U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 06-13-2020, 06:20 PM
 
Location: Silicon Valley
5,259 posts, read 2,337,473 times
Reputation: 8450

Advertisements

Quote:
Originally Posted by Therblig View Post
As spelled out in every thread about "creating jobs" and "bringing back industry" and my fave, "fabulous new industries of the future no one's even thought of yet look at computers and networks and stuff"...

...do you really think these are going to be huge employment sectors, or will they be highly automated right from the HP/Microsoft/Apple model garage? It's a bit hard to fine down, but it looks as if Tesla alone is using less than one-third the workers a lightly automated assembly line would require. I simply don't see any spectacular new industry arising from thin air and starting, much less staying with tens of thousands of workers.

No, not even robotic/automation/AI itself. Every job in those fields eliminates others at a very large factor that continues for the life of the technology.

The golden age of mass production is dead in terms of labor. If you need to make 1,000,000 of something, it's going to be automated with ever fewer laborers needed. However, before you get to 1,000,000 you need to make your first engineering runs, and those BOMs are going to be changing frequently. That's going to, in turn, require smaller purchasing runs. There is quite a bit of manufacturing still here in high cost Silicon Valley that is specialized on those smaller production runs. The key is communication and working with the engineering and design teams as they search for the answer and solution.



While I do have a fondness for my alma matter in manufacturing, when they acquired a printing and labeling division here, they really didn't know what they'd gotten. I think they saw a customer list and dreams of mass produced flexo printed stickers that could fill factories back east. Add to it some missteps by the transition team and Corporate was fired up about their only purchase in high cost, high regulated Silicon Valley. After initial problems and I was seeking a challenge and wanted to know how the hot dogs were made, they parachuted me in for a 2 year turnaround.


What I saw was that the key to this business would never be the product that made high volume. That was always going overseas to a contract manufacturer. However, as production products left, engineering and design teams were always working on the next iteration, and those teams needed a counter-party to develop solutions with them and quickly. I need a button here. I need an electric charge to get here. I need this to match with these. I need these to be fed into this machine for application. While we were always "losing" parts, we were always gaining their replacements. They'd bought hoping that it could feed their other factories setup for volume back East. It wasn't going to work. What was needed if we were going after volume was to be overseas.


Still, in the recession that hit, we did streamline quite a bit. In total, 1/3 of the employees were let go at that point, but by the end of 2009 we were back to regular production levels. Moreover, we became insanely profitable for the industry. Our sister divisions were turning in bottom lines from -4% to 6% net income. Nothing great. We jumped to 23%. We did everything better. We had a team that could make everything better. Our inventory turns went from <2 a year to 9. Our collection problems were resolved. Our on time % went up as we dialed in our production capacities in various cells very well. Design firms valued us.



In the following year, one of our goals was migrating from the two separate buildings we were in to one with some solid in-lining for production and warehousing. We found several ways we could do this, plus the market was on our side. While Corporate couldn't seem to get around high cost, high labor, high regulation, the reality was that industrial areas couldn't be rezoned and sold at a significant discount to all other land types. The reality is our labor was quite modestly priced, as the industry had been in recession and we had a very well cross-trained workforce. So in locating a property, we licked our chops as the SV industrial property prices imploded. A perfect building for us went from $288/sf to buy from investors, who went bankrupt, to their finance group that wanted $185/sf. That group, in turn, went bankrupt and the building eventually sold for $60/sf. In a model using a price point of $65, I was able to show from direct costs that we could recover our money from a complete purchase, renovation and inlining for the entire project in a little over 5 years, under 5 if adding in some soft things expected. (Never give it all, right?) But I knew they didn't like California. California is harder to manage, so I worked with the economic office and sweetened the deal, considerably. For about 2.5 basis points, we could issue two tranches of bonds to cover the purchase of the building, the relocation costs and any new capital equipment we wanted to buy. Payments would go over 30 years and in the California program we'd issue the bonds at interest rates paying .4% and .8% interest. They'd finance 100%. We just needed to maintain x jobs (well below what we had) for the loan amount. Not only was the deal good, but it would put our cost basis at a low enough point that the high cost California tag simply didn't fit anymore. We'd be lower cost that even a facility they had in rural Georgia, and unlike those guys, our sales were growing.



They flew out. Several times. They looked at the deal. They couldn't pick anything apart. I spoke with the head of Treasury who was a friend from Corporate days. He cautioned me. They don't want to get in bed with California...and we never issue debt at the sub level...but this is a nice deal.



