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Old 08-10-2013, 06:18 PM
 
8,391 posts, read 7,388,503 times
Reputation: 18287

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Lets imagine if you will, I want to establish a new manufacturing plant in the U.S. I am a company headquartered in the Silicon Valley. I am going to hire 1,500 people at good wages. The product will sell for $400 retail, for $300 wholesale. It has already been costed out, and will cost $250 to manufacture in Los Angeles Ca.

Why would I want to put that plant in California?

Why should I put it someplace else?

What are the reasons for and against putting it in Los Angeles.

That is the problem company execs face every day. Lets look at real reasons for your decision, not just use your emotions. Look at it like a hard nosed businessman.
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Old 08-10-2013, 09:12 PM
 
Location: Sierra Nevada Land, CA
7,920 posts, read 8,495,887 times
Reputation: 11621
Quote:
Originally Posted by oldtrader View Post
Lets imagine if you will, I want to establish a new manufacturing plant in the U.S. I am a company headquartered in the Silicon Valley. I am going to hire 1,500 people at good wages. The product will sell for $400 retail, for $300 wholesale. It has already been costed out, and will cost $250 to manufacture in Los Angeles Ca.

Why would I want to put that plant in California?

Why should I put it someplace else?

What are the reasons for and against putting it in Los Angeles.

That is the problem company execs face every day. Lets look at real reasons for your decision, not just use your emotions. Look at it like a hard nosed businessman.
You should do it in China. If its all about the money, gosh do it in China! You can make a sh!tload of money! Screw the American economy and North American workers. But good for you, you're considering that 3rd world city called LA.

Why put your plant in LA? How is it different than Silicon Valley? If it's all about the money-China is the place! Maybe Mexico.

Curious..$300 wholesale usually translates to $600 retail. Do you expect your retail guys to not make any money?
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Old 08-10-2013, 09:19 PM
 
Location: USA
16,588 posts, read 16,267,959 times
Reputation: 12542
Quote:
Originally Posted by oldtrader View Post
Lets imagine if you will, I want to establish a new manufacturing plant in the U.S. I am a company headquartered in the Silicon Valley. I am going to hire 1,500 people at good wages. The product will sell for $400 retail, for $300 wholesale. It has already been costed out, and will cost $250 to manufacture in Los Angeles Ca.

Why would I want to put that plant in California?

Why should I put it someplace else?

What are the reasons for and against putting it in Los Angeles.

That is the problem company execs face every day. Lets look at real reasons for your decision, not just use your emotions. Look at it like a hard nosed businessman.
-Educated population
-Culture that likes to go out and buy, drink and eat on a daily basis
-Access to capital and population

Let me give you an example... I am a mortgage broker and one of my clients owns a small/medium sized (70 ppl) restaurant that is a bit "hole n the wall," do you know what their net income is? $1.1 million NET INCOME. They are busy every day. People like to go out here. This is something that is lost in much of America where you go out maybe on the weekends, but that's it. This is just one example. Most of my clients work in computer science or they are small business owners.
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Old 08-10-2013, 09:21 PM
 
Location: Springfield, Ohio
11,799 posts, read 9,729,450 times
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Yeah, it's not as if hard-nosed businessmen in a global economy are choosing Iowa or Detroit to manufacture their products over California...they're going to China and Bangladesh (because even Mexicans are demanding better wages now). The only reason they'd choose North America is if the product is too weight-intensive to ship overseas, and therefore cheaper to build here.
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Old 08-10-2013, 09:22 PM
 
Location: USA
16,588 posts, read 16,267,959 times
Reputation: 12542
Quote:
Originally Posted by oldtrader View Post
Lets imagine if you will, I want to establish a new manufacturing plant in the U.S. I am a company headquartered in the Silicon Valley. I am going to hire 1,500 people at good wages. The product will sell for $400 retail, for $300 wholesale. It has already been costed out, and will cost $250 to manufacture in Los Angeles Ca.

Why would I want to put that plant in California?

Why should I put it someplace else?

What are the reasons for and against putting it in Los Angeles.

