3 ms·

My first job was manufacturing, it sucks but I think it is better than retail and the service industry. You sweat and do boring things all day basically. I hear

by _8j50 4y ago

My first job was manufacturing, it sucks but I think it is better than retail and the service industry. You sweat and do boring things all day basically. I hear a lot of people in the service industry complaining, maybe many of them are better suited to work in union manufacturing job somewhere. I don't blame companies but the government on any lack of manufacturing jobs. China is cheap and from what I understand they are usually at most 3-4x cheaper not 10 or 10x cheaper right? So that just means stuff costs a bit more and less net profit margins for companies right? Not ideal but it should be economically viable I would think? I am just concerned there is a real chance of an eventual war with china when the west depends on them on so much but opposes them on a lot of things as well. Can the frenemy relationship last long?

oneoff786 4y ago
4x cheaper as in 1/4 the cost to produce? So a foreign competitor can charge half as much as you and still make a a gross margin of 50%? Nah you’re out of business immediately.
- leoedin 4y ago
  Labour is 4x cheaper. Bill of material cost is going to be pretty much the same everywhere. Depending on the product, the labour cost of manufacturing might only be 20% - so that 4x turns into a 15% saving on cost of goods. That needs to be contrasted against shipping costs and the overhead of managing a Chinese factory.
  - christophilus 4y ago
    > Bill of material cost is going to be pretty much the same everywhere. A decade or so ago, my dad analyzed a part that came from his Chinese competitor. The finished Chinese part, including shipping, cost less than my dad’s company was paying for the raw materials. He was still able to compete by producing a much higher quality product (found in nuclear power plants, chemical processing plants, oil rigs, and other places where quality really matters). Anyway, my point is, I wouldn’t assume China is only cheaper due to labor.
- _8j50 4y ago
  On its own yeah but tariffs subsidies and other policy tools can make it so you are profitable. If apple makes iphones for $99 in China you can specifically implement tariffs on iphones at 500% so it is equally costly if making it in the US costs 499.
  - oneoff786 4y ago
    So now iPhones are 80% cheaper in every other country in the world? Seems unlikely to work. You’ve also introduced a massive tax for a single product for a single company which is prettt bullshit
    - _8j50 4y ago
      No, that means apple which is a US company tucks its tail between its legs and starts making iPhones in the US for US/europe customers and wherever else it wants if it wants to compete outside of the US. Apple specifically makes most of its iphone profits from the US and it is a mainline product for a trillion dollar company that is taking money out of the US consumer into Chinese economy so it isn't bullshit at all.
      - oneoff786 4y ago
        A tariff like this has never happened before and would be heavily contested. Not especially realistic. And also wouldn’t prevent apple from making iPhones in China for every other market.
        _8j50 4y ago
        You are right but at least a large part of their revenue will come from US made iphones which means money in the US economy instead of China, similar tariffs for others who innovate in the US but manufacture elsewhere can be implemented as well since international commerce can be regulates by the fed gov. It would also set precedent for future outsourcing attempts, reduce the likelihood of wars and supply chain chaos.
themitigating 4y ago
You blame the government because of free trade policies that led to globalism?
- _8j50 4y ago
  There is no free trade with China. Allowing outsourcing to countries that don't compete fairly with ameican companies because they treat their people like shit is what I blame them for. Free trade can only happen fairly if economic conditions between countries is similar.
nindalf 4y ago
> So that just means stuff costs a bit more and less net profit margins for companies right? Not ideal but it should be economically viable I would think? Except you still need to compete with other companies who can undercut your product on price now. A few $ here or there might not matter for some, but most people are going to sort by price and buy the cheapest one. Now there are second order effects - the high volume sellers get economies of scale during manufacturing and better deals from suppliers when they buy in bulk. Now you’re competing with products who are priced much lower. How long before you go out of business? All is not lost. You could potentially put a “proudly made in $country” tag on your product and charge a premium. You’ll go low volume, high margin. It’s viable and many manufacturers do it. But only the ones with a direct relationship with customers. A supplier making a tiny wizbang can’t sell them to Apple or Ford expecting a premium.
- _8j50 4y ago
  Isn't that what tariffs are for? To prevent foreign countries from undercutting local companies? America does not have a free trade agreement with China for example.

by _8j50 4y ago

oneoff786 4y ago

4x cheaper as in 1/4 the cost to produce? So a foreign competitor can charge half as much as you and still make a a gross margin of 50%? Nah you’re out of business immediately.

leoedin 4y ago
Labour is 4x cheaper. Bill of material cost is going to be pretty much the same everywhere. Depending on the product, the labour cost of manufacturing might only be 20% - so that 4x turns into a 15% saving on cost of goods. That needs to be contrasted against shipping costs and the overhead of managing a Chinese factory.
- christophilus 4y ago
  > Bill of material cost is going to be pretty much the same everywhere. A decade or so ago, my dad analyzed a part that came from his Chinese competitor. The finished Chinese part, including shipping, cost less than my dad’s company was paying for the raw materials. He was still able to compete by producing a much higher quality product (found in nuclear power plants, chemical processing plants, oil rigs, and other places where quality really matters). Anyway, my point is, I wouldn’t assume China is only cheaper due to labor.
_8j50 4y ago
On its own yeah but tariffs subsidies and other policy tools can make it so you are profitable. If apple makes iphones for $99 in China you can specifically implement tariffs on iphones at 500% so it is equally costly if making it in the US costs 499.
- oneoff786 4y ago
  So now iPhones are 80% cheaper in every other country in the world? Seems unlikely to work. You’ve also introduced a massive tax for a single product for a single company which is prettt bullshit
  - _8j50 4y ago
    No, that means apple which is a US company tucks its tail between its legs and starts making iPhones in the US for US/europe customers and wherever else it wants if it wants to compete outside of the US. Apple specifically makes most of its iphone profits from the US and it is a mainline product for a trillion dollar company that is taking money out of the US consumer into Chinese economy so it isn't bullshit at all.
    - oneoff786 4y ago
      A tariff like this has never happened before and would be heavily contested. Not especially realistic. And also wouldn’t prevent apple from making iPhones in China for every other market.
      - _8j50 4y ago
        You are right but at least a large part of their revenue will come from US made iphones which means money in the US economy instead of China, similar tariffs for others who innovate in the US but manufacture elsewhere can be implemented as well since international commerce can be regulates by the fed gov. It would also set precedent for future outsourcing attempts, reduce the likelihood of wars and supply chain chaos.

themitigating 4y ago

You blame the government because of free trade policies that led to globalism?

_8j50 4y ago
There is no free trade with China. Allowing outsourcing to countries that don't compete fairly with ameican companies because they treat their people like shit is what I blame them for. Free trade can only happen fairly if economic conditions between countries is similar.

nindalf 4y ago

> So that just means stuff costs a bit more and less net profit margins for companies right? Not ideal but it should be economically viable I would think? Except you still need to compete with other companies who can undercut your product on price now. A few $ here or there might not matter for some, but most people are going to sort by price and buy the cheapest one. Now there are second order effects - the high volume sellers get economies of scale during manufacturing and better deals from suppliers when they buy in bulk. Now you’re competing with products who are priced much lower. How long before you go out of business? All is not lost. You could potentially put a “proudly made in $country” tag on your product and charge a premium. You’ll go low volume, high margin. It’s viable and many manufacturers do it. But only the ones with a direct relationship with customers. A supplier making a tiny wizbang can’t sell them to Apple or Ford expecting a premium.

_8j50 4y ago
Isn't that what tariffs are for? To prevent foreign countries from undercutting local companies? America does not have a free trade agreement with China for example.