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Every wanted to see a Chinese production facility?
"George" wrote in message
... Today's Detroit News/Free Press puts much of the blame on undervalued Chinese currency (government controls the value and it hasn't changed since 1994). Since you've done some research on the problem, I'd like to hear your opinion... It's mostly a strawman. If you don't mind my not wanting to type it all out again, you can read what I said about it in my second China article: http://www.machiningmagazine.com On the right side of the page are three magazine covers. I wrote the first two. Click on the cover in the middle of the three ("What are you doing about China?"). It will open an Acrobat file in which I discussed it, based largely on the analyses by Asian economists working for US financial companies -- the guys who really have to fish or cut bait, with billions of investor dollars. They're the best analysts around. Ed Huntress |
Every wanted to see a Chinese production facility?
On Sun, 12 Oct 2003 20:38:10 GMT, "Ed Huntress" wrote:
"Gary Coffman" wrote in message .. . On Sun, 12 Oct 2003 00:26:02 GMT, "Ed Huntress" wrote: OSHA and EPA regulations combined amount to around 8% of manufacturing cost in the US. The wage differential between high-quality workers in China and high-quality workers in the US runs around 96%. So you have an 8% solution here to a 96% problem. What percentage of manufacturing cost is labor? You're not telling the whole story here. Nearly 100%. If you've bought into the "10 - 12% direct labor" figure and don't understand why I say nearly 100%, we can discuss. I'm aware of the marxist theory that all value is labor. I won't buy into it for the purposes of this discussion, however. We're comparing manufacturing costs here against manufacturing costs there, and for that purpose, the 10% of direct costs as wages figure is correct. So 96% of 10% is 9.6%, meaning that the difference in direct factory wages have essentially the same impact on product cost as OSHA and EPA regulations. And neither accounts for the much larger difference in product price for US versus foreign made goods. Lawyers, bureaucrats, and socialists will be the death of this nation. If anything kills manufacturing in the US, it will be doctrinaire, conservative free-trade economics. If we believe your figures, what's killing US manufacturing is excessively high wages. Though if you ask the customers, they're more likely to say it is excessively high prices. Excessively high wages compared to what? Did we have excessively high wages 30 years ago? Manufacturing wages then were higher, adjusted for inflation, than they are now. Were they too high? Yes, grossly so. In your own words, we had an underworked and overpaid middle class 30 years ago. But as noted above, that's only a small fraction of product price. Domestic manufactured product prices have grown 12x over the period (my example of a $3400 car then to a $38,000 car today). Not a lot of that can be attributed to wage growth. The great post-WWII boom in US manufacturing occurred when US products sold for prices comparable to the prices for Chinese products today. I don't think that's a coincidence. I think that's the silliest parallel I've ever heard. Not a parallel, just an observed fact. Demand is elastic, and consumers have price points where they become resistant to making a nonessential purchase. For many goods, the US manufacturers have grossly exceeded that price point. As I recently told a car salesman, I'm not about to pay more for a damn Chevy pickup truck than I paid for my house. You should perhaps spend less time poring over GDP figures and more time talking to customers. In non-command economies, their micro-economic decisions are what ultimately drives the macro-economic figures. Gary |
Every wanted to see a Chinese production facility?
"jim rozen" wrote in message ... In article , DoN. Nichols says... And I believe that there *are* MSDS sheets for distilled water -- simply to comply with the requirements that every chemical used have one on file. Well, yeah. Rumor has it those have the funny bits in them, like "in case of accidental injestion, dilute with.... water." "in case of fire, put out fire with... water." "in case of accidental spill, dilute with... water." The MSDS for chemi-sorb say that in case of accidental spill, sprinkle chemi-sorb on the spill. That sort of thing. I have the shipping hazard lable for water on my door at work. You know, the one with the three catagories, flammability, reactivity, toxicitiy. zero, zero, zero.... Jim ================================================== please reply to: JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com ================================================== Water reacts with most ingredients of the earth. |
Every wanted to see a Chinese production facility?
