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smaller companies are using robots
May 20, 2011 11:11 AM   Subscribe

Made in America: small businesses buck the offshoring trend - "For US manufacturing to make sense, factories must make extensive use of automation. That's getting easier, given that the cost of robots with comparable capabilities has decreased precipitously in the past two decades."

BONUS
  • Does corporate America kowtow to China? - "multinationals profit hugely from China and have less incentive to rock the boat... the problem for U.S. multinationals is that the focus on short-term profit easily outweighs long-term worries"
  • Capitalism, Unvarnished - "Working undercover, Daisey saw the nets that had been erected to catch suicidal workers who jumped off the building. He met workers whose spines had started to fuse together from 12-hour or 16-hour shifts. He met 12-year-olds who assembled iPhones and iPads."
  • Explosion Kills 2 at Foxconn Plant - "A large explosion ripped through a Foxconn high-tech plant in southwestern China Friday night, killing at least two people at a facility that is reported to manufacture iPads."
  • China's High-Speed Trains Coming Off the Rails - "China's expanding network of ultramodern high-speed trains is coming under growing scrutiny over costs and because of concerns that builders ignored safety standards in the quest to build faster trains in record time"
posted by kliuless (52 comments total) 12 users marked this as a favorite

 
Interesting how we always think of manufacturing as something that gets outsourced to China where labor is cheaper, yet Germany and Japan have strong manufacturing sectors, which have survived largely due to a reputation for quality.

I think we lost a lot of our manufacturing base because we didn't have that reputation for quality, or if we did, we lost it -- e.g. the US auto industry.
posted by Afroblanco at 11:28 AM on May 20, 2011 [9 favorites]


With all due respect, is there any point to this post, other than Anti-China GRAR?

Still, it's amusing to see that people are generally very OK with robots taking their jobs, while being very very angry at the prospect of a foreign worker taking the job instead.

Sigh.
posted by schmod at 11:29 AM on May 20, 2011 [5 favorites]


For US manufacturing to make sense, U.S. corporate tax policy needs to be reformed to quit incentivizing corporations to move operations, and realize profits, overseas:

"American corporations can already “defer” their U.S. taxes on offshore profits until those profits are repatriated (brought back to the U.S.). This creates incentives to move operations (and jobs) offshore and also creates incentives to shift profits offshore by disguising U.S. profits as “foreign” profits." - Corporate Interests Push Congress to Exempt Offshore Profits Permanently (Territorial System) or Temporarily (Repatriation Holiday)
posted by rkent at 11:32 AM on May 20, 2011 [4 favorites]


Follow this here:
Workers are hired by US Manufacturing.
Workers become expensive and infrastructure becomes relatively cheap.
US Manufacturing goes overseas.
Robots become cheaper than workers, allowing businesses to operate with fewer workers.
New businesses open in America with fewer jobs than
The cost of robots goes down, companies can operate in the US with fewer people, albeit slightly more technical people. Unfortunately, this means that those slightly more technical people are still worth less than they would normally be because of the greater supply of workers. Futhermore, the manufacturing segment has less bargaining ability as a whole when finding health benefits as a whole because they now have fewer people, meaning the price still goes up slightly. Moreover, the workers who went back for training while being unemployed have now saddled themselves with additional educational debt from a for profit institution. Next, the robotic manufacturing plant is still competing against the chinese import, although they are avoiding the import cost and minimizing personell overhead, but now it is two suppliers for a given product, which deflates the price of the good, and the value of the worker in both the US and China.
Which, if they produce robots for factories, means that the cost to open new factories drops... in a Reganomics view - that means more factories come on line. From my view, that means both the price of good and the wage of the worker get suppressed again. Focusing strictly on the supply side does very little asides from push the globalization route, where there will always be someone cheaper to do your job.