That is the problem company execs face every day. Lets look at real reasons for your decision, not just use your emotions. Look at it like a hard nosed businessman.
Let's also be real that the average small business owner isn't going to open a manufacturing plant and can't afford it. So if you want to feel bad for the poor execs with net worths of $50 million + than go for it. You should know as a country develops, manufacturing tends to leave. You even see this slowly happening in China. Those jobs are gone! Unless you want to pay them $1 per day, they are gone! You can lower taxes or do whatever you want, it won't bring back manufacturing jobs. That is why its important to invest in technology and education. We can build it somewhere else, but the technology should come from here and that is what is happening.
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Old 08-10-2013, 10:22 PM
 
8,391 posts, read 7,388,503 times
Reputation: 18287
Quote:
Curious..$300 wholesale usually translates to $600 retail. Do you expect your retail guys to not make any money?
That depends on the product. There are products that can give a 300% markup and even more, and there are those that only have a 20% markup. Retailers don't get a 100% markup in electronics for an example. Auto dealers, would love to get a 100% markup as you suggest is normal. Grocers would love to get a 100% markup on everything.

I spent a lot of years in the Furniture, Appliance, and Electronic business, and in big ticket items in department stores. I fairly know what markups are. Furniture averages 100% markup, but accessories can be up to 500% markup. Appliances and Electronics are considerably less. And the markup in big ticket items, can vary considerably by the amount you purchase in one order. Buy one and your wholesale cost is one thing. Buy a full truckload or rail road car load, and it is a far different price.

Quote:
You should do it in China. If its all about the money, gosh do it in China! You can make a sh!tload of money! Screw the American economy and North American workers. But good for you, you're considering that 3rd world city called LA.
Wrong answer. China costs are rising fast, and it is changing and not stable. Example, Apple is starting to move manufacturing computers back to the U.S. opening a Billion dollar plant in Texas. That is one reason foreign countries are opening plants in the U.S. You know, companies like Mercedes, BMW, Toyota, and the list goes on and on. For a lot of goods, the U.S. is the best place to put a plant. LA is not considered a 3rd world city the last I heard, it is part of the U.S. and part of California.

Quote:
Why put your plant in LA? How is it different than Silicon Valley? If it's all about the money-China is the place! Maybe Mexico.
LA was chosen for the example, as it is the largest city in California. Every plant that opens, is all about the money. No company wants to put in a money losing business.

Quote:
Let's also be real that the average small business owner isn't going to open a manufacturing plant and can't afford it. So if you want to feel bad for the poor execs with net worths of $50 million + than go for it.
No one said anything bout small business owner opening a 1,500 employee plant. It is for a Silicon Valley Company, opening a new facility in California, or someplace else. And what is wrong with a $50,000,000+ company opening a new plant. It is the people with money, that open most businesses that hire that many people. A business is considered to move from a small business, to becoming a large business at 500 employees. Over 500 is never considered small business.

Quote:
Those jobs are gone! Unless you want to pay them $1 per day, they are gone! You can lower taxes or do whatever you want, it won't bring back manufacturing jobs. That is why its important to invest in technology and education. We can build it somewhere else, but the technology should come from here and that is what is happening.
Manufacturing jobs are being opened right and left in the U.S. Companies are starting to come back to the U.S. such as Apple opening the big new plant in Texas to make computers. China and Japan are way ahead of us in robotic manufacturing plants, but the U.S. is starting to catch up. As they lower the number of people needed on what has been labor intensive manufacturing, it makes it practical to build many products in the U.S. again and to be able to make a profit doing it.

And if it can be built somewhere else when the technology is done in the the U.S., then it can also be engineered in other countries. They have good developers and engineers being trained overseas. That is why a lot of companies like Hewlett Packard and Microsoft hire a lot of engineers and developers from overseas to come to the U.S. The U.S. is far from the only place they are developing engineers and designers. As an example, the finest and most expensive cars in the world, are not being designed and engineered in the U.S.

From what I am seeing so far on this thread, is that people in California seem to be giving up and not looking at how to make it better in California. Just make it somewhere else is all I am seeing. I was hoping that people were more optimistic and looking for solutions on how to make things better, and not just giving up thinking good times are gone.
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Old 08-10-2013, 11:27 PM
 
873 posts, read 980,757 times
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Quote:
Originally Posted by oldtrader View Post
From what I am seeing so far on this thread, is that people in California seem to be giving up and not looking at how to make it better in California. Just make it somewhere else is all I am seeing. I was hoping that people were more optimistic and looking for solutions on how to make things better, and not just giving up thinking good times are gone.
Because it is impossible in California. That's why. Ridiculous income taxes, highest in the nation. Sales tax, amongst the highest in the nation. Gas taxes and fuel prices, highest in the lower 48, only Hawaii may be higher than California.