"Gary Coffman" wrote in message
... On Sun, 12 Oct 2003 20:38:10 GMT, "Ed Huntress" wrote: "Gary Coffman" wrote in message .. . On Sun, 12 Oct 2003 00:26:02 GMT, "Ed Huntress" wrote: OSHA and EPA regulations combined amount to around 8% of manufacturing cost in the US. The wage differential between high-quality workers in China and high-quality workers in the US runs around 96%. So you have an 8% solution here to a 96% problem. What percentage of manufacturing cost is labor? You're not telling the whole story here. Nearly 100%. If you've bought into the "10 - 12% direct labor" figure and don't understand why I say nearly 100%, we can discuss. I'm aware of the marxist theory that all value is labor. I won't buy into it for the purposes of this discussion, however. We're comparing manufacturing costs here against manufacturing costs there, and for that purpose, the 10% of direct costs as wages figure is correct. That's not marxist theory, Gary. That's what you get when you track down actual manufacturing costs and compare them between the US and China. Everything in China is cheaper because labor is so much cheaper across the board, and because many of the intermediate products and services (most component parts, transportation, most raw materials, even plant construction and maintenance) aren't traded on world markets. Their taxes are based on about the same rates as ours, but they pay much less in taxes because they make less and because everything costs less. If you ignore this vital fact, you'll never get it. You'll never understand how the Chinese are able to build injection molds and deliver them to US customers for 30% of their cost if manufactured here. It's elemental to understanding our trade situation and the threat to our manufacturing. So 96% of 10% is 9.6%, meaning that the difference in direct factory wages have essentially the same impact on product cost as OSHA and EPA regulations. And neither accounts for the much larger difference in product price for US versus foreign made goods. I don't understand what you're concluding here. Yes, direct manufacturing labor costs are only a small part of the manufacturing cost difference. No, that doesn't explain very much. What *does* explain very much is the effect of such low wage rates on the entire supply chain of materials and services. Add them all up, and they're close to 100% of the cost of manufacturing any product. And the difference between those TOTAL manufacturing costs in the US and China is huge. If we believe your figures, what's killing US manufacturing is excessively high wages. Though if you ask the customers, they're more likely to say it is excessively high prices. Excessively high wages compared to what? Did we have excessively high wages 30 years ago? Manufacturing wages then were higher, adjusted for inflation, than they are now. Were they too high? Yes, grossly so. In your own words, we had an underworked and overpaid middle class 30 years ago. It sure looks great in retrospect, doesn't it? Until we started to get bombed with products from low-wage-rate countries, it worked pretty well. Every major trading country played the same game, and we all made out nicely. Henry Ford got the idea when he doubled his workers' wages. But as noted above, that's only a small fraction of product price. As noted above, labor cost represents almost all of the cost of any manufactured product. Somebody has to mine the ore, smelt the iron, roll the steel, drive the truck, and keep the books. When everybody is making high wages, compared to those in some other country, costs are high. Then you have to decide how much benefit it is to you to trade with low-wage countries on the basis of their absolute wage advantage. There are benefits, and there can be enormous costs, especially when your balance of trade goes more negative than the ability of your economy to create comparable-quality replacement jobs. Domestic manufactured product prices have grown 12x over the period (my example of a $3400 car then to a $38,000 car today). Not a lot of that can be attributed to wage growth. I don't get the point here. But your conclusion about wage growth is not correct. Average individual money income in 1967 was $2,464. The same income in 2001 was $22,851. (http://www.census.gov/hhes/income/histinc/p01.html). Add in electronic fuel injection, airbags, and a DVD player, and you're in the same ballpark, in terms of car prices as a percentage of income. The great post-WWII boom in US manufacturing occurred when US products sold for prices comparable to the prices for Chinese products today. I don't think that's a coincidence. I think that's the silliest parallel I've ever heard. Not a parallel, just an observed fact. Demand is elastic, and consumers have price points where they become resistant to making a nonessential purchase. For many goods, the US manufacturers have grossly exceeded that price point. As I recently told a car salesman, I'm not about to pay more for a damn Chevy pickup truck than I paid for my house. Vehicle prices are about the same percentage of individual incomes as they were in 1967, and 1957, and so on. They've remained very stable throughout our entire lifetimes. That's more or less the basis on which car prices have been determined. The market for cars has grown substantially; it hasn't declined. You should perhaps spend less time poring over GDP figures and more time talking to customers. In non-command economies, their micro-economic decisions are what ultimately drives the macro-economic figures. I agree that microeconomics is badly overlooked and is poorly understood comopared to macroeconomics. But first, you have to start with accurate figures, or you're trying to theorize with junk data. Ed Huntress |
Every wanted to see a Chinese production facility?