Robots aren't the silver bullet to restore manufacturing in the US unless they are bought as a collective by the people they replaced. The real enemy is the scramble for more profit by those that own companies - be they big business, small business, EU, US, or ASIA/PAC.
posted by Nanukthedog at 11:36 AM on May 20, 2011 [1 favorite]


Dare I suggest that, for once, protectionism may be the answer? If US corporations want to pretend they're foreign companies, fine, let them. We'll just slap on some hefty tariffs.
posted by Faint of Butt at 11:55 AM on May 20, 2011 [9 favorites]


This article could alternately be titled "the rise of the machines".

The key graphs to me are the rise in Chinese wages on the first page and the drop in robot pricing on page 2. The main conclusion of the article seems to be that automation is now cheaper than the labour (and quality) costs in China.
posted by bonehead at 11:56 AM on May 20, 2011


If US corporations want to pretend they're foreign companies, fine, let them. We'll just slap on some hefty tariffs.

Vermont Senator Bernie Sanders said something similar, tho a bit more forceful (the word traitor was used if I recall) and I agree. "protectionism is bad" always seems to mean "protectionism is bad for huge multinationals"
posted by The Whelk at 11:58 AM on May 20, 2011 [1 favorite]


...yet Germany and Japan have strong manufacturing sectors, which have survived largely due to a reputation for quality.

From personal experience I can tell you that German manufacturing competes at least partially because it is very efficient and uses extensive automation. Also, Chinese factory owners prefer German equipment. Your motherboard might be made in China, the pick-and-place assembling it is more likely to be German.

Obviously the more automated your processes, the less advantage there is to operating in China. Land is cheaper in most of the US than in the main Chinese manufacturing hubs, and outside those hubs it can be hard to get reliable utilities and transportation.
posted by atrazine at 11:59 AM on May 20, 2011


Ok. those jobs that can not be outsourced are those that need hands-on. And yet, McDonalds will soon be using I Pads to take orders rather than high school grads...robots take jobs that are not outsourced.

A short story: 6 months ago I went into Best Buy and started chatting with an elderly worker, a retired guy in computer section. I told him all his stuff made in China. And that as more and more Americans lost jobs they would not be able to buy this stuff.
He told me I was a dummy. Why? Because the corporations did not care if they lost business in the US...a growing middle class and upward mobile market developing in China and in India and elsewhere and that would easily replace the lost market here.

The corporations, he noted, are international and do not give a hoot about what country they are located in since they are all over the globe now.They owe allegiance (profits) not to workers here or to this country or to any country but to their managers, stock holders, boards of directors...
posted by Postroad at 12:00 PM on May 20, 2011 [3 favorites]


This is uncomfortably reactionary.
posted by Stagger Lee at 12:12 PM on May 20, 2011 [1 favorite]




Interesting front page link, inside bonus links are bullshit linkdump additions which have nothing to offer as context for the first link and are just there to create ChinaGRAR. Flagged and not quite moved on.
posted by hippybear at 12:19 PM on May 20, 2011


We saw this with software and tech support offshoring - There Ain't No Such Thing As A Free Lunch. First-world labor and quality control standards actually happen to be worth something.

This isn't rah-rah exceptionalism, this is just the acknowledgement that developing countries are, well, developing. The workforce training, corporate culture and accumulated experience required of engineering, labor and management isn't there yet. The low cost of production comes with some serious tradeoffs that most companies haven't thought through very well.

What's more, as these countries do develop, the cost of doing business starts to approach other first world countries.

The rush to move all manufacturing across the pacific will be a sheepish trickle back stateside, as companies figure out having the bulk of their operation on the other side of the globe to sell a product locally is, perhaps, not the optimal way to do business.

