s top universities to develop and design new products. “High-tech” is the new catch phrase. China’s 53 state-owned science and technology research parks are being joined by foreign firms who are building facilities in China.
More than 600 global companies, including Google, Siemens, Sony and Intel, have opened research and development centres on the Mainland and find talent amongst the 600000 engineers who gradated from China’s universities last year.
European Union (EU) commissioner for science and research, Janez Potocnik, warns that, at current growth rates, within five years China will spend a larger percentage of gross domestic product on research and development than the EU!
China is matching its generous foreign direct investment inflows with an increasingly technologically-minded, and low-cost domestic human capital pool.
But China’s real secret to its monopolising of the global supply chains is that it is at the centre of experienced entrepreneurs from Hong Kong, Taiwan and South Korea whose global manufacturing and trading networks have allowed China to rapidly dominate the global textiles and white goods markets. Closer co-operation between these entrepreneurs and China’s state sector will allow China to also use these networks to expand the production and export of high tech goods. This year, 200 new foreign-invested research centres will open in China.
Davies is a director at research and strategy firm Emerging Market Focus and a senior lecturer at the Gordon Institute of Business Science.
http://www.supplychain.cn/en/art/?800
And so we should heed the screed of the protectionists, and act like Thompson, Mouch, Mowen, and James Taggert, stifling the creative and innovators among us so we can keep our society "stable"? Force those with disruptive technologies and processes - like Galt, or Rearden - to buckle under and "do their part" to keep the workforce fat, dumb and happy?
Now days, one engineer, one computer, and one SLA machine, and you can design and build more prototypes than a whole room-full of engineers with blueprint drawings, and a whole room-full of machinists with manual mills. Why SHOULDN'T we allow - and actually encourage - that solitary engineer to wreak havoc on the rooms-full of others?
Encourage productivity - it is how wealth - REAL WEALTH - is created. Farmers added wealth over hunter/gatherers. Railroads added wealth over wagon train. Airplanes added wealth over railroads.
It's the whole point of Atlas Shrugged - society and the government should NOT tell a man what he has to do for the "benefit of society". Let a man rise or fall on his own merits. If he can create wealth more efficiently, then more power to him!
The low-level unskilled labor jobs still exist - they’re just in different industries.”
Manufacturing creates wealth. Working in restaurants and in places that sell more crap we don’t need uses wealth. Globalists are living in a fantasy world and I fear many of them will be hanging from lamp posts when we enter the next depression.
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