Global Manufacturing Costs - Page 2
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  1. #21
    Join Date
    Mar 2004
    Edison Washington USA
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    Quote Originally Posted by Mcgyver View Post
    someone eating your lunch in one sector or another is why trade works - they do what they do best and vice versa. Overall, US manufacturing is considerably higher than the EU as a percentage of GDP and in Italy for example wage rates for welder fitters are significantly less than I pay. I bet the guys that make Schaublin lathes and 911 turbos get paid well, but the 0.1% pinnacle of a market is a small place. They occupy that space, but Haas makes a lot more money and contributes a lot more to the economy than Schaublin does. Point being, not that you shouldn't pay attention and try and learn from the other guy, but the sentiment that Europe has got manufacturing right and we don't doesn't stand up to the facts.

    As for where something gets made, its mostly cost and in second place can be industrial capacity. Lots of factors go into cost, and its not always cheaper to make there, manage there and ship here. That's why we such a large manufacturing sector here. With their lower labour costs, why isn't everything made there? Traditionally the answer has been productivity differences, but that seems an advantage that will be hard to maintain - they're not exactly squatting in mud fill yards tapping away with mallets. Of course there is costs to overcoming business culture and language barriers (that includes QA), shipping etc. I know I compete with it all the time if there is any volume to the fabrication. A hydrovac truck manufacturer I used to make things for now brings the tanks turrets booms and bumpers for the half the cost of buying here. Steel is comparable, energy more, but the the labour cost is still substantially less. If put aside shipping and management challenges, you have to have greater productivity here to overcome it
    US manufacturing is, indeed, a very large and profitable sector. We do well in industries that include commercial aircraft, weapons, farm and construction equipment, and higher end consumer goods, for example. In most cases, quality, innovation, and yes, government policy and tax and federal purchasing policy, has helped those sectors thrive here. When government doesnt support an industrial sector, it tends to move offshore. The feds dont buy or support research in appliances, and we make almost none. But the commercial jet airliner industry as we know it was a direct result of federal money. Same thing with Waterjet cutting- without federal funding for development of a process to accurately cut titanium, composite honeycomb panels, and carbon fiber for defense and intelligence agencies, we would not be world leaders and innovators in that sector.

    But Haas is not a great example- the USA has steadily lost machine tool and manufacturing capabilities for decades- we lead in a few oddball categories- waterjet cutting, for example- But Haas is an outlier, an unusual american success story. Most of the other machine tool manufacturers in the USA are foreign owned, and would have gone out of business without the foreign investment.

    Germany, far from making less money on machinery, leads the world in that category, making more in profit than either China or the USA.
    So, in that category, they DO have manufacturing right.
    Cost, again, loses out to quality.
    The largest lathe manufacturer in the world, which is also pretty cheap, is Dalian. 大连机床集团 | 加工中心,钻攻加工中心,数控机床,数控车床,龙门加工中心
    and yet, multiple german companies are first choice by buyers, even though the machinery is made in Germany, where both costs to the manufacturer, and cost to the final purchaser, are more.
    Quality, not low cost, dictates what people buy, and nationalism, desire to keep a middle class, a government lead national industrial policy, and a general sense of community means German companies dont move their plants to China.
    Cost definitely is the main factor in many market segments.
    But making decisions on cost alone hollows out a country, both in terms of manufacturing capacity, and in terms of standard of living for its people.

    An interesting case study is The US Concrete industry. ALL of the major companies that make concrete in the USA are foreign. They invest here, because there is a viable market.
    But they are also building on home country concrete production, modernizing and automating US plants based on developments made in their home countries- 1 thru 5 largest producers in the USA are Irish, Mexican, French, German, and French again.
    American investors, and American companies, have lost the business, due to focusing on things like short term profit- its more profitable to invest elsewhere, so hedge funds are not in Cement.
    There is a reason why foreign companies have taken over- and it has to do with industrial policies, and corporate culture- both of which we have very different takes on.

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  3. #22
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    Sep 2011
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    It's very simple.It's easier. My previous employer would not allow aluminium molds, only steel, but insisted on a 5 year payback - impossible. Oriental suppliers used aluminium. We shut down lines because the imported product cost less than the raw materials. We made and imported a particular item. Breaking strain for US made - 25lbs. 7lbs for the import! The 'latte-sipping-yuppies' did not want to design a widget. Not as cool as flying to China to choose someone else's widget. Close down a US line and get a bonus and move on to a new job. Repeat until the factory is completely redundant. The Chinese undercut prices to cause the US factory to close and Americans were more than happy to help.

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