6 ms·

> 3. Demand is unidirectional: medical supplies are made in a handful of countries (ie China) but there isn't a huge demand for air freight the other direction.

by r00fus 7y ago

> 3. Demand is unidirectional: medical supplies are made in a handful of countries (ie China) but there isn't a huge demand for air freight the other direction. See also the container problem. This has got to change. Why is everything made in China? Anyone not coming to grips with the national security implications of not creating critical equipment in your own country (or region) is praying for doom.

Aloha 7y ago
I'm not sure why this is being downvoted, its a valid comment. Any stretched out supply chain for critical path items is at risk in any disruptive event. Globalization of your supply chain is fantastic at making stuff cheaper - but not at making the supply more durable.
- chrischen 7y ago
  Well the problem is that the critical equipment was not stockpiled... even if we could manufacture that we’d still have the problem of doing it quickly as the current ventilator shortage is showing. In fact one of the reasons things are made in China is not just that it’s cheap, but they have a large human workforce that can be adapted to quickly make or assemble all sorts of low complexity items.
  - hhs 7y ago
    > In fact one of the reasons things are made in China is not just that it’s cheap, but they have a large human workforce that can be adapted to quickly make or assemble all sorts of low complexity items. This could be a chance to build new business models to help people retrain.
    - s1artibartfast 7y ago
      Nobody in the US wants to do these chinese jobs. I dont blame them
  - Aloha 7y ago
    No one would think of/plan for a crisis that involves stocking 1m ventilators. Beyond that, that stock would need to be rotated out.
bazooka_penguin 7y ago
It distances us from the most local and immediate effects of pollution. China is ok with the pollution, we're not
dylan604 7y ago
> Why is everything made in China? Part of me wonders how serious a question this is. The ridiculously cheap manufacturing costs is why anything is made in China. When the Chinese get unions to negotiate $45/hour salaries, require fair working conditions, time off, medical/dental, and on and on things might be different. You can take advantage of the situation and develop a 100% robotic assembly line that does not require $45/hour workers so that you can manufacture critical equipment in your own country. Be the hero the world needs, not the one it deserves.
- jsdwarf 7y ago
  Proximity to the raw materials is another important factor. Latex gloves are mainly made in Asia, because that's where most of the rubber trees are.
  - ISL 7y ago
    There are a huge number of rubber trees in Africa, too. Firestone is/was one of the largest employers in Liberia. The rubber plantations in Ghana are massive.
  - khuey 7y ago
    Most rubber is synthetic (including nitrile (not latex) exam gloves)
  - econcon 7y ago
    I tried getting into 3D printing filament business in India and result? I couldn't find raw pellet providers which are manufactured locally and had to import the pellets, after paying duties even cheap labor couldn't make me competitive as prices as some American or European or Chinese brands.
- Aloha 7y ago
  While the internet is highly variable in this question, it appears that for the cases where it is cheaper to manufacture in china, the cost of manufacturing is only about 5% cheaper. In some other cases where all the components are already made in the states, it can be upwards of 20% cheaper to make it here, because of the shorter lead time, less complex supply chain, as well as other factors. The cost differential of China has effectively vanished due to rising wages, the implementation of some environmental rules, and increasing strength of the RMB. What China does have is well established closely knit supply chains, which means its a shorter lead-time to start new production of a given widget - this is something that we can fix over time, and in my opinion, this may be the biggest lasting change from this crisis. We effectively got caught with our pants down in this crisis because of this.
kube-system 7y ago
We have done some protectionism of other strategic industries, but those policies usually get a lot criticism when people aren't thinking that disaster is waiting around the corner. See: farm subsidies
- katmannthree 7y ago
  I think a lot of the criticism towards farm subsidies is less about the actual subsidy itself and more about perceived hypocrisy in the system for supporting only certain industries. It doesn't help that many of those on the receiving end of the subsidies hold highly individualistic political positions while benefiting from diametrically opposed socialist policies.
rootsudo 7y ago
This is changing, manufacturing is moving to Vietnam. The reason why is because China is cheap. The CCP purposely deflated it's RMB so to attract foreign DTI. Direct trade investment. It also supported financing projects of infrastructure, factories and easy money lending in China in lieu for hiring chinese contractors to build in Chian and in turn then fuel the Capitalist West products that are made in China but "designed in USA" and then that knowledge is spread among other people in China in a copy/repeat system. There's more, but it's mostly that, good education, focus on science, and he whole no religion thing and being a communist state meaning easy peasy to built factories, no right of way and no time consuming court system, no true intellectual property protection, and of course cheap labor. With the emergence of good factories, also came good supply chains that were consistent within a single city so things can be deigned, built, tested and redone on scale, easily. Mini silicon valeys in a way. Then transportation, highway, and then the Chinamail/EMS being subsidized by USPS to help offset delivery cost. Vietnam is now the new star. :D
jldugger 7y ago
> Why is everything made in China? Because we don't let people migrate to the US in sufficient quantities to equalize the cost of labor. For better or worse, there's a ton of underemployed folks in China who's alternative to manufacturing is subsistence farming. Since this is, in your own words, a national security problem, I imagine you're in favor of removing the national immigration quotas the US imposes?
- nhebb 7y ago
  In order for that argument to work, the US would also have to lower the minimum wage. Is that what you're proposing?
  - gbear605 7y ago
    No need to, let enough people immigrate and the cost of wages in China will go up to over the US minimum wage
    - _jal 7y ago
      In your estimation, how many relocated people would be required to push the median Chinese wage over, say, $12?
  - roenxi 7y ago
    The strategy would presumably be halve the minimum wage while simultaneously halving the cost of everything else. Someone one 60% of the US minimum wage in China would theoretically [0][1] have a more comfortable lifestyle than a US minimum wage worker. In all likelihood this is because they can buy stuff extremely cheaply because their manufacturing costs are lower. [0] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)... [1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
Glyptodon 7y ago
How can "RAID for supply chains" not just lead to being competed out of business by competitors without that added complexity in the short term? (The obvious answer of creating random disasters that hit single source competitors harder seems sketchy.) It seems like the only industries it work in would have to essentially be oligopoly class or otherwise noncompetitive to begin with.
- jnwatson 7y ago
  This is key. Competition is about squeezing inefficiencies out. It is about accepting risk of supply chain disruption in order to reduce cost. The more cynical way to put it is nobody gets a raise for a detailed continuity of operations plan. They do if they reduce manufacturing cost by 20%.
meej 7y ago
China has an industrial policy, the United States prefers to leave things up to the free market. https://prospect.org/special-report/industrial-policy-road-taken/ https://prospect.org/special-report/industrial-policy-road-t...