This isn't to say all Chinese products are bad and will be that way forever - Postwar Japan, then Taiwan and Korea had the same sort of growing pains, and they're not exactly export lightweights.
posted by Slap*Happy at 12:24 PM on May 20, 2011 [3 favorites]


He told me I was a dummy. Why? Because the corporations did not care if they lost business in the US...a growing middle class and upward mobile market developing in China and in India and elsewhere and that would easily replace the lost market here.
Well, china is trying to spur more demand for it's products locally, but it's having trouble. Chinese people aren't as interested in just blowing cash on junk as Americans are, even if they have the money

Secondly, a big part of this is trade policy. China is keeping it's currency low, and the U.S. could fight back by printing more dollars. However, powerful people in the U.S. are paranoid about inflation (and you get lots of ridiculous nonsense about how "The FED is just PRINTING money!" all over the place)

The fact that the U.S. economy sucks is mainly due to government policy being focused on improving things for the very rich. And, if you look at the wealth held by the very rich, it's gone up! If the fed policy worked to target employment rather then trying to keep inflation at 1% you would see the reverse: Inflation would eat away at the fortunes of the rich, while spurring investment, which would give people jobs and so on.
We saw this with software and tech support offshoring - There Ain't No Such Thing As A Free Lunch. First-world labor and quality control standards actually happen to be worth something.
I think this is wishful thinking here...
posted by delmoi at 12:41 PM on May 20, 2011 [2 favorites]


BONUS links do not meet international manufacturing standards. You should have outsourced them, or used a robot.
posted by a womble is an active kind of sloth at 12:47 PM on May 20, 2011


Some discussion about automation trends from the education bubble thread the other day.

inside bonus links are bullshit linkdump additions which have nothing to offer as context

I'm seeing links about labor rights and quality control in Chinese manufacturing. Seems relevant to a discussion of US "on"-shoring to me.
posted by weston at 12:47 PM on May 20, 2011 [1 favorite]


Dare I suggest that, for once, protectionism may be the answer? If US corporations want to pretend they're foreign companies, fine, let them. We'll just slap on some hefty tariffs.

Have you read anything about protectionism?
posted by esprit de l'escalier at 12:48 PM on May 20, 2011


If the fed policy worked to target employment rather then trying to keep inflation at 1% you would see the reverse: Inflation would eat away at the fortunes of the rich, while spurring investment, which would give people jobs and so on.

You work hard, you put some money in the bank, and tomorrow it's worth nothing. How is that fair?
posted by esprit de l'escalier at 12:50 PM on May 20, 2011


I think this is wishful thinking here...

Which is why when people think of a quality, high-end product, and consumer safety they think of Chinese engineering and craftsmanship!

Believing in labor arbitrage and an absence of regulation as a competitive advantage in all cases is wishful thinking, and it's biting into some bottom lines.
posted by Slap*Happy at 1:01 PM on May 20, 2011 [2 favorites]


Dare I suggest that, for once, protectionism may be the answer? If US corporations want to pretend they're foreign companies, fine, let them. We'll just slap on some hefty tariffs.

They already pay import tariffs the same as any other importer of manufactured goods.
posted by atrazine at 1:06 PM on May 20, 2011


astrobiophysican: "“Sometime around 2015, manufacturers will be indifferent between locating in America or China for production for consumption in America.”"

Yup. It's already starting.
posted by workerant at 1:12 PM on May 20, 2011


this is the key paragraph for me:
When the Krywkos returned to the US, they searched for a manufacturing partner with the tools and expertise to produce their earphones. They found one just a few miles away from their Palmetto, Florida, headquarters: Dynamic Innovations, a maker of ruggedized computers and other equipment. Sleek Audio quickly signed up.
I may be wrong, but I have an idea who might be a major buyer of ruggedized electronics from a firm in florida: US military (or closely connected.) there is no way Sleek headphones would be able to get the capital to invest in the automated assembly line for their stuff. their ability to do this is built on what is effectively a government subsidy.

small business in the US is generally not going to be able to invest in automation without some form of government backing. this can come in many forms i.e. military spending, but it is absolutely necessary.
posted by ennui.bz at 1:16 PM on May 20, 2011 [4 favorites]


Dare I suggest that, for once, protectionism may be the answer?

Yes, let's hurt 95% of the country for the sake of the other 5%. That works. See astrobiophysican's link to last week's Economist. It ain't about robots or skin color or worker rights, it's about where things are cheaper. Blindly assuming either domestic or overseas is always right is something demagogues do, not smart businesses.
posted by yerfatma at 1:17 PM on May 20, 2011


You work hard, you put some money in the bank, and tomorrow it's worth nothing. How is that fair?
Well, that wouldn't be fair but I don't think you wold feel it was very fair if you got laid off either. Or if customers stopped patronizing your bussiness because they couldn't afford it anymore.

