U.S. Manufacturing costs are almost as low as China’s, and that’s a very big deal

Fortune ^ | June 26, 2015 | Brian Dumaine

[central_va]

There is currently probably five times the profit on the Asian-made stuff compared to the US-made version,

I call BS. the profit per unit in manufacturing is about 6%. So you are saying per unit asian there is a 30% profit ? Again BS. Post some numbers.

Note to freepers Free traitors as a group throw out BS all the time .. Question everything and make them back it with facts and figures.

[RKBA Democrat]

Note that this is far more important than whatever the kleptocrats are doing in DC.

One thing these companies should consider is a tactic used in Italy. Put factories in quiet neighborhoods. No signs, nothing to call attention to your presence. Shakedowns occur to those who are overt about their presence. Only employ those that must be employed, and preferably family members and friends who will be quiet.

[sphinx]

There are often hidden costs associated with offshoring. For instance, companies that offshore their customer service centers to India often lost business over time because customers swear they will never buy a product again that will force them to try to deal with some guy in Mumbai they can’t understand.

LOL. DC had a messed up rollout of broadband service because the pols were playing social justice politics, but that's another story. I was stuck with unstable DSL service for several years and used to spend more time than I want to recall with user support. It got to the point that I would be cheering, about three in the morning, when I would finally get transferred to Mumbai. At least the guy in Mumbai could fix things.

[RKBA Democrat]

If it interests you, look up an organization called “Free Keene.” I don’t agree with them on many things and view them as a somewhat unsavory bunch, but when it comes to tactics, they have some unusually brilliant ideas.

[Sherman Logan]

I feel your pain.

Lots of execs seem to think the purpose of customer service is to give the customer someone to talk to. When of course it is to solve the customer’s problem, which is really hard to do if you can’t understand the person.

BTW, I’ve dealt with some truly excellent Indian customer service people. I don’t object to an accent, just to those so thick I can’t understand them. I also object to incompetence, whatever its location.

[Sooth2222]

It depends on the type of goods. I’m sure our robot lathes can turn our machined parts nearly as cheaply as the ones in China. If, on the other hand, you have hire 50 girls to hand-paint Christmas ornaments, then it’s much cheaper in China.

It's probably still a little cheaper but then there is the cost of shipping, and for machined metal parts that's not inconsequential.

[TalBlack]

And American companies have been boosting their productivity faster than many of their international competitors.

For all of my adult life I’ve been expecting this edge to pass away of various natural causes...and yet it never really does.

[niteowl77]

In this case, the "quality" (or at least the features) actually improved - more or less - since the MSRP remained the same as the US-made item (or roughly so) while the lower costs of production allowed a few more bells and whistles. One of the older heads who had been involved in something similar at a previous employer told me that the savings at first would be incredibly attractive, but that once the vendor had "set the hook," the savings would not be quite as good (which did turn out to be the case).

Bottom line, the same item as imported now would be priced beyond what nearly anyone would pay for it were it made in the US. So I suppose that it comes down to the idea that if the product is cheap enough, the quality doesn't matter (although in this case the quality remains more than adequate for the application).

Interestingly, the majority of the end-users would be probably be considered "patriotic all-americans," and most of the potential purchasers who we actually talked to at the time were adamant that they wouldn't buy anything not made in the U.S.A. I don't know if the owners were biting their nails over that, or if they had (accurately, as it transpired) decided that it was all bluster. In any event, John Q. Public did, in fact buy the offshore product, and what is more, they continue to do so.

Mr. niteowl77

[niteowl77]

I call BS. the profit per unit in manufacturing is about 6%. So you are saying per unit asian there is a 30% profit ? Again BS. Post some numbers.

Note to freepers Free traitors as a group throw out BS all the time .. Question everything and make them back it with facts and figures.

I'm not in a position to supply anything past generalities… sorry, but that's the way it is. Perhaps I'm not expressing it right, but the way it was presented to me by the numbers guy was that if the the profit which was made per US-made unit was "X," the overseas version of the same item brought in "X" times 5. I myself was incredulous, but it easily explained why that part of the business was going offshore. It clearly had become more lucrative to "buy" it than to "build" it.

I didn't like seeing the production lines go overseas; there is little more disheartening than watching your work family wither away, even if - like in a real family - there were the inevitable squabbles and feuds going on. When the lines were humming and the parking lot was full, it was comparatively pleasant and I believe that everyone was proud to be putting out quality products. The downtown was busy, and the local economy was, if not "fat," at least comparatively "happy." I hope you aren't under the impression that I'm a free-trade advocate, because I personally do not believe in the oligarchian wet dream of "free trade" any more than I believe in a utopian democracy (as opposed to a representative republic).

Mr. niteowl77

[dila813]

But the cost to manufacture in Mexico has plunged, Mexico has been cheaper for about 8 years now.

You take into account freight, there isn’t a reason to make anything in China unless it will be sold there.

[crusher2013]

Yes, you get it. But not many do, even on this site.

The planned inflation is just a wealth tax on the middle class since they hold most of their wealth in paper.

The Rich do well because they hold assets.

Again inflation is a transfer of wealth from the MC to the Government, The entitled and the rich.

[Georgia Girl 2]

Cut the US corporate tax rate to 15% and we could rule again.