On Tue, 30 Dec 2014 00:56:51 -0500, Ed Huntress
wrote:
On Tue, 30 Dec 2014 10:31:50 +0700, John B. Slocomb
wrote:
On Mon, 29 Dec 2014 12:20:38 -0500, Ed Huntress
wrote:
On Mon, 29 Dec 2014 07:11:44 -0800, Larry Jaques
wrote:
On Mon, 29 Dec 2014 02:04:18 -0800, mike wrote:
On 12/28/2014 5:29 PM, John B. Slocomb wrote:
On Sun, 28 Dec 2014 15:08:49 -0800, mike wrote:
On 12/28/2014 1:18 PM, Larry Jaques wrote:
On Sat, 27 Dec 2014 22:26:29 -0800, mike wrote:
On 12/27/2014 9:44 PM, Ed Huntress wrote:
On Sat, 27 Dec 2014 02:08:54 -0800, "Howard Beal"
wrote:
"Ed Huntress" wrote in message
...
Much snipped
I think you guys are 'way too pessimistic about the American economy,
and 'way too optimistic about the Chinese.
This is a long story, but the Chinese have been too slow to adopt
international standards of quality -- sewing a straight line on a
Louis Vuitton handbag is not a measure of manufacturing quality. And
now they're facing much higher transportation costs and a steep rise
in wages, with the Lewis Turning Point looming ahead. Like the
Japanese before them, they're losing their edge on cost, but without
the Japanese reputation for quality.
I talked with a Chinese representative of their tool-and-die industry
in Atlanta last month. I asked them if they could make decent D2 steel
yet. "Just barely," he said. Which puts them at a competitive parity
with the West...in about 1950.
The long-term goal for China is to be globally competitive at
competitive, not cut-rate, prices. They're hoping to accomplish
market-share inroads before their costs rise too much. So far, they're
not doing very well at that, in automobiles, industrial equipment, and
so on. There are factories in China turning out good products but
they're almost always run by Western companies, who are putting up
with horrible productivity in order to gain the labor-cost savings.
That will go away. Now their goal is to ride it out as the Chinese
domestic consumer market expands. Their economy *must* become more
consumption-based, or they're going to lose much of their export
market as their costs increase.
Meantime, US manufacturing has settled into a low but sustainable
percentage of our GDP. It's projected to grow in dollars, and slightly
in percentage of GDP, in coming years. The rest of our economy is
perking along mostly on services, and the labor-multiplier effect of
manufacturing is sufficient to sustain pretty good growth.
Our economy is doing well. It's employment that's at risk, largely
because of steady improvents in our productivity -- read "automation."
This will become a bigger social problem and we will have to address
it. But the solution will be much happier than you guys are imagining.
There is nothing in the economic dynamics that suggest we're going to
become a third-world country.
Do you remember Japan after WW II?
I wasn't born until 1948. But I remember when Japanese products were
junk.
The Japanese did exactly what the Chinese are doing now, albeit on a
smaller scale, they leaped into foreign trade with what they could
manufacture and the words "Made in Japan" was a synonym for "Junk!".
Now look at them. The first Nikon FP camera was made in 1948 and by
the Korean war Nikon and Canon had become the preferred camera of most
news correspondents and Leica and Contax were headed down the slippery
slope.
In about four years. After 1950, and Deming, Japanese industry focused
on quality and it paid off in just a few years:
"Deming is best known for his work in Japan after WWII, particularly
his work with the leaders of Japanese industry. That work began in
August 1950 at the Hakone Convention Center in Tokyo when Deming
delivered a seminal speech on what he called Statistical Product
Quality Administration. Many in Japan credit Deming as the inspiration
for what has become known as the Japanese post-war economic miracle of
1950 to 1960, when Japan rose from the ashes of war to become the
second most powerful economy in the world in less than a decade,
founded on the ideas Deming taught:"
True. The Japanese have a long history, right back the "Black ships"
and before, of acquiring foreign technology.
Japan became interntaionally recognized for quality in just over a
decade. China is still known for junk, after three decades or so.