And of course, it's not "worth nothing" In reality it's worth 99.9998% of what it was the day before. Stop being such a baby.
posted by delmoi at 1:24 PM on May 20, 2011 [3 favorites]


Of course, what you proposed wouldn't actually work like you suggest, but I don't think it's "being a baby" to ask why encouraging inflation would be a good thing. If you think it's so awesome, I'll buy you a ticket to Zimbabwe or Argentina so you can see your policy at work.
posted by yerfatma at 1:40 PM on May 20, 2011 [1 favorite]


There's no need to be rude. Obviously, it was hyperbole (and, by the way, it's 99.9972%) but the idea is that high inflation devalues saving and investment, and forces people to want to spend immediately. That forces people to spend on things that they may not want, which ultimately devalues work.
posted by esprit de l'escalier at 1:42 PM on May 20, 2011




I just went on a tour of a local furniture factory last night that makes unique high quality rustic furniture. They have sales around the country including some big name clients.

The saplings used are provided to them free or very low cost and they employ over a dozen people to cut, assemble and manufacture the furniture. Interestingly the dozen or so workers are local Mexican immigrants but are good carpenter craftsmen. There isn't much in the way of automation and the machinery is refurbished early 20th century shop equipment. Nevertheless they are very efficient and have the production very streamlined.

The owner mentioned that he knows a local furniture warehouse that buys directly from China. Chairs they sell use American hardwoods shipped to China and then the finished product is shipped back to retail at $80.
posted by JJ86 at 2:05 PM on May 20, 2011


The "ghost shift": "Yamaha set up three motorbike joint ventures in China, only to have a local partner sell its technology to rivals. Within four months counterfeit Yamahas were being sold, Deng says, and by the early part of this decade, five of six Yamahas in China were counterfeit."

I have seen Chinese factories building good product. The factories are noisy and dangerous but as long as no element of the recipe changes, you will get consistent product. Whether someone -else- is also getting that product is unknown. If any element of the recipe changes the results are, in my experience, unpredictable. This is fine for shower curtains and flip-flops, not so much for brake cylinders.
posted by jet_silver at 2:47 PM on May 20, 2011


This robot really seemed to me to be the beginning of the end of the sweatshop. The fact that it is explicitly designed to have to the same size and range of motions as a child assembly worker, but can be mounted directly to the table, makes it seem like we're only a few years of price declines away from the switchover.
posted by chortly at 3:17 PM on May 20, 2011 [1 favorite]


Within four months counterfeit Yamahas were being sold, Deng says, and by the early part of this decade, five of six Yamahas in China were counterfeit.

Which is a fascinating study in counterfeit. If they're being made in the Yamaha factory with Yamaha parts by Yamaha workers moonlighting off shift... I know that Yamaha isn't getting the money for the product that's sold off ghost shift work, but is its presence in the marketplace degrading Yamaha's reputation?
posted by hippybear at 3:18 PM on May 20, 2011


Dare I suggest that, for once, protectionism may be the answer? If US corporations want to pretend they're foreign companies, fine, let them. We'll just slap on some hefty tariffs.

That'll show 'em. Make American consumers pay more for American made goods, or inflated imports.
posted by 2N2222 at 3:22 PM on May 20, 2011


The experience of New Zealand and Australia may be instructive. During the 80's, New Zealand started to embrace free markets and deregulation in a pretty hard core way. Countries like the USA and Australia look quite protectionist in comparison. Australia was also opening up, but not as much.

Fast forward a decade or two. The Australian economy had grown more than the NZ economy, despite more protectionism. Worker wages were higher across the board. (I think it was about a 12% difference. Can't remember)
Clearly, there will be a lot of differences in the economies of two different countries, but there was a lot of interest in figuring out why and how this happened. And as you can tell from my preamble, one of the leading conclusions has to do with protectionism.

