For argument’s sake, let’s say it is a business grade laptop, similar to a high-end Thinkpad. They currently retail for about $1000 new. How much more would it cost if it was built in the USA?
Without strictly defining “built in America”, I think your question is unanswerable. For example, Element Electronics is currently selling “made in USA” televisions, but it looks like almost all the value gets added elsewhere, and the American factory just performs one simple assembly operation (installing one printed circuit board) and the final QC checks. At that level, the cost difference would of course be very small.
For example, must all of the assembly operations (like putting parts together with screwdrivers and snaps and glue and stuff) occur in America? All the injection molding of plastic parts? All the chemical processes to make the plastic that gets injection molded? All the chemical processes to make the plastic’s precursors? Must any oil used come from an American well?
If you insist, for example, that the laptop must use an American-manufactured LCD, then you have a special problem, because the cost of components like that is dominated by the capital cost of the hugely expensive factories that make them; so without a good forecast of how many units they’ll be able to sell, there’s no way to calculate the final average unit price. And, it’s a lot easier to sell LCDs when the factory that’s using them is next door than when it’s an ocean away, with the attendant shipping and customs problems; so unless you can move entire big chunks of the supply chain at once, you’ll pick up extra cost due to that inefficiency.
A surprising amount of the value in that laptop may already be American. For example, the CPU may come from an American fab, and that’s a relatively expensive component. And when calculating that share of the value, should we consider the manufacturing equipment too? For example, if an American company sells fab equipment to a Chinese fab (which often happens), then do we count the Chinese technicians who maintain the machine, but exclude the American technicians who built it? What if the Chinese fab has a service contract with the American equipment vendor?
In any case, under reasonable assumptions, it’s probably closer to a 10% change than to 1% or 100%. But without strictly defining those assumptions, any quantitative answer is meaningless.
Just some guessing.
A lot of the parts are not currently manufactured in US. But let’s suppose they are.
Many of the parts are produced in highly automated facilities. A lot of those parts are then assembled by automated systems. After a lot of sub assemblies are created with little direct manual labor, the sub assemblies often need human labor to put together. So actual final assembly human labor costs can be a smaller percentage of the overall cost. Of course even the automated factories have humans working in them. That might be a more significant cost, if their wages were comparable to higher technology trained, educated, workers in the U.S. But I still think an established U.S. based chain, would not make the product too expensive. More expensive, yes. But keep in mind, that added expense is cycled back into the economy of the U.S. by direct spending of the labor earning those wages into the U.S.
Of course there are all the complex and perverse tax loopholes. Less regulations to live up to. But again, these costs will be directly returned into the U.S. economy. Money doesn’t just disappear. It moves in and out of peoples pockets.
The cost in dollars would increase. The dollars earned would increase. The economic activity and benefits would be in the U.S. Ultimately, the cost should balance out. Making things overseas, is just grabbing extra profit by playing inequalities. Skimming.
As for high value parts?
http://tuoitrenews.vn/business/21324/80-of-worlds-computer-chips-will-be-made-by-intel-vietnam-by-2015-ceo
Articles over the years discussing what it would cost to produce ipads or iphones in the US have come out somewhere between 50 and 100% increase in retail price. But these are calculations by tech or even general news reporters calling around asking some questions and doing some back of envelope. And Apple has wide margins on those products so it’s important whether you assume they keep the same $ margin, same % margin, or shrink the margin by either measure, not as much a factor in tight margin generic PC’s.
As Tommy Seven said it depends a lot on how you’d define ‘made in the US’. And also, related to that point, the extra cost of the new supply chain process to ship things bigger distances or more times because you wouldn’t have the same ‘clusters’ of closely situated suppliers and contractors who now supply various parts and labor in close coordination within China (typically). Those just don’t exist in the US now, for those parts of the device and process.