On Sun, 12 Oct 2003 12:28:36 GMT, "Mike H" mikehg1@removethis
foraccess-4-free.com wrote something .......and in reply I say!: Actually the whole article had a sort of "infotainment" feel about it to me, before I even read this.... If you read into the article a little deeper the writer points out that safety equipment is made available and is mandatory for the workers, however, they were allowed to remove them while he was taking pictures. Mike H. ************************************************** **************************************** I walk out into the silent, lonely, country night. Man's work is nowhere evident. The canvas above is devoid of the ever-spreading fluorescent glow of ground-based light sources on dust and smoke. It is streaked with wandering cloud, lit to silver faerie floss by the moon. The stars are alive with cold, sparkling clarity. The beauty is indescribable. My **** flows frothily and noisily into the gravel at my feet. Sometimes you have to do what you have to do. Nick White --- HEAD:Hertz Music Please remove ns from my header address to reply via email !! ") _/ ) ( ) _//- \__/ |
Every wanted to see a Chinese production facility?
Ed Huntress wrote:
It's mostly a strawman. If you don't mind my not wanting to type it all out again, you can read what I said about it in my second China article: Ed, The articles are so good that I printed them out to sit and _read_ them. Clearly, what you state is what is happening. You have arrived at the question - now that we know what has happened what can be done to fix it. The legislation outlined doesn't seem to address the central issue, the enormous sink of Chinese workers. It's not dumping when they _can_ make a product cheaper than you can. What actions would you suggest to increase the chances that our kids can make a fortune in manufacturing and support us in our old age. I'd also like to hear from the other guys in the trenches. Ray and you other fellows that compete directly- what can be done to get us out of this mess? Kevin Gallimore -----= Posted via Newsfeeds.Com, Uncensored Usenet News =----- http://www.newsfeeds.com - The #1 Newsgroup Service in the World! -----== Over 100,000 Newsgroups - 19 Different Servers! =----- |
Every wanted to see a Chinese production facility?
On Sun, 12 Oct 2003 18:01:23 -0400, Gary Coffman
wrote: On Sun, 12 Oct 2003 20:14:25 GMT, "Ed Huntress" wrote: The US economy since WWII has been built on an underworked, overpaid middle class. May they rise again. The reason for that was that at the end of WWII the US was the only major industrialized nation left with an intact infrastructure. The rest of the world was either smashed flat, or was made up of remnants of a colonial infrastructure which held them to peasant level. So the US could allocate resources profligately without enduring any negative consequences. But that day is over, and it won't come back barring a WWIII that again smashes the world while leaving the US largely intact (unlikely). Like it or not, the rest of the world either rebuilt, or is building up for the first time. The US is no longer in such a privileged economic position that it can dictate that the world's economy must be shaped solely for the benefit of its fat lazy overpaid and underworked middle class. In other words, the peculiar circumstances of Eisenhower America that you dream about have come and gone. They won't be back. There are six billion people working very hard to see that they won't be back. We have to adapt to that reality. Short of an imperialism that any civilized person would decry, 300 million people consuming 30% of the world's resources cannot be sustained in the face of 6 billion others who want to live and raise families too. Gary That's exactly right. -Carl |
Every wanted to see a Chinese production facility?
Yeah, and Norm puts the gard back on his Delta cabinet saw as soon as
the cameras are turned off. :-) Mike H wrote: "AL" wrote in message . net... No one is wearing safety glasses. "Dan" wrote in message ... Very modern, very well equipped. Very little "real" detail, but an interesting read nonetheless. One of the computer geek pages went to China to tour a case manufacturer: If you read into the article a little deeper the writer points out that safety equipment is made available and is mandatory for the workers, however, they were allowed to remove them while he was taking pictures. Mike H. -- Glenn Ashmore I'm building a 45' cutter in strip/composite. Watch my progress (or lack there of) at: http://www.rutuonline.com Shameless Commercial Division: http://www.spade-anchor-us.com |
Every wanted to see a Chinese production facility?
