$35.00 here $16.00 there ( China )

I may not have the perfect machines or tools, I am not the worlds best programmer, but I am not that bad. A couple days ago one of our major customers said they had to quote a rubber two color cover for an assembly we have made for several years, the place quoting the rubber part alsu quoted the metal parts ( 5 total ) and gave a price of $16.00 for a group of parts we build for $35.00, we make about $45.00 to $50.00 per hour on these parts, but they run about 1000 at a time so it runs a long time and works out ok, but to run it for half price isn't going to work. I am not here to rant and this customer has sent several parts overseas in the last few years and likely will send more. The funny thing is they will buy tens of thousands from there and one thousand from here. I couldn't run them for half price for any quantity, but could do better with five to seven thousand parts, than I can on one thousand. I am not here to whine as this is a reality, but it makes one wonder when this country will wake up and do something. We have mininum wage, health insurance, unimployment, osha, epa, workplace safety nd many others, China does not, Why do we insist that our workers neeed these things and imported stuff does not?

I guess we could start working under chinese work conditions, but if forced to do that, I might try starting a revolution instead.

The years between those choices and where we are not may not be as many as we would like to think.

kustomizer

Why do we insist that our workers neeed these things and imported stuff does not?

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Because our government is infected with a cancer called free trade. It is the official state religion of our schools and universities and indoctrination starts early in the public school systems. Also our corporate controlled/censored media makes sure that protectionism is criticized at every chance and will demonize anyone who even hints at returning to our tradition of high tariffs.

This bias is so universal as to make censorship of protectionist views the norm.

I have been struggling with censorship in the Wikipedia article on the Smoot-Hawley Tariff Act which has reduced my input to a single paragraph while the bulk of the article supports the free trade bashing of the supposed effects of the "record tariff" - a historical lie. Every time I add my facts, it is edited to one paragraph.

Here is the tariff data that supports my view.

YEARS……………..AVERAGE EFFECTIVE TARIFF (% tax on all imports)
1821-1830………….46.6%
1831-1840………….24.9%
1841-1850………….24.0%
1851-186……………20.8%
1861-1870………….36.2%
1871-1880………….31.3%
1881-1890………….30.1%
1891-1900………….23.7%

1821-1900………….29.7%

1901-1910………….25.0%
1911-1920………….11.8%
1921-1930………….13.8%
1931-1940………….16.8%
1941-1950………….9.0%

1901-1950………….15.3%

1951-1960………….5.9%
1961-1970………….7.3%
1971-1980………….4.0%
1981-1990………….3.5%
1991-2000………….2.5%


source: Historical Statistical Abstract of the United States

1927……….13.8%
1928………..13.3%
1929……….13.5%
1930……….14.8%
1931……….17.8%
1932……….19.6%
1933……….19.8%
1934……….18.4%
1935……….17.5%

As you can see, the United States was built under a protective tariff and imports as a percent of America's GNP averaged about 4% from 1821 till 1970 with the all time low of 1.7% in 1942. Since then exports have rocketed to over 18% of GNP as the tax burden has shifted from imports to the domestic producer.

For example, imports control about 80% of the U.S. toy market. The effective tariff rate today is about 1%.

Thus, 80% of the U.S. toy market that is imported enjoys on average a 1% tax rate.

Who gets to pay the rest of the tax burden?

The U.S. manufacturer. The U.S. economy is at about a 30% tax rate.

The logic of free trade taken to its conclusion will have the 80% imported toys paying no taxes and the 20% domestic producer paying 100% of the taxes. Mind you these taxes pay for the roads, airports, shipping ports, and everything else needed to move goods around this country, imported toys included.

Doesn't take a genius to see what will happen. The domestic producer will be taxed into bankruptcy or moving off shore to avoid the tax hammer. Then the tax burden shifts off of the businesses as they leave and goes onto the backs of the citizens, who go bankrupt in record numbers. The average citizen can't leave this country to avoid the tax hammer. Then you will tax the middle class into poverty, unable to consume the output of our own econmy, let alone the output of the rest of the world.

Steve

Kustomizer, how much of the $35.00 is material?


A few years back, I was making some aluminum parts for a customer in lots of 100 every few months. I was buying the aluminum for $1.85/lb (very good price at the time), and it was about $12.00 worth of material per part. The material+machining totaled $30.00 per part. Then the customer shipped them off to anodizing for a few bucks, then off for laser engraving for a few more bucks.

Eventually, they started buying COMPLETE parts from China, machined, anodized, laser engraved, and shipped across the world for.....you guessed it, $12 bucks.

How could this be? No amount of automation or technology is going to allow me to machine, anodize, engrave, and deliver a part for less than the cost of the raw stock.

It's frustrating to think about, so I prefer to keep my blinders on and just keep chugging ahead. There are still plenty of companies in America who are looking for good quality parts at a good price.

Steve,
Good point, free trade, let's not forget that the American who lost his job to China was also buying imported junk and thought he was getting over on the system. I think you'll enjoy the link, more corporate stupidity, but then there are those here who will say it's being a good world citizen.
http://www.spectator.org/dsp_article.asp?art_id=12303
http://www.businessandmedia.org/articles/2007/20071031144306.aspx

A friend and I put together a price a couple years ago on some gearbox shaft spacers. About a half dozen different sizes, all of which would be parted off of DOM tubing with no further ops necessary. The company we were quoting to really prefers to keep things domestic from the engineering and plant purchasing level, but the buyer told us up front they'd been ordered by some of the corporate suits to quote this out overseas as well since quantities were large.

We had excellent material pricing, and both of us had excess turning center capacity we were really interested in putting to work at the no-brainer level, so we priced it rock bottom with one man to run 3 lathes and box the parts as they came off.

