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> There is plenty of cheap labor in Latin America. I too believe the US has to invest in and cultivate industrial relationships in Latin America. That said, i

> There is plenty of cheap labor in Latin America. I too believe the US has to invest in and cultivate industrial relationships in Latin America. That said, it has been years since China's advantages boiled down to cost of labor. The manufacturing advantage China developed over decades is to have highly integrated short supply pipelines for a massive category of products. Want to make washing machines? There are entire towns dedicated to making them and they make every component for your washing machines within a one hour truck ride. Want to make microwave ovens? Same thing. Computers? Ditto. Desks? Chairs? Shelving units? Plumbing fittings and valves? Same. The length of a supply pipeline is a crucial cost element in any manufacturing operation. China has the most efficient, short and well integrated multidisciplinary supply chain in the world. Let's say you want to make microwave ovens in Los Angeles. Your screws might come from New York. Wires from China. Glass from Germany. Microprocessor and other chips from Singapore, Taiwan and China. Other components from Japan. Sheet metal, cardboard and packaging materials from Mexico. Etc. The cost of such a disjointed supply pipeline is massive when compared to what they do in China. It is far less about hourly wages these days and more so about this. One of the reasons for which we can't make anything in the US or Europe is that we don't own the supply chain. It isn't the case that we were short in PPE, gowns, syringes and other medical supplies because Trump is an idiot (insert any politician, at any level, in the US or Europe in that statement). Not so. The reality of what we ran into as this pandemic gained strength is that we have no supply pipeline for anything other than a very narrow set of industrial and military products. Everything else is in China. Europe has the same problem. We don't even make the cloth, the yarns, elastics, adhesives and staples you need to manufacture N95 masks. Even worse, we likely don't make any of the components you need in order to make a machine that can test N95 masks. Those of us in manufacturing have been screaming about this for decades. This was OBVIOUS twenty years ago. It was MANAGEABLE thirty to forty years ago. It is near checkmate today. Who's at fault? Our politicians. We (US and Europe) have been treated to decades of politicians seemingly devoid of business sense and long term visions. The Chinese, instead, saw this and decided to take a long term view (decades) towards achieving a goal. And here we are. Go around your house and make a list of how man items you own that were made in China and how many --if you can find any-- in the US or Europe. Then understand that if something says "Made in USA" or "Made in France", it is very likely that every single internal component was made in China. So, where was it really made? Right? This situation is far more complex than most realize. Which, in and of itself, is how we got here.

totalZero 6y ago
100%. Ultimately cost of labor alone isn't going to be the deciding factor, and when I say "plenty of cheap labor in Latin America" I'm not suggesting that we can save money in the short term by moving our factories there. I'm suggesting an affordable alternative, geographically closer to home, in a set of countries that (when compared to China) are smaller, more defensible, and culturally more similar to us. We have seen evidence that China's manufacturing sector includes slave labor. You can't compete with slave labor! This is why the "it's just business, save a penny where you can" mentality totally misses the point. We have to spend some money to get out of this mess. For a major corporation, this would mean spending less on buybacks in order to build new manufacturing facilities elsewhere. For our government, this would mean coordinating with our companies and foreign ally governments to manage a concerted effort at creating new manufacturing ecosystems in mutually-agreed-upon regions that offer logistical and tax advantages. With respect to your point about efficient, short and well integrated supply chains: large corporations have to be the first movers. They are the only ones who can begin to cultivate the seedlings of regional manufacturing ecosystems developed around the production of a particular type of product. There are large negative externalities to cross-pacific shipping, and these externalities have to be considered when we answer the question, "how much money do we save by getting our stuff from China?". One such externality is the cost of US-taxpayer-subsidized shipping from China. Another is that both sides suffer from invasive species that affect billions of dollars of revenue in tangential industries. The spotted lanternfly was introduced to Berks County, Pennsylvania, in a shipment of stone from China a few years ago. It now threatens billions of dollars of economic productivity from the hardwood, fruit, hops, and wine industries in that state alone. This is but one example of a greater phenomenon. If you source closer to home, some of the invasive species risk gets mitigated.

totalZero 6y ago

100%. Ultimately cost of labor alone isn't going to be the deciding factor, and when I say "plenty of cheap labor in Latin America" I'm not suggesting that we can save money in the short term by moving our factories there. I'm suggesting an affordable alternative, geographically closer to home, in a set of countries that (when compared to China) are smaller, more defensible, and culturally more similar to us. We have seen evidence that China's manufacturing sector includes slave labor. You can't compete with slave labor! This is why the "it's just business, save a penny where you can" mentality totally misses the point. We have to spend some money to get out of this mess. For a major corporation, this would mean spending less on buybacks in order to build new manufacturing facilities elsewhere. For our government, this would mean coordinating with our companies and foreign ally governments to manage a concerted effort at creating new manufacturing ecosystems in mutually-agreed-upon regions that offer logistical and tax advantages. With respect to your point about efficient, short and well integrated supply chains: large corporations have to be the first movers. They are the only ones who can begin to cultivate the seedlings of regional manufacturing ecosystems developed around the production of a particular type of product. There are large negative externalities to cross-pacific shipping, and these externalities have to be considered when we answer the question, "how much money do we save by getting our stuff from China?". One such externality is the cost of US-taxpayer-subsidized shipping from China. Another is that both sides suffer from invasive species that affect billions of dollars of revenue in tangential industries. The spotted lanternfly was introduced to Berks County, Pennsylvania, in a shipment of stone from China a few years ago. It now threatens billions of dollars of economic productivity from the hardwood, fruit, hops, and wine industries in that state alone. This is but one example of a greater phenomenon. If you source closer to home, some of the invasive species risk gets mitigated.