"Ed Huntress" wrote:
It's all relative, Carl. Which way do you want the US to head? Toward two rice balls per day, with all of us commuting to work on bicycles? Hey - wouldn't this help with the obesity/fitness problem here? Probably settle this low carb nonsense too. :-) Jay |
Every wanted to see a Chinese production facility?
On Sun, 12 Oct 2003 22:04:10 GMT, "Ed Huntress"
wrote: "Carl Byrns" wrote in message .. . On Sun, 12 Oct 2003 20:14:25 GMT, "Ed Huntress" If you want to compare our workers with those in low-wage countries, you can say that we aren't getting as much for our dollar as we would if we employed people who have no plumbing and no cars. Is that what you're comparing us with? Why not? Much of assembly line work is broken down into tasks simple enough for a well trained monkey. You don't need a Phi Beta Kappa key (or indoor plumbing) to hang wheels on a car. True story: A US car plant was having terrible door/hood/trunk fit problems despite the fact that an inspection machine was used to detect misalignment. The problem was traced to the fact that the workers assigned to adjust the doors/hoods/trunks couldn't read and therefore couldn't understand the computer screen on the inspection machine and didin't adjust anything. They stood around 8 hours a day doing nothing and getting paid quite well for it. How can you say these guys are any better at building cars (or any production line job) than Chinese peasants would be? Hell, the Chinese peasants probably work with a lot more gusto than the US workers, secure in the knowledge if they screw up, they'll be back plowing the fields. No one wants to step in ox ****. How are the US workers worth $25.63 when they can't read? Or when they stand around 8 hours a day and do nothing? It's all relative, Carl. Which way do you want the US to head? Toward two rice balls per day, with all of us commuting to work on bicycles? And what would you do, Ed? Close the borders to imports? Yeah, that'll work. See how well local content laws worked in Brazil or East Germany. Ed, every time a US industry is threatened, they blame the aggressor. When the Japanese started building high-quality economy cars, the US car companies all cried they couldn't compete because the Japs will work for a bowl of rice. When Korea started building ships, cars, and computers, it was more rice bowls. When factories went up in Mexico, it was tacos. Now it's China and rice again. Do you see a pattern here? The US industry gets fat, dumb, and happy and then cries foul at the first inkling of foriegn competition. It never thinks of ways to compete. -Carl |
Every wanted to see a Chinese production facility?
Ray and you other fellows that compete directly- what
can be done to get us out of this mess? One big step would be to let dollar float where it really belongs to the other countries money.Canada is my biggest problem--60%+ of the imported molds come from there. How do you draw a line and say on this side the $=$ but on the other side (Canada) its only .68 cents? We have the same standard of living.The next thing is the molds made in China (most) are so bad that the customer comes back to me after they fire the new save a $ purchasing agent or he moves on to screw up another good co.Almost all the engineers I deal with (except the few that have female friends over there) would rather have American tooling 1st then canadain. What kills me is when whole plants or product lines move , then the tooling never comes back and we all make Wal-mark richer Ray Mueller |
Every wanted to see a Chinese production facility?
jim rozen wrote:
In article , DoN. Nichols says... And I believe that there *are* MSDS sheets for distilled water -- simply to comply with the requirements that every chemical used have one on file. Well, yeah. Rumor has it those have the funny bits in them, like "in case of accidental injestion, dilute with.... water." "in case of fire, put out fire with... water." IIRC, you can burn water with fluorine. (well, steam) However, if that sort of fire is going on, I'm going to be the one running away fastest, without bothering to try to put it out. Fluorine is nasty stuff. -- http://inquisitor.i.am/ | | Ian Stirling. ---------------------------+-------------------------+-------------------------- Money is a powerful aphrodisiac, but flowers work almost as well. -- Robert A Heinlein. |
Every wanted to see a Chinese production facility?
