The hidden consequence of offshoring (expenses, debt, purchase, sell)
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I found this to be a very accurate description of what I see going on. It's one of the unintended consequences of mass offshoring, particularly to China.
The quality of counterfeit goods has dramatically improved over the years. I believe that counterfeits and "real" products are often made in the same factories. If not, all one has to do is track down the suppliers. China cannot, and will not do anything about it. It would be to difficult, too costly, and it would take too big a bite out of their economy.
Personally, I have purchased some cheap Chinese knock offs of what would be big ticket items. With a little know how and work, I was able to improve the quality enough to rival the expensive American engineered and built products. We're at a point where the big corps are nothing more than unnecessarily expensive middle men, or baggage. They know it too.
This is what happens when big corps try to squeeze the profit by cost cutting, instead of focusing on innovating and designing new, cutting edge products. It's a shame, because innovation has been such a large contributor to our ever improving standard of living... Until it wasn't.
I found this to be a very accurate description of what I see going on. It's one of the unintended consequences of mass offshoring, particularly to China.
The quality of counterfeit goods has dramatically improved over the years. I believe that counterfeits and "real" products are often made in the same factories. If not, all one has to do is track down the suppliers. China cannot, and will not do anything about it. It would be to difficult, too costly, and it would take too big a bite out of their economy.
Personally, I have purchased some cheap Chinese knock offs of what would be big ticket items. With a little know how and work, I was able to improve the quality enough to rival the expensive American engineered and built products. We're at a point where the big corps are nothing more than unnecessarily expensive middle men, or baggage. They know it too.
This is what happens when big corps try to squeeze the profit by cost cutting, instead of focusing on innovating and designing new, cutting edge products. It's a shame, because innovation has been such a large contributor to our ever improving standard of living... Until it wasn't.
Some of my graduate research was on this same topic. Preaching to the choir. But to be honest, the world economy is basically an oligarchy now. When they eventually see diminishing returns from the offshoring, they will just cut costs. This will probably take the form of closed factories and laid off workers.
Some of my graduate research was on this same topic. Preaching to the choir. But to be honest, the world economy is basically an oligarchy now. When they eventually see diminishing returns from the offshoring, they will just cut costs. This will probably take the form of closed factories and laid off workers.
That's the thing. They can cost cut all they want. A Chinese worker doesn't need the big corp anymore. The Chinese can cut the corp right out of the equation. The American consumer can cut the big corp right out of the equation. The genie is out of the bottle.
Reasonably priced middle men can take the place of the expensive corp to provide goods at a fraction of the cost. Those sources are available on the internet, and on the store shelves all over America. Harbor Freight if filled with that stuff. On the internet, I can find much better quality tools for just a little bit more money. I think HF is where defective products go to be sold in bulk, or even given away for free.
I'm not sure how many corps actually own factories in China. In my experience, there are many small American companies that either source the completed products, or the parts. It's very easy for the supplier to simply sell these items directly, and for practically nothing. After all, we did all the product design work for them, and for free. So I'm not sure what good "cost cutting" is really gonna do. Eventually, the corporation stands to be replaced by cheaper competition.
When they eventually see diminishing returns from the offshoring, they will just cut costs.
When they saw the diminishing returns from NOT offshoring (c 1970's forward)...
the chose to abandon old unclean and unsafe plants and to abandon labor agreements.
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This will probably take the form of closed factories and laid off workers.
Even if these companies were re-shore production capacity to meet US needs...
and by that to offer employment to more US citizens the benefits would be modest at best.
Wages in MODERN plants would be low for 98% of floor workers. Doubtfully more than minimum
wage for most... then only 10% more for the rest because the still underlying problem of the
labor surplus, far in excess of need, would persist and persist in depressing wages.
I found this to be a very accurate description of what I see going on. It's one of the unintended consequences of mass offshoring, particularly to China.
The quality of counterfeit goods has dramatically improved over the years. I believe that counterfeits and "real" products are often made in the same factories. If not, all one has to do is track down the suppliers. China cannot, and will not do anything about it. It would be to difficult, too costly, and it would take too big a bite out of their economy.
Personally, I have purchased some cheap Chinese knock offs of what would be big ticket items. With a little know how and work, I was able to improve the quality enough to rival the expensive American engineered and built products. We're at a point where the big corps are nothing more than unnecessarily expensive middle men, or baggage. They know it too.
This is what happens when big corps try to squeeze the profit by cost cutting, instead of focusing on innovating and designing new, cutting edge products. It's a shame, because innovation has been such a large contributor to our ever improving standard of living... Until it wasn't.
It has been but not in the case of sneakers. These cost about $2 to make. They sell for $200. Nike and the basketball star split the rest. If someone sells them to idiots for $20, he's saving the jerk a ton of money which he probably needs because he's a poor jerk.
Wages in MODERN plants would be low for 98% of floor workers. Doubtfully more than minimum
wage for most... then only 10% more for the rest because the still underlying problem of the
labor surplus, far in excess of need, would persist and persist in depressing wages.
America's production capacity could never efficiently accommodate even a modest reshoring effort. We lack the workforce, and the equipment. Machine makers around the globe are already stretched to the limit in terms of meeting current demand from western nations. A great deal of U.S. production machinery was exported out of the country decades ago, and ended up in China. We were literally stripped of our ability to remain self sufficient. I'm not sure if there is a practical way of turning back.
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Originally Posted by Troyfan
It has been but not in the case of sneakers. These cost about $2 to make. They sell for $200. Nike and the basketball star split the rest. If someone sells them to idiots for $20, he's saving the jerk a ton of money which he probably needs because he's a poor jerk.