by r00fus 7y ago

Aloha 7y ago

I'm not sure why this is being downvoted, its a valid comment. Any stretched out supply chain for critical path items is at risk in any disruptive event. Globalization of your supply chain is fantastic at making stuff cheaper - but not at making the supply more durable.

chrischen 7y ago
Well the problem is that the critical equipment was not stockpiled... even if we could manufacture that we’d still have the problem of doing it quickly as the current ventilator shortage is showing. In fact one of the reasons things are made in China is not just that it’s cheap, but they have a large human workforce that can be adapted to quickly make or assemble all sorts of low complexity items.
- hhs 7y ago
  > In fact one of the reasons things are made in China is not just that it’s cheap, but they have a large human workforce that can be adapted to quickly make or assemble all sorts of low complexity items. This could be a chance to build new business models to help people retrain.
  - s1artibartfast 7y ago
    Nobody in the US wants to do these chinese jobs. I dont blame them
- Aloha 7y ago
  No one would think of/plan for a crisis that involves stocking 1m ventilators. Beyond that, that stock would need to be rotated out.

bazooka_penguin 7y ago

It distances us from the most local and immediate effects of pollution. China is ok with the pollution, we're not

dylan604 7y ago

> Why is everything made in China? Part of me wonders how serious a question this is. The ridiculously cheap manufacturing costs is why anything is made in China. When the Chinese get unions to negotiate $45/hour salaries, require fair working conditions, time off, medical/dental, and on and on things might be different. You can take advantage of the situation and develop a 100% robotic assembly line that does not require $45/hour workers so that you can manufacture critical equipment in your own country. Be the hero the world needs, not the one it deserves.

