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Depends on the trade, of course. But tradesmen work on different projects, travel to different areas, work with a range of skills. I guess what I'm trying to

by brc 16y ago

Depends on the trade, of course. But tradesmen work on different projects, travel to different areas, work with a range of skills. I guess what I'm trying to say is that tradesmen != manufacturing plant worker. I have a relative with a manufacturing plant. Their strategy is to try and out-niche the chinese. Their chinese competitors can dump finishing product onto the market cheaper than they can buy the raw materials. Thats' before the value-add of labour is included, with all the attendant taxes and benefits of the labour is paid for as well. The only way they can compete is to develop close relationships and fast turnarounds with their clients and hope like hell that's enough for them to ignore the price discrepancy. It generally depends on the final item being manufactured - anything competing in a fierce marketplace is going to go overseas at some point. It's the unionised manufacturing sector worker that is getting smashed by low-cost foreign labour. And that is happening across all high-cost labour countries, Australia included.

wisty 16y ago
It's not just about low-cost foreign labor. Chinese staionary energy is dirt cheap (burning dirty subsidized coal doesn't cost a lot) which might be 20% of the cost. And the land might have been free, if the investor had good connections. Oh, and they might have cheap loans. The costs are raw materials, energy, capital, and labor. Labor isn't the only factor. But people accept the $1/hour = 20X cheaper myth, and buy stuff that's 1/10th the quality.
- nickpinkston 16y ago
  Well, it's actually closer to 20x cheaper for 1/2 the quality - hence why so much is made there. Being I manufacturing, we see both the move back to the US due to rising wages, shipping and materials costs, but many things (toy painting) are very much still an outsourcing game.
- brc 16y ago
  Well, most of the USA will be using coal powered energy as well, as most USA energy is coal powered. Same goes for Australia, which is even higher percentage coal power. As for free land - many large plants have been setup in the USA with essentially free land, and essentially free capital. Not all, mind you, and not all in China would be the same. But then business in China has high costs in other areas, such as bribery and corruption. In the end, it mostly comes down to labour costs (and availability) when you're doing a labour intensive manufacturing process. The other thing that is being lost is even the ability to compete based on knowledge. Running factories takes time, expertise and experience. New factories aren't opening, people aren't learning how to run them. It's the trend that worries me, over the raw numbers.
eftpotrm 16y ago
And yet I regularly hear of people on-shoring manufacturing again, after many years of having to do very intensive spot-checking of the manufactured goods to ensure they were being built to the agreed spec and not having cheaper components used instead, or having too many supply chain issues leading to unreliable, late delivery. It still appears (to a non-expert, anyway) that there is a root issue with the Renminbi being pegged below its natural exchange rate to artificially depress their export prices, which seems to be coming close to creating a situation much like that which triggered the Opium Wars when China was known as the 'silver grave' of the world. But then, most have their inbuilt distortions. China - the pegged currency. Europe - the Common Agricultural Policy. USA - Prison labour.

by brc 16y ago

wisty 16y ago

It's not just about low-cost foreign labor. Chinese staionary energy is dirt cheap (burning dirty subsidized coal doesn't cost a lot) which might be 20% of the cost. And the land might have been free, if the investor had good connections. Oh, and they might have cheap loans. The costs are raw materials, energy, capital, and labor. Labor isn't the only factor. But people accept the $1/hour = 20X cheaper myth, and buy stuff that's 1/10th the quality.

nickpinkston 16y ago
Well, it's actually closer to 20x cheaper for 1/2 the quality - hence why so much is made there. Being I manufacturing, we see both the move back to the US due to rising wages, shipping and materials costs, but many things (toy painting) are very much still an outsourcing game.
brc 16y ago
Well, most of the USA will be using coal powered energy as well, as most USA energy is coal powered. Same goes for Australia, which is even higher percentage coal power. As for free land - many large plants have been setup in the USA with essentially free land, and essentially free capital. Not all, mind you, and not all in China would be the same. But then business in China has high costs in other areas, such as bribery and corruption. In the end, it mostly comes down to labour costs (and availability) when you're doing a labour intensive manufacturing process. The other thing that is being lost is even the ability to compete based on knowledge. Running factories takes time, expertise and experience. New factories aren't opening, people aren't learning how to run them. It's the trend that worries me, over the raw numbers.

eftpotrm 16y ago

And yet I regularly hear of people on-shoring manufacturing again, after many years of having to do very intensive spot-checking of the manufactured goods to ensure they were being built to the agreed spec and not having cheaper components used instead, or having too many supply chain issues leading to unreliable, late delivery. It still appears (to a non-expert, anyway) that there is a root issue with the Renminbi being pegged below its natural exchange rate to artificially depress their export prices, which seems to be coming close to creating a situation much like that which triggered the Opium Wars when China was known as the 'silver grave' of the world. But then, most have their inbuilt distortions. China - the pegged currency. Europe - the Common Agricultural Policy. USA - Prison labour.