Buyer faxed us a copy of the quotes, and one from India averaged 4 cents apiece less than our bare material cost. Not even considering labor or shipping, the 4 cents represented 20-25% of the material cost. Like Joe said, in some cases it appears that cheap labor doesn't even figure into the equation. More like they've found people who'll pay them for the privilege of working.

Why does everyone assume that raw materials costs are the same here as in India or China? American aluminum has all sorts of regulations, taxes and so on associated with it.

Perhaps in China people are less particular about things like CCF emissions, or the cost of electricity or yes, the cost of labor? Ditto for steel and other materials.

Could there also be subsidies involved, or people selling at a loss to start a relationship, or so on?

Gene

I watched a documentary several months ago on PBS produced by Independent Lens, that focused on a garment factory in China.

Almost all of the workers were women, and they were sewing Levi's jeans, earning 6 cents per hour. That's six pennies per hour.

A typical work day consisted of at least 12 hours, and often times as long as 20 hours.

At one point, the factory was desperate to increase production levels to meet shipments, so they decided to run what they called a "Slogan campaign".

They put banners up all over the place which read: "Work hard today, or work harder tomorrow looking for another job."

How inspiring.

U.S. grown aluminum has something that foreign doesn't have. I think it's quality must be regulated closer. Parts I just finished for an airplane mfg. company required domestic aluminum. The first thing I suspected was that it was politics. But after I thought about it nobody seems to care where anything comes from on the planet anymore.

"Work hard today, or work harder tomorrow looking for another job."

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These signs do exist, I have seen them with my own eyes on one of my trips to China. I am looking if I have a photo of it.

quotes, and one from India averaged 4 cents apiece less than our bare material cost

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This is usual, finished parts delivered for less than material costs. I have seen this time and time again. They used to call this practice "dumping".

So when does the revolution start?
I predict NEVER...
your all sheeple, you like being sheared

well..maybe not "all"...but enough that nothing will ever get started and the ones with the idea of returning to the US Constitution are laughed out of the "club"

"So when does the revolution start?
I predict NEVER...
your all sheeple, you like being sheared

well..maybe not "all"...but enough that nothing will ever get started and the ones with the idea of returning to the US Constitution are laughed out of the "club""

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And what are you doing to help the situation? What course of action would you recommend for this "revolution"?

Part of the issue is how we are "setup"....

Power used to be cheap in the Tennessee Valley... then they got a Manager (thank you Mr. Carter) - who destroyed the Nuclear Power Program... so power is EXPENSIVE now.... comparitively.. so the Alumin. company in Alcoa/Maryville severely ramped down. Costs up. Production DOWN...

"We" set ouselves up for that one... Make the cost expensive - for needless reasons - and production goes elsewhwere...

***********

TO do? How about..
a - don't subsidize port expansions with Tax dollars.. they can pay their own way...
b - ditto for subsidized transport of imports from a port along public transportation systems - again with tax dollars..
c - no "tax free" warehousing of goods.. as so many companies like to take advantage of -
d - in fact, remove subsidies ALL ALONG THE SUPPLY AND CREATION CHAIN...
e - how about... actually enforcing Patent Protection laws.. stop violating patent items at customs... I think that would save at least 100K+++++ jobs - not to mention make US companies more IP oriented...
f - etc, etc, etc...

how many simple solutions do you want... ?

10? 1000?

--jerry

Material for these is about $10.00 per set, our customer has always insisted on domestic aluminum to avoid previous troubles in annodizing with another supplier, I forgot to mention the $16.00 price includes the above mentioned rubber cover and annodizing. This customer has had a few things made over there in the last few years, they have had their share of minor quality issues, but seem to like what they get.

No way we can compete with China. I tell my customers I am an American, who owns an American machine shop, employs Americans, making parts for American companies. If they choose to get quotes from China, I tell them don't even bother sending me the RFQ.

Funny thing though. Years ago my first customer, a manufacturer of servo motors, wanted me to cut my price on a shaft I was machining for them. About 1, 000 pcs per month. My "distant" competitor beat my price of $3.25 each by only $.25. Needless to say, they were desperate for the quarter savings, and the Chinese won that one.

The stupid part is how cheap I was running the shafts! I should have been charging $6 or more. (Was still making about $60 per hour though...

Trying to organize six couples to go to dinner is just about all the group leading I can seem to muster, We ( American manufacturing ) need more than talk, I will carry on and buy American and I am sure I will always be able to find something to make. A revolution of sorts is going to be the type of action needed ( I hate to think of another " uncivil war ) I can't think of any reason to keep on track as we are, as I am thinking that we are not headed in the right direction, and I think I am much more sheltered than most manufacturing type folks. For some reason the bug wheels are quite happy with the "Global Economy" I think it is a great Idea to bring American wages and lifestyle down to the same level as the global average, I am quite certain that is exactly what our forfathers worked so hard for

I make patterns for a curtain rod finial company they get everything cast in china in iron they pay 16 cents per pound the most expensive part of the whole job is getting them from LA to phoenix. I tried to get a local screw machine shop a job on a small simple part he quoted the job at 30 cents each the chinese quoted 3 cents each. they needed 10,000 parts.

The scrap yard pays ME $.08 per pound for castings. How the hell does it get broken, sorted, shipped over, melted, poured into forms, etc for $.16

Metalmuncher`s hit it right on the head.I find also that it is not about lowering machine rates or putting better and faster machines on the job.It is pure and simply down to material cost.Parts are coming in to the UK at cheaper prices than we can buy the material.We buy large volumes of steel but it makes no difference.From what I read the world price for steel is $400/tonne,well I would like some of that as the cheapest we can buy is plate at $900 or bright bar at $1000-$1050/tonne.