Both countries benefited from reducing their protectionism (protectionism = bad!), but one country benefited more by keeping some elements of protectionism in place (protectionism = good!). How?

The thinking is that because wages could not fall as much in Aus, workers were expensive. And because workers were expensive, a business was forced to find ways to do more with fewer workers to remain globally competitive. If cheap labour is available, you just fix a problem by hiring more hands, and keep doing things the way you've been doing them. If cheap labour is not available, you have to invest in technology that will make your existing workforce more productive. That means computers, automation, etc.

So you're starting at a disadvantage, but to overcome that disadvantage, you end up building a system that produces more per worker - and that system can grow until you have high national employment, and then you have high national employment + high productivity per worker = powerful economy generating a lot of wealth, which pays for high wages for all. (Well, most)

Obviously, things don't have to go that way. Things could just crash and burn instead. But I guess the take-home point is that Australia is another example of how automation can allow a developed country to maintain high wages, that mass unemployment is not a necessary result.

I think Australia is more similar to the USA than it is to New Zealand, so I don't see why the USA couldn't learn a thing or two from what happened in Australia. (Unfortunately, the US political system seems to gridlocked to act with decisiveness and nuance.)
posted by -harlequin- at 3:26 PM on May 20, 2011 [1 favorite]


It's interesting how many products are designed around the notion of cheap Chinese labor. As the story points out, the headphones manufacturer had to redesign their entire product to automate the assembly process.
posted by RobotVoodooPower at 3:32 PM on May 20, 2011


Modest inflation is good for the average consumer and worker because it encourages both consumption and productive investment in the near term. It is true that your dollar will be worth a tiny bit less tomorrow if you stash it in your mattress; this provides you more incentive to spend it today. You don't need to spend it on empty consumption - making a productive investment (e.g. starting a business) is good too, if it will return more than the rate of inflation.

So, consistent modest inflation continues to encourage these activities in the short term and, basically, keeps the economy moving. People keep investing and consuming, demand continues, employment continues. Yay. Whereas disinflation or outright deflation encourage everyone to stop and wait, stuff that dollar in the mattress and hold off until tomorrow to consume or invest. Demand drops off a cliff, massive unemployment. Boo.

Note that this is where the tradeoff is really notable between people with lots of assets ("top 1%") and those without - when you are very rich on a net worth basis, your more-or-less explicit plan is to sit on your money and gradually consume it over the rest of your life. You have no plans to work, or at least no need to work. Any amount of inflation really is bad for you! Whereas if you derive most of your consumption from current income (i.e., almost EVERYONE), the effects above are much more important to you than any loss of value to your savings.

Getting low-net-worth people agitated against inflation is roughly like getting low-income people upset about raises in the top marginal tax rate; it's another scare tactic the rich use to get them to sell out their own self interest.
posted by rkent at 5:01 PM on May 20, 2011 [6 favorites]


rkent, you're right, but too much inflation, and people who are retired — who thought they had enough money to last the next thirty years — end up starving because the value of their savings disappears. Three percent inflation every year becomes forty percent in thirty years — a huge difference. I guess delmoi can tell them to stop being babies.

Anyway, this whole discussion is exactly why the federal reserve is typically separated from the government: if people are allowed to vote on this, the young and indebted can essentially steal from retirees, or as you point out, vice versa.
posted by esprit de l'escalier at 5:22 PM on May 20, 2011 [1 favorite]


too much inflation, and people who are retired — who thought they had enough money to last the next thirty years — end up starving because the value of their savings disappears.

No they don't. We've created a system where older citizens are supported by the younger citizens so they can live their sunset years without fear of poverty and starvation.

Oh, wait. Nevermind.
posted by hippybear at 7:13 PM on May 20, 2011 [1 favorite]


I've often wondered why a store hasn't opened in the US that only sells products made in the US. On each shelf a photo of the US factory - with all of the workers standing outside the factory.

