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Thread: Manufacturing is returning to the U.S.

  1. #1
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    Default Manufacturing is returning to the U.S.

    Manufacturers are finding that manufacturing products in the U.S. instead of Asia can lead to greater efficiencies, in addition to saving the time and cost of shipping products across the Pacific Ocean. By having factories and workers in the same area as the engineers, workers can be more involved in the product design process, which can lead to more efficient manufacturing and lower cost. See:

    http://www.theatlantic.com/magazine/...boom/309166/1/

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    Banned Melonie's Avatar
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    Default Re: Manufacturing is returning to the U.S.

    This is absolutely true ! In fact, Apple is now seriously considering the possibility of actually producing hardware in the US again. But other analysts attribute this to different factors ...

    - political pressure from the US gov't ( i.e. risk of losing tax favored deductions, gov't grant money etc ) and US media ( foreign worker suicides )

    - devaluation of the US dollar plus appreciation of asian currencies bringing semi-skilled US labor costs down in relative terms

    - acknowledgement of the real costs of offshore 'risk' factors ... from disrupted supply chains, to commodity cost creep versus delivery cycle, to distrust of foreign 'landlords' supporting property rights ( technology, nationalization )

    - an increasing number of US manufacturers are now being acquired by foreign investors ( i.e. A123 systems sold to the Chinese yesterday ) who need a 'safer' place to invest their billions.

    - an increasing number of US states are passing laws reducing the risk of strikes / worker pay demands ( i.e. Michigan approved 'right to work' legislation yesterday ) disrupting US business cost model.

    Yes this trend is better than a kick in the head. However, semantics matter too ... and much of this US 'manufacturing' is in fact US semi-skilled workers assembling low cost imported components for sale with a 'Made in USA' sticker attached.

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    Default Re: Manufacturing is returning to the U.S.

    Quote Originally Posted by eagle2 View Post
    Manufacturers are finding that manufacturing products in the U.S. instead of Asia can lead to greater efficiencies, ....
    Some of us never left. Some of us knew that we offered greater efficiencies by being close to our customers. That lead to an ability to meet changing customer demands quickly and with less transportation cost. Having said that, I just inked my first foreign deal, so now my little company is an exporter too.

    Z

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    Default Re: Manufacturing is returning to the U.S.

    That's great!

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    Default Re: Manufacturing is returning to the U.S.

    Quote Originally Posted by Melonie View Post
    This is absolutely true ! In fact, Apple is now seriously considering the possibility of actually producing hardware in the US again. But other analysts attribute this to different factors ...

    - political pressure from the US gov't ( i.e. risk of losing tax favored deductions, gov't grant money etc ) and US media ( foreign worker suicides )

    Yes this trend is better than a kick in the head. However, semantics matter too ... and much of this US 'manufacturing' is in fact US semi-skilled workers assembling low cost imported components for sale with a 'Made in USA' sticker attached.
    I agree ...

    Also foreign labor is starting to organize. ie Apple has had strikes in China over the new Iphone demands.

    In some ways this is hedging their bets.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Manufacturing is returning to the U.S.

    here's the 'under the hood' analysis for Apple ...



    (snip)"At the end of last week, CEO Timothy Cook announced that Apple intends to invest $100 million next year to relaunch part of its manufacturing operations in the US.

    Apple and Foxconn, the contractor responsible for manufacturing iPhones, iPads and a host of other Apple products in China and other countries, is expanding its existing operations in America to build Mac computers. How many jobs will it create? About 200—a number that wouldn’t even get you noticed in the Fortune 1000.

    This may be an act of the old “corporate social responsibility,” (CSR) CEO Cook suggested in an exclusive interview with Bloomberg Businessweek after his announcement. “I don’t think we have a responsibility to create a certain kind of job,” Cook said. “But I think we do have a responsibility to create jobs.”

    According to a spokesperson for Foxconn, however, the move was more a public relations strategy than a new commitment to a social contract with American workers. Louis Woo told Businessweek that the decision was prompted by pressure from Apple’s customers. But that’s not all. He said, “In addition, any manufacturing we take back to the U.S. needs to leverage high-value engineering talent there in comparison to the low-cost labor of China.”

    Apple sold nearly a quarter of a million phones, computers, and other electronic products in the first 3 quarters of the year and can afford to indulge in a little “reshoring,” as this kind of thing is now known. Or is Apple’s latest move simply a matter of crunching the numbers.

    One way to look at those numbers is to look at how many humans are required to manufacture tech products. In today's New York Times, columnist Paul Krugman writes, "One of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad." So much for social responsibility.

    With a mere 200 employees added to the payroll at an average salary of $32,000, and high skilled workers making around $65,000, Apple can produce Macs in the US and still make superb margins. And because they’re setting up shop in South Carolina, a right to work state, they are not worried about union demands. In addition, they leave behind problematic logistics, Chinese regulation, and all the messy disputes over working conditions at Foxconn and other mainland contractors.

    In the end, though, none of this is persuasive as a justification for Apple’s interesting move. CSR is dandy, one is all for it, but few companies do anything purely in its cause. And in this case, Apple’s strategy would flunk badly if economic and social conditions did not support it. Cost structures, skill sets, logistics, supply chains, proximity of markets—all this and more has to function as a successful manufacturer’s support base. Otherwise the move starts to look like miscalculated affirmative action.

    We have enough evidence now to conclude that Apple’s partial move back to America and its work force has a chance of succeeding on the fundamentals. Last year the Boston Consulting Group published a study forecasting a “manufacturing renaissance” in the U.S. as China’s wage rates and currency rise, skilled workers grow scarcer, and U.S. productivity maintains a strong lead over China’s. Apple thus joins a group of U.S. companies—Caterpillar, Ford, NCR—that have already reckoned that “Made in USA” makes good business sense.

    More recently, the Centre for Research on Socio–Cultural Change, a think tank at Manchester University, took apart (literally) an Apple 4G iPhone to calculate the cost of each stage of production. In China, the phone cost $178.45 to make, according to CRESC; labor was just $7.10 of that. Since it sells for $630 (including downloads), Apple goes home with a 72 percent profit margin.

    In America, the same experiment yielded this: Labor comes in at $21 an hour (triple the Chinese rate), and total production cost would be $337.01. Apple’s margin: a still enviable 46.5 percent, according to the CRESC study."(snip)

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    Default Re: Manufacturing is returning to the U.S.

    Congrats!

    Quote Originally Posted by Zofia View Post
    Some of us never left. Some of us knew that we offered greater efficiencies by being close to our customers. That lead to an ability to meet changing customer demands quickly and with less transportation cost. Having said that, I just inked my first foreign deal, so now my little company is an exporter too.

    Z

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