For me, I knew this would be a decider. Did they send me out to squeeze as much money out of this place as possible, or were they going to follow the data showing there really was something here, it's just not what they initially thought. Did they understand the different value this company provided. These firms wanted someone there that they could touch and feel different materials with while figuring things out. Things grew quiet. We all got concerned.


And while the heads of Sales, the different production facilities, the art and tooling, facilities, and the G&A were all working together very well, our weakest manager, leading inside sales, kept doing stupid stuff. She was the only one that couldn't seem to get it together. But we had enough to carry. Somehow this one could always walk away immune to everything. In the downsizing, hers was the only department to lose 0 people. Her overrides were horrendous and soon became relatively ignored. Nobody realized what a healthy relationship she'd developed with the offsite GM over all of the divisions.



Finally I had a meeting. The question was posed, what would you do if we said we wanted to close the division? Perhaps I was a bit too flippant, but I had an immediate answer. "I'd offer to buy it from you."



It seemed the logical answer at the time. By 2010 our profit levels were higher than they'd been since the .com days. The business was running well. Corporate asked for more cuts. I sent them the information showing that if we cut, we would simply push ourselves into overtime and our on time rates would suffer. I had it down to the station. I had our costs locked in. The big concern was merely freeing up some time to get equipment moved into the new building. Especially as we were hiring and training staff in China.



It was a double hit to the company. First word came back that the existing facilities would be leased for another 3 years. Then, that the inside sales manager would become the General Manager of the division. They did let me know before hand. They were nice about it. They believed that the place was as efficient as it could be and yes the results were quite pleasing. However, the future would require sales growth and I didn't have this. I agreed, but pleaded for them to put in any of the good contenders we would have or make an outside hire. That lady didn't have sales experience either. The decision had already been made. I was stunned. The factory expected me to fight...wanted me to fight...but this company I really felt happy to be a part of had just made a serious mistake. I thought the best thing we could do is to try and support her and we'll get through it.



My forecasts that were spot on were now overruled. To keep track I inserted a budget line for "GM Magic", hoping to show that one couldn't just will cost structures away. Even as I was trying to bring everyone together, I saw that I'd been made the enemy by the new GM. An odd consulting group was brought in that was to save us on costs. I worked with purchasing in order to prove out that we were being put in a much worse position. The defensive consultant finally blurted out that there were savings but I wasn't including the check given to the big boss. I immediately questioned what check that was, and got some info, and we ended the consulting arrangement. Coming from internal audit, I knew where to go. Coming from internal audit, I also knew my time was now coming to a close.



I began building out templates for an outsider to use to close the books, show which metrics to check and what they meant. With things in place, I finally took a job a few blocks away for 40% more money. The new GM was a step ahead of me and had been working to convince my weakest AR clerks that she could take my role. When Group Controller finally contacted me as to if things were set I told him point blank that they weren't, they're making a horrible mistake and they needed to send me someone competent to hand off to. Well (GM) says we're ready to go. I said, it's your job on the line when these books don't get closed. I've prepared quite a bit to make this easy. Send someone competent and they can report back that I'm full of crap if I'm wrong. Someone came out. I knew her. She had been one of my first audits with the company. She was good, but she was more interested in her Sub-Group role coming out of this. Gossiping around the office. We had a two day close for domestics. She waltzs in Day 1 at 3:00, convinced nothing needed to be done. I look at her. I look at the clock. I look back at her. She starts to speak and I look back at the clock. She stops talking. I look at her again. I HAD originally stated that I would be willing to come in this weekend in case it was needed, but perhaps this isn't a priority. We sat down and closed the books together. Went through the reporting templates and updated the forecasts. These will get you through the end of the year before you have to get someone capable of updating them if you do these steps. The one chosen knows so little that she has no idea she can't do this job, so you need to learn this to train whoever follows. Protests met with...$1,000 to the United Way if I'm wrong. Good luck, and I left. I stayed away on purpose. I didn't want to know what was certain to happen. However, several colleagues wanted a party to celebrate my long delayed engagement. It quickly turned into a help me party instead.



How can we report revenue numbers higher than shipping. I thought it was always different, and it's going down now. We're working so much overtime and we're late on everything now. The pricing in China was dropped by 25% because the labor is cheaper there, does that make sense, especially since we make some of it here? We've replaced your role 3 times already. Nobody can do the job. Vendors are dropping us because we can't get payments out the door. The only good/not good news....did you hear they fired both the group GM and his boss...how are they letting local GM stay?