jsdwarf 7y ago
Proximity to the raw materials is another important factor. Latex gloves are mainly made in Asia, because that's where most of the rubber trees are.
- ISL 7y ago
  There are a huge number of rubber trees in Africa, too. Firestone is/was one of the largest employers in Liberia. The rubber plantations in Ghana are massive.
- khuey 7y ago
  Most rubber is synthetic (including nitrile (not latex) exam gloves)
- econcon 7y ago
  I tried getting into 3D printing filament business in India and result? I couldn't find raw pellet providers which are manufactured locally and had to import the pellets, after paying duties even cheap labor couldn't make me competitive as prices as some American or European or Chinese brands.
Aloha 7y ago
While the internet is highly variable in this question, it appears that for the cases where it is cheaper to manufacture in china, the cost of manufacturing is only about 5% cheaper. In some other cases where all the components are already made in the states, it can be upwards of 20% cheaper to make it here, because of the shorter lead time, less complex supply chain, as well as other factors. The cost differential of China has effectively vanished due to rising wages, the implementation of some environmental rules, and increasing strength of the RMB. What China does have is well established closely knit supply chains, which means its a shorter lead-time to start new production of a given widget - this is something that we can fix over time, and in my opinion, this may be the biggest lasting change from this crisis. We effectively got caught with our pants down in this crisis because of this.

kube-system 7y ago

We have done some protectionism of other strategic industries, but those policies usually get a lot criticism when people aren't thinking that disaster is waiting around the corner. See: farm subsidies

katmannthree 7y ago
I think a lot of the criticism towards farm subsidies is less about the actual subsidy itself and more about perceived hypocrisy in the system for supporting only certain industries. It doesn't help that many of those on the receiving end of the subsidies hold highly individualistic political positions while benefiting from diametrically opposed socialist policies.

rootsudo 7y ago

This is changing, manufacturing is moving to Vietnam. The reason why is because China is cheap. The CCP purposely deflated it's RMB so to attract foreign DTI. Direct trade investment. It also supported financing projects of infrastructure, factories and easy money lending in China in lieu for hiring chinese contractors to build in Chian and in turn then fuel the Capitalist West products that are made in China but "designed in USA" and then that knowledge is spread among other people in China in a copy/repeat system. There's more, but it's mostly that, good education, focus on science, and he whole no religion thing and being a communist state meaning easy peasy to built factories, no right of way and no time consuming court system, no true intellectual property protection, and of course cheap labor. With the emergence of good factories, also came good supply chains that were consistent within a single city so things can be deigned, built, tested and redone on scale, easily. Mini silicon valeys in a way. Then transportation, highway, and then the Chinamail/EMS being subsidized by USPS to help offset delivery cost. Vietnam is now the new star. :D

jldugger 7y ago

> Why is everything made in China? Because we don't let people migrate to the US in sufficient quantities to equalize the cost of labor. For better or worse, there's a ton of underemployed folks in China who's alternative to manufacturing is subsistence farming. Since this is, in your own words, a national security problem, I imagine you're in favor of removing the national immigration quotas the US imposes?

nhebb 7y ago
In order for that argument to work, the US would also have to lower the minimum wage. Is that what you're proposing?
- gbear605 7y ago
  No need to, let enough people immigrate and the cost of wages in China will go up to over the US minimum wage
  - _jal 7y ago
    In your estimation, how many relocated people would be required to push the median Chinese wage over, say, $12?
- roenxi 7y ago
  The strategy would presumably be halve the minimum wage while simultaneously halving the cost of everything else. Someone one 60% of the US minimum wage in China would theoretically [0][1] have a more comfortable lifestyle than a US minimum wage worker. In all likelihood this is because they can buy stuff extremely cheaply because their manufacturing costs are lower. [0] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)... [1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...

Glyptodon 7y ago

How can "RAID for supply chains" not just lead to being competed out of business by competitors without that added complexity in the short term? (The obvious answer of creating random disasters that hit single source competitors harder seems sketchy.) It seems like the only industries it work in would have to essentially be oligopoly class or otherwise noncompetitive to begin with.

jnwatson 7y ago
This is key. Competition is about squeezing inefficiencies out. It is about accepting risk of supply chain disruption in order to reduce cost. The more cynical way to put it is nobody gets a raise for a detailed continuity of operations plan. They do if they reduce manufacturing cost by 20%.

meej 7y ago

China has an industrial policy, the United States prefers to leave things up to the free market. https://prospect.org/special-report/industrial-policy-road-taken/ https://prospect.org/special-report/industrial-policy-road-t...