For the items not available (made in the US) a blank spot on the shelf - with a sign saying "Open a business and be featured here".

I'd shop there.
posted by Bighappyfunhouse at 7:19 PM on May 20, 2011 [1 favorite]


Bighappyfunhouse: that was actually the propaganda that WalMart was using 10-15 years ago. They actually had big banners up in the stores "Made In America -- if we can't find it produced here, we will try to find a company which will make it here" or something like that.

The thing is, even while they were doing that promotion, they were lying about it.

I'd love to have an easy choice to make about supporting American industry. It's just so fucking hard anymore to know what is or what isn't American.

I mean... Toyota, Honda, and BMW all have US plants. If you buy a car made at one of those places, are you buying American?

There are a few things which you can easily trace back and know you're buying American. Like, Danner Boots. They're made in America. But how many people really are in the market for their product? And that's just one product out of how many thousands Americans consider buying all the time?

I'm not protectionist insofar as I think there should be governmental restrictions and tariffs and such... But I would welcome having clear information about where a product is made available to the consumer, so I could make choices when I want.

Sadly, most corporations feel this is information which should be obscured from the consumer. Which... well, which tells me a hell of a lot about corporations in general. They never like the sunlight of transparency -- it makes them look bad.
posted by hippybear at 7:30 PM on May 20, 2011


Which is why when people think of a quality, high-end product, and consumer safety they think of Chinese engineering and craftsmanship!
They do when they think of apple products, which are all made in China. The fact that a stereotype is widely held doesn't make it true. Besides, it's not like people think of those things when it comes to American engineering either. Germany and Japan, maybe, but the U.S?
Yes, let's hurt 95% of the country for the sake of the other 5%.
The Chinese are engaging in protectionist policies (the currency peg) and it's working great for them (although, they are keeping wages artificially low in exchange for more employment). Look, the "Free trade is wonderful for all" thing was promulgated in the 90s and it turns out it's a great way to boost the bank accounts of the already wealthy by lowering costs, but it doesn't result in much benefit for the working classes.

Also, simple solution to the Ghost Shift problem: Just run shifts 24h/day.
rkent, you're right, but too much inflation, and people who are retired — who thought they had enough money to last the next thirty years — end up starving because the value of their savings disappears. Three percent inflation every year becomes forty percent in thirty years — a huge difference. I guess delmoi can tell them to stop being babies.
Well, first of all there's Social Security, which is tied to wage growth (not just the CPI which grows more slowely) but also they should invest their money. Even today it's not hard to find an investment earning more then 3%. No one is guaranteed to life a life inflation free, and frankly it's just stupid to strangle the economy in such a way that most of the benefits go to the top 1% and some 'trickle down' to retirees who don't want to invest their money. Most retirement accounts are in 401ks and stuff these days anyway.

It's only people who's retirement is made up mostly of non-SS who even need to invest.
posted by delmoi at 7:58 PM on May 20, 2011


The Chinese are engaging in protectionist policies (the currency peg) and it's working great for them (although, they are keeping wages artificially low in exchange for more employment). Look, the "Free trade is wonderful for all" thing was promulgated in the 90s and it turns out it's a great way to boost the bank accounts of the already wealthy by lowering costs, but it doesn't result in much benefit for the working classes.

The first sentence refutes itself. It's great, except for the artificially low wages/buying power of the currency. IOW, it kinda sucks.

The second is puzzling. Lower prices doesn't help working classes? Is it really better for working class folks to pay more for the stuff they buy? Interestingly, China's currency policy is good news for American consumers, as it subsidizes the stuff we buy. Even us working class folks.
posted by 2N2222 at 9:05 PM on May 20, 2011 [1 favorite]


I worked for a closely held German company that went into Chinese manufacturing for both cost and Chinese market development reasons, after having manufacturing operations in 13 countries, including the U.S. and Brazil. In their U.S. experiment, they bought a nearly obsolete metal stamping plant in rural Missouri in a deal which included substantial tax breaks from local government, retooled it at a cost of several million dollars, only to find that the unionized workforce, seeing all that investment, was determined to get some money too, in the form of higher wages. Whereupon, they shut down the Missouri factory, moved the inventory and some of the machinery to Atlanta and to a smaller manufacturing plant in "right to work" rural Georgia. They had ongoing quality control problems with the manufacturing operation in rural Georgia, and faced high shipping costs for their heavy steel products from Atlanta to West Coast customers.

