I was out walking yesterday and I noticed that all the steel man-hole covers, covering the sewer entrances around here (Northern VA) are all freaking made in India!!!
has the state of US manufacturing become so horrible that we cant even afford to make round steel plates here? It is actually cheaper to make these overseas and ship these heavy ass things back here? My mind boggles!
It was bad enough when I learned Disney (I mean how American is Disney?) makes their micky mouses’ in China, but this… this… It just dont seem right!
A small piece of the American inside me is crying…
Well, it looks like that it’s been going on for forty years, and it’s a cost issue–the covers sell for a third of the price that American foundries sell them for.
You’d think shipping would eat up any savings you’d get, but buying them by the boatload must be cost-effective. Good for the Indians. Someday US foundries will wake up…I hope.
Wake up to what? the production costs overseas are lower because they can pay workers less, because cost of living is lower there, as are other costs. I’m sure U.S. companies know this only too well. but as long as costs are greater here, and their products will cost more on the market, they won’t compete. If they try to compete, they’ll have to pay the workers a ludicrously low wage. that won’t happen.
Eventually, they say, wages in India will rise, and it will even out. I don’t buy it, myself. If costs go up in India, the manufacturing will just move someplace even cheaper. And how long all this will take nobody seems willing to say.
But manufacturing can’t just move to a place with cheap wages. You also have to have some sort of political stability…enough to be confident the government isn’t going to steal your factory. You have to have infrastructure…you can’t just plop a factory down in the middle of Africa, you’ve got to have air access, rail access, sea access so you can get raw materials to your factory and ship items out for export. You’ve got to have workers that won’t need to flee from warlords when the political winds change.
So there are lots of third-world shitholes out there where you could pay your workers pennies. But most of those places are too risky to invest in. And these third world sites aren’t competing against American or European manufacturers that much…that ship sailed long ago. They are competing against China.
China and India together are almost half the world population. Where are these companies going to move to when Chinese and Indian wages rise? When/if Chinese and Indian wages rise then the internal markets of those countries will be huge. Which means the global demand for manufactured goods will be much larger when formerly impoverished peasants start buying TVs and gameboys and washing machines and cell phones.
Moving factories to Africa in search of cheap wages isn’t much help because the population in Africa is pretty small compared to Asia. If Asia is so prosperous that they don’t offer dirt-cheap wages any more, where else can you go besides Africa? But Africa won’t work unless you get political stability, and you can’t get political stability unless you’ve got economic development. Anyway, if Africa finally gets some manufacturing jobs that’s not exactly a bad thing is it? Is it a crime for a country to develop from $100 per capita GDP to $1000 per capita GDP? Rather it would be a crime to try to stop it.
I am, as we speak, looking at a quotation for an assembly that weighs 82,000 pounds. Fabricated in North America, the cost is 1.305 million US dollars, with a freight cost of $20,000. Fabricated in China, the cost is 1.020 million US dollars, with a freight cost of $80,000. That’s nearly a quarter of a million dollars cheaper, even including freight, on something that weighs 41 tons.
In addition, the fabrication time in North America is 44 weeks, and in China 22 weeks. That covers any time difference between sourcing from the two sites. In a publically held company, with a fiduciary responsibility to the stockholders, how can I justify a North American fabricator?
Human Rights. Now, that’s only because you said China. If it had been India, I’d have to say that with that price difference you’d have to go with foriegn.
Uh yeah, joe lunchbucket stockholder dosen’t know of care jack diddly crap about the inner workings of internal purchasing. If this is a common size project $250K is little stuff but could make or break bonuses on that project team.
You can’t really. Had the fabrication time been the same, then you could have justified it with readiness and ease of comeback, but with such a time difference, you can’t.
Might depend on who the stockholders are - Pickens is one thing, but a lot of ordinary people holding mutual funds might have a different take. Have you asked Joe (and Josephine) Stockholder what they’d prefer – an extra $.02/share, or the chance to help Their Fellow Americans stay employed?
The thing to make sure of is that the quality of the item from the other source is the same. Many times it seems to me people are not making an “equal replacement” choice, but taking a 95% solution at 75% of the price.
There is a lot of consternation about this in my company’s purchasing departments. China produces a lot of low-cost things such as boiler tubing, and they provide innumerable assurances and guarantees that the tubing is up to code. Now boiler tubing is not magix stuff, nor all that hard to make in today’s world - so long at the metallurgy and forming is done right. However, in practice we have found that it is not in fact up to specification. Given safety factors, if the engineering, construction permits, and laws of the country we’re working in allow weaker material than the original spec, then maybe we can use it and save lots of money (in this case, it’s like a 90% solution at 50% price). Then again, we also know that if there is a problem or failure, the Chinese boiler tube companies are pretty much immune from being sued because of (illegal) Chinese protectionism, and so the only recourse is to blacklist the company. Which doesn’t help you when you have 3M feet of boiler tubing that won’t weld properly - or much worse, a section of boiler wall ruptures, sending a million pounds of steam through the plant to tempura a hundred souls.
Another factor is supply and demand. In some cases we’re finding that the US suppliers of parts and materials are years behind schedule, due to what some feel is the result of too much downsizing of labour in order to maximize profit. In some cases we have to take that cheaper item just because there’s nothing else out there.