A very imprecise but perhaps illustrative example would be producing merchant ships now in the US, as required under the Jones Act for ships carrying cargo between US ports. Many of those ships in recent years (for example there’s been a boomlet in building medium sized tanker for the US coastal trade because of increased US oil production) have been designs from South Korean yards. Almost all the components are foreign made (engines, pumps, etc), US infrastructure for such stuff specialized for ships has pretty much withered away. The finished ships cost shipowners ~3-4 times as much built in the US as same basic design ships from the Korean yards themselves, though ROK and US industrial wages are not nearly as greatly different as US v China. Some of it is the ‘friction’ of having to deal for those component items in smaller quantities removed from the integrated process in Korea. The component makers make bigger margins, and have to devote more resources to dealing with the foreign end user. A lot of it is lower US productivity for this kind of work (though overall US labor productivity is higher than ROK). And both points also relate to scale: recent contracts to build Daewoo and Hyundai designed tankers in San Diego and Philadelphia yards have totaled around 30 ships so far over a number of years, large scale activity compared to often almost completely moribund US merchant ship building of last few decades. But Hyundai’s medium tanker building subsidiary HMD often has a order backlog of ~200 such ships, not counting all the other types the Hyundai group as a whole builds and over which it spreads its overhead.
Of course ships and computers are quite different. But IME few laymen guess the cost differential is anything like what it is for ships, even people in the industry but not involved in that aspect sometimes find it hard to believe, or think it must be some simple problem of bad management or ‘greed’ but it really isn’t. Economies of scale and integration (physical and commercial proximity) can be enormous in modern industrial activities.
Really a long winded answer saying ‘I have no idea’ when it comes to PC’s, but also I don’t have much confidence in anyone estimating it closely even with a solid definition and scenario, or even if so. It’s very far from obvious it would be a differential small enough for the idea to make any sense whatsoever (really made in US), beyond the political sphere where it wouldn’t have to.
The business in Vietnam appears to be an assembly and test facility, not a fab, per Intel’s fact sheet. That’s a lower share of the total value in a processor, though good luck breaking it out in any objective way except total income to the people in each country. Intel has fabs mostly in the USA, not entirely.
There’s a surprising amount of labor in electronics like laptops and iphones. A lot of things that you think would be automated are actually done by hand.
The labor cost between the U.S. and China is roughly a factor of 10, so my rough guess for something like a laptop would be that it would cost about 5 times as much.
Well, much of the laptop is built in America. James Fallows, in “China Makes, the World Takes”: [INDENT][INDENT]…the generic Windows-style laptops I saw in one modern factory might go for around $1,000 in the United States, with the retailer keeping less than $50.
Where does the rest of the money go? The manager of that factory guessed that Intel and Microsoft together would collect about $300, and that the makers of the display screen, the disk-storage devices, and other electronic components might get $150 or so apiece. The keyboard makers would get $15 or $20; FedEx or UPS would get slightly less. When all other costs were accounted for, perhaps $30 to $40—3 to 4 percent of the total—would stay in China with the factory owners and the young women on the assembly lines. [/INDENT][/INDENT] The point being is that laptop assembly isn’t an especially important part of the process. To be fair though a lot of hard disk and component manufacturing is done abroad, so this only addresses a segment of the OP.
$1000 laptop may include perhaps $50 worth of assembly labor, which in China can get you maybe 50 hours of work.
The work in the US could easily cost $1000, doubling the cost of making the laptop.
The cost of labor in China is no longer anywhere close to $1/hour (untrustworthy graph, but anyone working with Chinese factories at any level of technical sophistication can confirm this). That kind of analysis also doesn’t consider the increased level of automation that becomes cost-effective at higher labor costs, and doesn’t consider that “cluster” effect unless you assume the whole industry moves at once.
The Jones Act thing is really interesting, though as Corry El says, it’s hard to distinguish the cost of US labor from the cost of lower volume. I wonder what other natural experiments like that exist.
Over the costs of parts it would be 1-2 hundred dollars more to cover assembly labor. The cost of parts is not that easy to determine because they are primarily sub-assemblies that would vary in the amount of labor involved, and the additional costs of manufacturing here in the US. There are too many apples and oranges comparisons in the entire manufacturing cycle to narrow it down specifically, how much cheap labor is replaced by automation, how much energy is costing the manufacturer, the costs of regulation and taxes on the manufacturers, intermediate transportation costs, and additionally different expectations for profit. The $1000 PC could easily jump to $2000 if the same process was conducted here, although well less than $1500 should be feasible if the entire PC manufacturing business model were turned domestic.
This is sometimes true, but this is often true because labor was cheap and the designers knew that. If labor gets more expensive, then not only does manufacturing automation become more attractive, but the design itself changes: a discrete-wire cable might become an FPC, or a some slightly cheaper through-hole components that need to be hand-added get replaced with SMT components that can be machine-placed with everything else, or multiple simple mechanical parts get combined into one CNC-machined complicated one, reducing manual assembly time. This makes any comparisons based on current hours of assembly time etc. very suspect.