Going forward I noted upfront in conversations that I didn't want to talk about work. Some came out but mostly it was honored. I didn't act again until I was met by our largest production factory manager. Small stature and surprisingly homosexual, even in my time the conversation was had. "He yelled at me." "Why?" "Because I messed this up." "Did he treat you unfairly?" "No, I just want to vent." "That's fine." His factory feared him, but respected him. He was fair. He was open. He was honest, and once you knew what you needed to know, he was a puppy dog again. I once asked if he was a problem when new and people were very upset and they hastened to say no, he was great, it's just rough when you're in the spotlight. That was what tripped him up. The man who had invented the membrane switch label (makes a click when you push the button) for us and who had increased productivity in his factories by an amazing 40% while I was there....was suddenly at my office at my new place. Do you have a job, I was fired today, the factory is now being run by a nice simpleton guy with a knack for colormatch and no operational awareness. I was stunned. The company was now losing money. They kept cutting to try and make profits but it kept pushing out orders late and they were in real danger of losing their key customers.



A byproduct of starting up China was that I was a signer on the account, and for the years following I needed to submit information even though I was no longer with the company. At year 2 China was out of funds. It had closed its doors. I wrote the top level whose division it was. "I can still salvage what's left and pay on an earn-out for subsequent years...sell me the company for $1 to start." I was told no, but I wasn't told to go to hell like I fully expected the guy to do. An obscure reference to the price paid initially told me nobody wanted the goodwill to die on their bonus year.



They did eventually get to one building. The company began to collapse and their largest customers began running away. The next largest factory manager had a triple bypass heart surgery. After a week he came back against advice but was to do desk duty only. He ran flexo presses, the big ones. A big job came up. They were late. He was the only one that knew how to run the press. The GM and Safety Manager, cronies to the end, looked the other way. He ran the job. The next day he died. In an awful get together a funeral service was had. All I had to do was look at the safety manager and ask why and she ran away crying. His wife threw a fit during the service and stormed out screaming you stole my husband. The new GM danced through it all. The only happy moment was when a lady rushed up to introduce herself. She was the new controller and had discovered my templates. They still work. They're amazing. Thank you for building them. She'd even realized what the GM Magic line was.



Eventually the company was swept under the rug of an overall company brand. Goodwill transfer complete they shut it down.



Because, well, it costs too much to build in America. Everyone knows that.
Rate this post positively Reply With Quote Quick reply to this message

 
Old 06-13-2020, 07:48 PM
 
12,331 posts, read 9,907,809 times
Reputation: 31945
Quote:
Originally Posted by blisterpeanuts View Post
It seems to me that Westerners have a pretty good grip on research and invention, but when it comes to the nitty gritty of steadily engineering, assembling, and improving fundamental components, we lack long term focus.

The Asians, however, seem to have the patience to do repetitious, detailed work like soldering chips and other parts into tiny circuit boards. Also, they now have almost a total monopoly on chip foundries and other fundamentals of electronic products like LED displays.

This last part puzzles me the most. Why can't someone set up a plant to make LED displays in, say, Florida or Arizona, that is equally competitive, given that the components don't require tremendous hand work? Literally, it could be a machine etching or extruding some kind of material with an almost completely automated process.
The Asians? You are making a racial argument in the economics forum? You're assuming Asians have special hands to do repetitious work? Wow.

You're going to completely ignore the cost of labor and production in the US? An offshore worker will work for a few bucks a day. American works want a minimum of $25/hr or more, benefits, unions, etc.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-13-2020, 08:15 PM
 
4,798 posts, read 4,045,600 times
Reputation: 11697
Quote:
Originally Posted by charlygal View Post
The Asians? You are making a racial argument in the economics forum? You're assuming Asians have special hands to do repetitious work? Wow.

You're going to completely ignore the cost of labor and production in the US? An offshore worker will work for a few bucks a day. American works want a minimum of $25/hr or more, benefits, unions, etc.
Why don't you at least read the thread before jumping in at the end with some ignorant virtue signaling? No one is talking about race here. "Asians" refers to a diverse set of cultures in the Far East, many of which are highly efficient and hard working.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-13-2020, 11:16 PM
 
1,748 posts, read 885,413 times
Reputation: 503
Quote:
Originally Posted by oldtrader View Post
If people here had to pay the price to make everything in the USA, their standard of living would drop by huge numbers. They simply would be priced out of the market.
Oldtrader, trade deficits are always net detrimental to their nations’ GDPs, numbers of jobs and amounts of their median wage.

For whatever was or will be a nations’ annual spending for products, trade surplus nation’s increased, and trade deficit nations decreased the amount of their gross domestic product. Balance of trade particularly affects their nation’s numbers of jobs and those jobs’ purchasing powers.

I’m among the proponents of the improved foreign trade policy described in Wikipedia’s Import Certificate article, https://en.wikipedia.org/wiki/Import_certificates .