They moved some tooling and jobs from rural Georgia to China. Within months, they were getting very high bills from the Chinese for tooling maintenance, and at the same time, in the U.S., competitors started to carry nearly identical versions of once proprietary, patented mechanisms, at vastly lower prices. Turned out that the Chinese were running the tooling 3 shifts a day - 1 for my employer, the German company that owned the tooling, and 2 for "new customers." After all, the economic development contract under which the Chinese were doing the manufacturing included indemnities against "technology transfer."

The Germans finally pulled the tooling back from China (it had been thoroughly copied by that time, and even improved). It wound up in a Mexican plant near Tecate, from which they were trying to rebuild relationships with U.S., Mexican and Canadian customers under NAFTA terms...

Manufacturing is no picnic, anywhere in the world. And mostly, the race goes the culturally and capitalistically fleet and nimble, who are willing to re-evaluate and relocate as markets evolve.
posted by paulsc at 11:16 PM on May 20, 2011 [1 favorite]


I think Australia is more similar to the USA than it is to New Zealand, so I don't see why the USA couldn't learn a thing or two from what happened in Australia.

I take it you haven't visited, them's fighting words. NZ is virtually a state of AU (there is provision in the AU constitution for NZ to join, should it want to).
Neither country has done well in terms of manufacturing. AU was slower to drop tariffs than NZ, and still has a substantially higher minimum wage.
In a lot of ways the NZ workers rights system has followed the US race to the bottom.
The Australian industrial landscape has been killed by off shore manufacturing of everything that can be transported, any wealth we enjoy is based on the services sector with mining and farming the icing on the cake.
The few remaining successful manufacturers have gone up the value chain to attempt to nullify the cost premium for local manufacture.
posted by bystander at 5:44 AM on May 21, 2011


The Chinese are engaging in protectionist policies (the currency peg) and it's working great for them (although, they are keeping wages artificially low in exchange for more employment)

I had a much longer response, but it's clear that this is another topic where you have more passion than knowledge. The Chinese economy is not in a comparable position to the US. The currency peg is not simply a "protectionist" device on par with actual, specific product tariffs. And declaring that current economic policies are "working great" is like rating a pitcher on his first inning performance.
posted by yerfatma at 5:59 AM on May 21, 2011


the idea is that high inflation devalues saving and investment
No, inflation spurs investment as invested equity isn't appreciably hurt by inflation, making invested dollars more valuable in the long term than horded dollars. This is why sitting on piles of money is a bad idea (unless inflation is being artificially held down by policies favoring the wealthy who are too frightened to invest in what they perceive as a risky economy). But really, fiscal policies that promote hoarding are missing the point.
posted by Wyatt at 7:15 AM on May 21, 2011


The Germans finally pulled the tooling back from China (it had been thoroughly copied by that time, and even improved). It wound up in a Mexican plant near Tecate

So, they made major investments in facilities and supply chain, on three continents, and then wrote all of them off as a loss, in the name of being nimble and chasing low operating overhead at all costs?

Reminds me a lot of mutual funds who murder their profit with taxes and fees because the fund manager keeps chasing after hot stocks and is constantly selling off underperformers...

Eventually, it's going to catch up with you.
posted by Slap*Happy at 8:33 AM on May 21, 2011


"... Eventually, it's going to catch up with you."
posted by Slap*Happy

I wasn't holding my former employer up as a paradigm of successful international manufacturing; indeed, they did flush millions down the tube in unsuccessful ventures, because of failures to understand the local cultures they were trying to work in, and because they expected local management to operate in the same kind of decentralized operating model as they employed in their home market, where they had as much manufacturing capacity as they had in the rest of the world, combined. In hindsight, they learned that foreign operations probably required more continued oversight than they first thought, and that they'd have to adapt their strategies of management to local needs and conditions as experienced by their foreign workforces.