TommySeven already gave a pretty good overview. And as he points out, the Viet Nam operations are final assembly of parts made in China.
Ok, if you wanted to ship CKD (complete knock down kits) to the US (think a Ikea style notebook with all the parts in a bag), and then assemble in the US, it might be an additional $10-20 dollars for the higher labor cost in the US.
Last time I checked, it took about 20 minutes for a notebook to go down a line and be fully assembled (burn in of the software and test took hours on top of that) from start to finish.
This already takes place in Mexico.
I believe that Lenovo still assembles a small amount of laptops in Raleigh North Carolina.
For purposes of US government self use “made in America” laptops, they can actually be assembled in a bonded style factory in Taiwan.
The real issues is the supply chain. Most of the big brands like Dell, HP and Acer can no long design a notebook from scratch. They have outsourced and oversee the design by the ODM partners. Then every screw, widget (tech term), assembly, sub assembly, connector, critical silicon, panel modules, casings, etc are all made in China. These could be made in the US, and the US has the capability on a small scale, but if you want to pump out 10 million units per month, there is only one place to do that. It took decades to shift the supply chain to China and I would expect over a decade to shift it back. Then the costs from all of those little components would reflect higher labor costs, high environmental oversight, additional pollution controls, regulatory overhead, real cost of capital (many Chinese companies have subsidies from the government), etc. Anyway, it would be a lot.
Manufacturing automation will be difficult for the final assembly. You would literally have to throw out the process developed of the past 30 years to make a PC, and design for automation manufacturing from a blank sheet of paper. That or kill off most of the brands so the survivors all have Apple style volume and limited SKU’s. HP’s practice of having one of every model under the sun, does not lend itself to automated manufacturing.
Tim Cook said that the cost differential for building an iPhone in the US was minimal - like 10% of the retail cost, but that the important thing was the infrastructure in China is vastly better than that in the US right now.
I’m a manufacturing guy, and I try to make as many products as possible in the US, but there are economies of scale that can’t be ignored in Asia.
Strictly, made in USA, Israel, Ireland, or China. I think Intel still tends to keep their highest-tech fabs in the USA, though others (like the TSMC) have similar fabs in Asia. Supply chains sure are complicated.
That’s another good point: labor costs not only drive manufacturing methods, and not only drive design for manufacturability, but even drive the mix of products that will be available to the consumer. HP may have its sprawling product catalog not because customers find that particularly valuable, but because it’s cheap, so why not? With more automated manufacturing, that might change.
Not a computer but electronics related, the Steam game controller is built in the US via a completely automated process and sells for $50, the same MSRP or less than controllers for the Playstation 4, Xbox One or Wii U ($50-$60). Of course, the components may well come from overseas and who knows what each company’s profit margin is on their controllers.
And a factory with only a few nominal people to make sure the robots don’t break sort of defeats the point of why most people want factories in the US to begin with.
From an article in The New York Times on how and why the iPhone is produced in China and not the US:
“‘The entire supply chain is in China now,’ said another former high-ranking Apple executive. ‘You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.’”
The article also describes how, when Steve Jobs made a very last minute decision to have a glass screen on the original iPhone, the Chinese factory ramped up extremely quickly to handle the change.
I just came here to say that many things manufactured off-shore are done so because of the available workforce, the looser labor laws, lack of unions, etc. It’s about flexibility, growth, and minimizing the risks associated with trying to expand a workforce.
On paper, you could make many things in the USA, and compete on pricing, but good luck finding anyone to do the work, even if you pay at the top of the salary range for that field.
This is coming from someone who has done a lot of outsourcing, and 80% of the time, it’s not about saving money. It’s most often about minimizing workforce risks, because if you’re a well-run business, you need to grow, and you ain’t growing if you can’t get people to work.
Sad but true.
$1237.16
Well Mr. Boff King, if you seen an entirely manufactured in the U.S.A., our expense will go sky-high. For instance: You know how “cheap” those shoes are? They are paying relatively low for jobs such as the Chinese citizens. That is solely because of their economy is lower in than ours. A shoe built in United States would charge you 129.99$ (130$). I actually seen a shoe built and ensemble in America; they do in fact worth that much, if they are built in America. However, in foot wear in China would cost a whopping 60$. To solve this problem is to maximize the wages so that all those John Does accept their desires.
So all in all I think it’s up to you what you conceptualized!