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Tax rates and government interventionism are major forces driving business overseas. A government "five year plan" to "refactor" the manufacturing industry is

Tax rates and government interventionism are major forces driving business overseas. A government "five year plan" to "refactor" the manufacturing industry is the poison not the medicine.

hristov 17y ago
Nope, labor costs are the major forces. As long as somebody sells the stuff in america they will probably pay very similar taxes based on profit regardless of where they made it. They will probably pay more taxes if they outsource actually because that would bring them more profit.
- kingkongreveng_ 17y ago
  Labor costs are lower in much of Asia, but it's not that simple. Shipping costs, risks to IP, loss of flexibility and accessibility to the manufacturing operation all factor into the picture. There are plenty of examples of manufacturing operations returning to the US for these reasons. Germany is a higher cost labor market than the US yet you don't see much of this simplistic scenario where physical operations inevitably flee high wages. The big issue driving away these operations on net is the regulatory nightmare of employing Americans and running a plant. You have OSHA, the EPA, and an ever growing body of employer mandates to contend with. Also, the US is now a high tax country from a business perspective.
  - hristov 17y ago
    Germany has their own versions of the EPA and OSHA and they are much more powerful than the US ones.
    - eande 17y ago
      which is tax money and they tax the society enormously , e.g. sales tax alone 19%.  DARPA called in the past for some great technical innovations, but this one bringing manufacturing back to US is questionable. Not that I don’t like to see it, but it is an open worldwide market and may the best business model win. I see this initiate more a reaction from the government, because they are scared loosing the access to the companies who run the semi fab process.

Tax rates and government interventionism are major forces driving business overseas. A government "five year plan" to "refactor" the manufacturing industry is the poison not the medicine.

hristov 17y ago

Nope, labor costs are the major forces. As long as somebody sells the stuff in america they will probably pay very similar taxes based on profit regardless of where they made it. They will probably pay more taxes if they outsource actually because that would bring them more profit.

kingkongreveng_ 17y ago
Labor costs are lower in much of Asia, but it's not that simple. Shipping costs, risks to IP, loss of flexibility and accessibility to the manufacturing operation all factor into the picture. There are plenty of examples of manufacturing operations returning to the US for these reasons. Germany is a higher cost labor market than the US yet you don't see much of this simplistic scenario where physical operations inevitably flee high wages. The big issue driving away these operations on net is the regulatory nightmare of employing Americans and running a plant. You have OSHA, the EPA, and an ever growing body of employer mandates to contend with. Also, the US is now a high tax country from a business perspective.
- hristov 17y ago
  Germany has their own versions of the EPA and OSHA and they are much more powerful than the US ones.
  - eande 17y ago
    which is tax money and they tax the society enormously , e.g. sales tax alone 19%.  DARPA called in the past for some great technical innovations, but this one bringing manufacturing back to US is questionable. Not that I don’t like to see it, but it is an open worldwide market and may the best business model win. I see this initiate more a reaction from the government, because they are scared loosing the access to the companies who run the semi fab process.