They did have the good sense to see that sunk costs were sunk costs, once significant operational problems surfaced, and they were quick to take action to change the course of their strategies in response. Where they learned they couldn't manufacture successfully, they tried to build sales and distribution operations that could be supplied from alternate manufacturing sites. They didn't continue to pursue failed initial strategies, or get tied up in long, costly litigation to try to achieve their original goals.

And as a privately held (indeed nearly a family held) firm, their attitudes about profit versus long term viability differed markedly from those typical of Wall Street. They made a profit each year, in spite of mistakes, and they had a 110 year legacy of continuity, that they intended to keep, and would have paid to do so, by foregoing profit, if need had demanded. But it never came to that, since they had a willingness to change strategy as soon as they understood their initial ideas about new markets and manufacturing opportunities weren't workable. In that sense, yes, I think that they understood, better than many firms, the concept of "nimbleness."
posted by paulsc at 10:18 AM on May 21, 2011


the idea is that high inflation devalues saving and investment
No, inflation spurs investment as invested equity isn't appreciably hurt by inflation,


and

also they should invest their money. Even today it's not hard to find an investment earning more then 3%.

I don't know who told you that companies are unaffected by inflation, but it's not true. Yes, we all try to beat inflation when we invest, but companies have expenses, which will rise in the face of inflation. Inflation affects their profits just as much as it affects the rewards that we derive on our capital.

Inflation is higher costs without a commensurate increase in value. No one expects a life free from inflation, but please ask any Argentine senior citizen what he thinks of inflation. It's not that they "all had their savings in cash."
posted by esprit de l'escalier at 4:16 PM on May 21, 2011


Actually, I take that back. There are investments you can make that are unaffected by inflation, for example, a company with a lot of debt might benefit in the face of inflation.
posted by esprit de l'escalier at 5:48 PM on May 21, 2011


I take it you haven't visited, them's fighting words. NZ is virtually a state of AU<>

Seriously? I've been to all of these countries, and while Aus is more friendly with NZ, there are deep cultural differences, and it seems closer to the USA. The politics aren't nearly as wingnut as the US, but seem Out There to the right of the middle of developed nations, while NZ seems more progressive. I'd go so far as to suggest that Aus seems more similar to the US than Canada does.

Think of it this way - the people who claimed (without thinking about it) that they'd flee the USA if Obama became prez - where could they go? Lefties go to canada or europe. The only countries remotely as right wing as the US are third world shitholes, it seemed the only developed nation that didn't make the democrats look like extreme right was Aus. Actually, things have changed a bit since then, you may be right. Canada is a lot less left, etc.

posted by -harlequin- at 4:21 AM on May 22, 2011


this might be worth revisiting again...
andy grove on american manufacturing [1,2,3]

also here's krugman on Making Things in America:
Manufacturing is one of the bright spots of a generally disappointing recovery. Just look at the auto industry.
posted by kliuless at 8:19 AM on May 22, 2011 [1 favorite]


The politics aren't nearly as wingnut as the US, but seem Out There to the right of the middle of developed nations, while NZ seems more progressive.

Hmm. I guess if you made that judgment when Howard was in power in Australia and Clark in power in NZ it might hold some water. If so, I think a lot of your perception might have been to do with the political climate at the time. The nominal left is now in power in Australia, and the conservatives rule NZ, so I would suggest you might get a different reading now.
I think 90%+ of both countries would nominate each other as being most similar (with probably the UK as the next option) before they would suggest a similarity to the US.
I suppose there might be some kiwis who view Australia as similar to the US, but I think all of them would say there was still a big degree of difference.
In concrete policy terms, I think you would have to rate Au closer to the liberal euro states on healthcare, pensions/superannuation, worker's rights.
The kiwis lean lefter on defence, environment, refugees.
posted by bystander at 5:51 PM on May 22, 2011


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