But a lot of junk. Far more then Japan ever produced. Harbor Freight
is a 2 billion dollar business and Walmart probably more, to say
nothing of all the other countries.
Japan's GDP grew from 102,607 (Millions of dollars) in 1945 to 375,090
in 1960, a growth of 360%. China's GDP grew from 225.3 Billion Rmb in
1970 to 1985 (15 year period) to 896.4. a growth of 398%.
A large volume, low cost, product is not unique to China, after all
the largest employer (except for the U.S. government) does exactly
that.
Granted there are differences between Japan and China but at least in
certain industries, perhaps in many, there is a very definite intent
on improving.
We'll see how successful they are. Fourteen years ago, executives at
VW's China factory said they'd be ready to export to Western countries
within five years.
'Still waiting.
In reality, who cares?
I don't have up-to-date figures but in 2005 Chinese White Goods
exports to the EU alone was worth 4,185 billion dollars. In 2005 China
produced 31 million refrigerators, 30 million washing machines and 75
million air-conditioning units, for export. Again, I don't have
comparative figures but in 2012 VW's world wide earnings were 254
billion.
Whether VW-China is a success or not may not be a significant detail.
A friend does fiberglass work on yachts and a Wholesaler in Bangkok
recently sent him some fiberglass cloth samples in an effort to
convince him to buy from them. It was really rough stuff with the
weave very uneven and a lot of knots where a strand had been spliced.
He sent the stuff back and included a sample of the Australian (I
believe) cloth that he uses. The Wholesaler called home to discuss the
matter and in the conversation the Wholesaler said that he had sent
the cloth back to the Chinese factory and they were very interested in
my friend's comments and would strive to do better and would send
improved samples at a later date.
Here there are many single cylinder, water cooled, diesel engines used
- they even "home build" built a small truck with them called a "Etan"
which originally was powered with Japanese made "Kubota" engine, see:
https://www.flickr.com/photos/percyv...7629962147807/
For an action shot see:
https://www.youtube.com/watch?v=0AmeF4jV8gw
Today, they are nearly all powered with either a Chinese copy of the
Kubota, or a Chinese made Kubota as Kubota has established factories
in China in order to remain competitive.
I suspect that question is how much longer can the U.S. maintain its
current levels of income as more and more jobs move overseas. The
current unemployment rate in the U.S. is, I believe, 5.8% and it is
being bragged about. Thailand, on the other hand is 0.7.
We could go on forever with anecdotes, John, and I could point you to
some analyses by specialty labor and trade consultants, but you could
find them if you want. Let me just say that the number of US jobs
"lost" to offshoring is wildly exaggerated for a number of reasons.
But the most importnat figures are these:
Total private (non-government) US employment, before the effects of
the recession were felt, Nov. 2008: 113,636,000. As of Nov. 2014:
118,868,000.
And the Economist's current estimate is that China's economy will
exceed the U.S.'s by 2021 but their graph shows the Chinese economy to
continue to grow at an accelerated rate while the U.S. lags behind. A
previous estimate made by the Economist (2011) showed China exceeding
the U.S. in 2018 so their updated forecast (2014) seems to be well
within the limits of most estimates.
Even counting losses due to fast-climbing productivity improvements,
and counting the recovery from the recession, our net job gains are
not bad. Offshoring has hit some specific job categories and
industries pretty hard, but the US has one hell of a resilient
economy. Overall, the effect of offshoring is estimated to reduce our
employment growth by around 10% to 12%. It's a very hard thing to
measure accurately.
Difficult to analyze but jobs alone may not be the important factor.
If Macdonald's hires more counter persons certainly the unemployment
number goes down but I'm not sure that is a significant fact when
looking at the overall economy.
As for those "trucks" you linked to, they tell a story in themselves
-- and it's not a story that US truck manufacturers are going to worry
about. d8-)
Well, the link wasn't supposed to impress you with the vehicles, it
was to demonstrate the varied use of Chinese made engines in 3rd world
countries :-)
--
Cheers,
John B.