Americans love to consume. It is engrained in our culture. It's what keeps our economy afloat today. You can never take that away from the American consumer. If you remove their means to consume, either by reducing their wage or eliminating their job, you simply remove their means of consuming your product. Americans are very resourceful, and will just find a cheaper middleman or means of consumption.
The internet has changed the way our economy workers, and that's only going to continue. I wish this documentary highlighted the true nature of the internet counterfeit trade.
America's (current) production capacity could never efficiently accommodate
even a modest reshoring effort. We lack the workforce, and the equipment.
A great deal of U.S. production machinery was exported out of the country decades ago...
Voluntarily exported. And often with the assistance of programs designed to rid us of them
The unsafe and unclean and labor intensive nature of that equipment was no longer suited.
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We were literally stripped of our ability to remain self sufficient.
I'm not sure if there is a practical way of turning back.
There isn't. But do we really need to make our own running shoes?
Or worry about who might be counterfitting them?
Exporting those jobs or the other manufacturing shifts done later under NAFTA weren't in
and of themselves poor choices either for the businesses or for the country as whole.
It became that way ...but it didn't need to have happened that way.
Why? Because we did nothing about continuing to create replacement workers for jobs
that no longer existed ...so we gained NOTHING from having given up those jobs.
Then add fuel to the fire by not fixing immigration policies during this period.
Had those companies been somehow coerced to remain here and retool with modern clean
and safe equipment (which btw would have required far fewer workers than what were needed
before) we would still be in pretty much the same place we are now:
More people available than jobs that need doing.
See? It's a circle or started as one that has now become a maze.
The only exit from the maze is REDUCED numbers of people ...especially at the lowest levels.
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The internet has changed the way our economy workers, and that's only going to continue.
I wish this documentary highlighted the true nature of the internet counterfeit trade.
Voluntarily exported. And often with the assistance of programs designed to rid us of them
The unsafe and unclean and labor intensive nature of that equipment was no longer suited.
I must respectfully disagree. You could use modern, high tech equipment to produce small quantities of parts or goods. However, it would be too difficult to pass the costs of the equipment onto the consumer. That old equipment is cheap enough that anyone who can run it efficiently can still compete, simply because they do not have debt to service. There are still places around that are doing it, but not enough to keep up with demand in many cases.
I can't tell you how many customers I deal with who voice concern about the lack of companies who fill that small quantity and "just in time" niche. There used to be many places that serviced their needs, but they have since closed up, or are at full capacity and not taking new work. That raises the expenses involved in JIT manufacturing, prototying, etc. These are vital to the production process as well. This is not helping America's "competitive advantage", if anyone believes we have one anymore. This is not just a regional phenomena either. It is happening everywhere in this country, and it's going to get much worse before it improves.
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Originally Posted by MrRational
Had those companies been somehow coerced to remain here and retool with modern clean
and safe equipment (which btw would have required far fewer workers than what were needed
before) we would still be in pretty much the same place we are now:
More people available than jobs that need doing.
Retool with what? More expensive machinery? Many of the options available were not fully mature than, and could not compete with cheap labor. We would have simply invested more, and lost in a bigger way. NAFTA was too much, too fast, and a complete shock to the system to be of benefit to America. It took awhile for all that to really materialize and sink in though.
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Originally Posted by MrRational
That is little more than a distracting sideshow.
As for the internet, I would have agreed 5 years ago. Not today. Too many people know how to get their products direct. The corporation doesn't get a penny from these people, and their ranks are growing. Just more unintended consequences that have served to disturb what equilibrium remained. These are not normal times by any stretch of the imagination.
That's OK. It's all water under the bridge now anyway.
But to be sure we're STARTING from the same point, I'll reiterate my points.
The first (and most subsequent) off-shoring was rooted in three basic factors:
1) EPA issues 2) OSHA issues 3) Labor/wage issues
Sometimes all three were at play.
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You could use modern, high tech equipment...
To re-establish any of these operations there would be no choice BUT to do that.
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I believe that counterfeits and "real" products are often made in the same factories.
Surely this isn't news to you?
Last edited by MrRational; 03-29-2015 at 03:45 PM..
All we see here is offshoring is terrible. There is one reason for it. If a company cannot build a product in the United States so it can compete with the other products on the market, a company is left with two choices.
1: Close up and go out of business and lay off all their employees.
2: Move the manufacturing to where they can build the product and sell it at a profit. In doing this, they lay off half the staff, and are able to keep half of it working (the ones not involved in manufacturing) and stay in business.
When this country started we imported a lot of goods. Today we import a lot of goods.
What is not being said, is all of the onshoring that is being done in this country. This involves foreign owned companies opening manufacturing plants in the U.S. Over 5,000,000 Americans are working for those companies, and it is increasing and expected to increase at the same rate for at least the next 10 years, at 1,000,000 new American jobs opening up in the US by foreign owned companies.
Lets just take one type of American onshoring. There are 13 auto companies building cars in the U.S. today. 10 of them are foreign labels owned by foreign owners. 3 are American Brands, and one of those 3 was sold to foreign owners. Foreign owned auto factories building foreign brands of cars build more cars than the American owned ones in this country. Those foreign brands, are the basis for American companies building parts for the cars, which produce a lot of American Jobs. Some of those foreign owned companies use more American made parts, than American owned factories.
Low priced items that take a lot of hand labor, cannot be made in this country at a competitive price. Those factories are closed, due to being priced out of the market. As they are doing it, they keep half or more of their employees in the U.S., only part of the jobs go overseas. It comes down to make a choice, go out of business, or lay off half or less of the employees and have the goods made overseas.
On the other hand, larger and higher priced items, can be built in this country cheaper than building them overseas and shipping to this country. Autos, high speed trains of he future, and many other things are built in this country by foreign owned companies.
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