Respectfully, Supposn
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-14-2020, 04:44 PM
 
Location: Washington Park, Denver
8,608 posts, read 7,793,847 times
Reputation: 9692
Quote:
Originally Posted by Supposn View Post
Oldtrader, trade deficits are always net detrimental to their nations’ GDPs, numbers of jobs and amounts of their median wage.

For whatever was or will be a nations’ annual spending for products, trade surplus nation’s increased, and trade deficit nations decreased the amount of their gross domestic product. Balance of trade particularly affects their nation’s numbers of jobs and those jobs’ purchasing powers.

I’m among the proponents of the improved foreign trade policy described in Wikipedia’s Import Certificate article, https://en.wikipedia.org/wiki/Import_certificates .

Respectfully, Supposn
No, they aren’t. You still don’t understand macroeconomics.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-14-2020, 06:37 PM
 
12,726 posts, read 16,244,380 times
Reputation: 8707
Quote:
Originally Posted by ddm2k View Post
I'd like to step in and say that it's not US workers being greedy. The average price of a single family detached home in my area is >$320,000. Some of Europe is not cheap, either.
Just confirms my point. If you could find a place in the US where it's $50,000 perhaps you could qualify at $8 per hour. But workers with anything beyond basic skills could get jobs paying better.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-15-2020, 09:13 PM
 
1,748 posts, read 885,413 times
Reputation: 503
Quote:
Originally Posted by SkyDog77 View Post
No, they aren’t. You still don’t understand macroeconomics.
SkyDog77, no? What “aren’t”?
The expenditure method is the conventional generally excepted method for calculating a nation’s gross domestic product. If in some rare cases, if a USA federal office or any learned journal refers to GDP calculated without consideration for the expenditure method, some notation of the differing calculation method would be noted.

The nation’s net balance of trade is “Baked in” the expenditure formula for calculating nations’ GDPs. Within the duration of the report, a trade deficit indicates the nation's expenditures for products exceeded the total value of products the nation has produced during that duration. That’s why it’s referred to as a deficit.
Respectfully, Supposn
Quote:
Originally Posted by Supposn View Post
... For whatever was or will be a nations’ annual spending for products, trade surplus nation’s increased, and trade deficit nations decreased the amount of their gross domestic product.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-16-2020, 11:54 AM
 
Location: ATX-HOU
177 posts, read 42,113 times
Reputation: 177
Quote:
Originally Posted by Therblig View Post
...with their wallets.
That explains the brutal efficiency of capitalism, but doesn't explain why we didn't adapt and invest in the future.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-16-2020, 12:55 PM
 
2,767 posts, read 770,698 times
Reputation: 4470
Quote:
Originally Posted by VitaminB12 View Post
That explains the brutal efficiency of capitalism, but doesn't explain why we didn't adapt and invest in the future.
Wrong on both counts, really.

To rubberstamp OMG IT'S CAPITALISM AGAIN! on every disliked economic feature is... pretty meaningless. People will demand more for less under pretty much any economic model except perhaps something dreamed up for a Berkeley grad student's thesis. "Capitalism" didn't do it.

And if the 'solution' was cheap goods from overseas, it's exactly the explanation of why we didn't "invest and adapt." We outgrew being the world's factory into being the world's consumer.

And "1955" is not coming back, not even as tailfins on Teslas.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 06-17-2020, 01:15 PM
 
Location: ATX-HOU
177 posts, read 42,113 times
Reputation: 177
Quote:
Originally Posted by Therblig View Post
Wrong on both counts, really.

To rubberstamp OMG IT'S CAPITALISM AGAIN! on every disliked economic feature is... pretty meaningless. People will demand more for less under pretty much any economic model except perhaps something dreamed up for a Berkeley grad student's thesis. "Capitalism" didn't do it.

And if the 'solution' was cheap goods from overseas, it's exactly the explanation of why we didn't "invest and adapt." We outgrew being the world's factory into being the world's consumer.

And "1955" is not coming back, not even as tailfins on Teslas.
This isn't a capitalism "sucks" post, but a we can do "better" post as capitalism clearly has its pros and cons. Of course 1955 isn't coming back and the US won't be the world's factory but that doesn't mean we don't have our own strengths, we can't enhance them, or create new ones through better policy.

Some of it is perception, the historical manufacturing regions have suffered the most while other regions expanded their manufacturing base like the Gulf Coast, SE, and West (not just the coast but Nevada and Arizona). The West Coast historically has had a significant manufacturing base since WW2 and I would imagine due to geography and technology it has not met the same fate as the rust belt.
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6. The time now is 09:03 AM.

© 2005-2020, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top