When this state steals 13.3% of your income a year -- on top of federal taxes -- there is no reason to put a business in California, period. You will keep a lot more of what you earn in just about any other state. Also, absurd housing prices, together with sky high living costs, are crushing young adults and young families.

Nor can it be changed. Government and taxes are entrenched in this state. Heck, they just passed Prop. 13 last year, raising both the sales tax and the income tax. What's more, California's pensions are in the red by hundreds of billions of dollars.

When faced with this massive bureaucracy, individuals must make individual decisions within their power to effectuate meaningful change. Moving out of here is the only sensible option. It's the only immediate and meaningful solution for the individual, which translates into significant financial gain. Hundreds of thousands of families who have left California are testament to this.
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Old 08-11-2013, 04:25 AM
 
Location: USA
16,588 posts, read 16,267,959 times
Reputation: 12542
Quote:
Originally Posted by USDefault View Post
Because it is impossible in California. That's why. Ridiculous income taxes, highest in the nation. Sales tax, amongst the highest in the nation. Gas taxes and fuel prices, highest in the lower 48, only Hawaii may be higher than California.

When this state steals 13.3% of your income a year -- on top of federal taxes -- there is no reason to put a business in California, period. You will keep a lot more of what you earn in just about any other state. Also, absurd housing prices, together with sky high living costs, are crushing young adults and young families.

Nor can it be changed. Government and taxes are entrenched in this state. Heck, they just passed Prop. 13 last year, raising both the sales tax and the income tax. What's more, California's pensions are in the red by hundreds of billions of dollars.

When faced with this massive bureaucracy, individuals must make individual decisions within their power to effectuate meaningful change. Moving out of here is the only sensible option. It's the only immediate and meaningful solution for the individual, which translates into significant financial gain. Hundreds of thousands of families who have left California are testament to this.
Most people who left California did so because they couldn't afford to live here anymore. They were the ones who weren't successful and instead of trying to improve themselves, they blame their failure on the government. Good grief you people are ridiculous! Biggest whiners and excuse makers in this country.

California is ranked #6... 2012 startup rate: 410 per 100,000 adults
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Old 08-11-2013, 12:51 PM
 
25,874 posts, read 49,787,562 times
Reputation: 19320
In my circle... almost all that have pulled up stakes are retired...

Homes paid for and many with significant pensions.

The main reason is being able to keep more of what they have/cash out of their CA holdings.

For some, it was also the draw of family that left California.

A very successful Doc I work with just moved to Ohio where both of his daughters/grandchildren now live.

Others only go as far as the Nevada side of Lake Tahoe.

I'd say about a third have moved to Oregon... most to be with family.

None of the 7 families I know that moved last year were leaving because they could not afford CA.... many also were leaving very low property tax bills from decades of ownership.

One of my old car friends has a beautiful spot in Carmel... they live 6 months and a day in Alaska... a place they truly love... just the winters are difficult... By keeping their Alaska residency... their bottom line improves substantially and pays for all their world travels plus, they receive a nice check from Alaska each year from Alaska oil money.
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Old 08-11-2013, 01:12 PM
 
Location: Conejo Valley, CA
12,476 posts, read 16,985,136 times
Reputation: 4304
Quote:
Originally Posted by oldtrader View Post
Lets imagine if you will, I want to establish a new manufacturing plant in the U.S. I am a company headquartered in the Silicon Valley. I am going to hire 1,500 people at good wages. The product will sell for $400 retail, for $300 wholesale. It has already been costed out, and will cost $250 to manufacture in Los Angeles Ca.

Why would I want to put that plant in California?
This situation is far to simplistic to give an answer, you' have to know the details to determine the ideal location.

On a cost basis though, the Los Angeles area will be competitive. Commercial rates for industrial properties, unlike residential, are reasonable and there is a large supply of skilled (manufacturing wise) labor. The labor supply is critical, any plant that requires 1,500 workers has to be located in a fairly large metro area otherwise they may have labor blockages. The tax situation, contrary to popular belief, is fairly neutral in Los Angeles as well. Your fixed taxes, e.g., property tax, are relatively low compared to other areas so you're primarily paying taxes on profit. California's corporate tax rate is competitive.

But,as mentioned, the details matter. What does the distribution of this product look like? Domestic only,or international? Being in Los Angeles will save an exporter on distribution costs since the products can go out of local ports, Los Anegles is also very well connected to the rest of the country via domestic lines as well. In either case, distribution issues will greatly limit where the company can put this plant as well.

After you know the details, would probably be just a handful of possible locations they could put this plant in the US.
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