In article , Carl Byrns says...
And what would you do, Ed? Close the borders to imports? Yeah, that'll work. Carl, you apparently haven't been following this tale through its entirety. Ed has never suggested protectionism, and has pointed out its folly to those who have. Jim ================================================== please reply to: JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com ================================================== |
Every wanted to see a Chinese production facility?
On Sun, 12 Oct 2003 13:25:07 GMT, Carl Byrns
wrote something .......and in reply I say!: I am Australian, I assume you are American. We face similar problems. In addition I might say, many small countries such as ourselves see most of our money going overseas even if the US _could_ hold on to its jobs. I disagree. If anything kills manufacturing in the US, it will be union workers pricing themselves out of the market. Locally, we had a very established business where the rank and file struck for higher wages, despite knowing the employer was already fighting off a diminshing market and offshore competition. You already know the results- the business folded and the tooling went to- China. You are adopting a completely one-sided stance, and seem not to realise the inevitable consequence of what you are saying, under globalisation in particular. Union workers are "pricing themselves out of the market" at least in part because they need the wages to buy the products they make, to support the industries that employ them and make huge profits doing so. These same industries spend billions of dollars anually trying to encourage the overpriced workers to keep buying more and more. I am not aware how many of the US cars, for a big instance, go overseas, but I bet it's a small percentage. This would have been very much so until quite recently, I would think. Just last week, a large factory announced that it was closing- idling 1200 workers. The jobs are going not to China, but to Singapore. It's hard to feel sorry for these workers- they were getting big bucks and bennies for assembly line work and they wouldn't consider even a small pay cut to stay employed. But the lower paid workers in Singapore will not be able to buy the very products they make. Singapore will probably export huge portions of whatever it makes. The workers would have accepted a "small pay cut" until the next one, and so on. Even given that this particular factory was altruistic enough to keep trying, in the end competition would have resulted in the closing of that factory. GM is setting up car factories in China. GM says they are building for the Chinese market only, but I wonder... And again, the Chinese workers are so underpaid that they will not buy the cars.........unless (and surely they would not do this!) GM sells them very cheaply, thereby starting the cycle of expectation again, making profits, driving up wages, then moving on when it starts to look more attractive elsewhere. And of course they would _never_ then export those same cars back to the US at a greatly inflated price would they? (it's all that damned polution and compliance stuff that made us quadruple the price yer honour!) Those guys are not working for peanuts because they _want_ to. They are doing it because they have nothing else. I hope you are adopting the stance that you are only for the sake of argument. As with many people who espouse extreme conditions as the answer to some situation, you seem to feel that in the world order that equalled China's, you yourself would be very comfortable. If you are a business owner, then that _may_ be financially true. But if you could live with the mass of US, European, South African, New Zealand and Australian citizens backing down until they were living at Chinese economic and safety levels, to line your pockets, and _still_ be comfortable, well.... That is where it would end, because as long as there is more profit to be made, and profit is the overwhelming motive of industry, if somebody offers cheaper costs per product, the job will go there. There was a time, I think, when the memories of world war, less communication and transport ability, and national pride prevented this, because an American company was an American company and proud of being able to support the country's economy. But this is no longer so. "American" (and the others as well) companies are now simply international, with proft, or even worse "return to the shareholder" (most of whom have absolutely no knowledge of or interest in what the company actually _does_), being the _only_ motive. ************************************************** **************************************** Whenever you have to prove to yourself that you are not something, you probably are. Nick White --- HEAD:Hertz Music Please remove ns from my header address to reply via email !! ") _/ ) ( ) _//- \__/ |
Every wanted to see a Chinese production facility?
"Ed Huntress" wrote in message v.net...
With a good Chinese worker making $0.80/hr., and with productivity in their better export-oriented plants and shops running perhaps 2/3 of ours, there was no other possible outcome There is no way the best factories in China are 2/3 as productive as even the average U.S. factories, and what I've seen tells me that they're at best only 1/3 as productive. This may be why Honda has estimated that its Chinese parts factories will be only 30% cheaper than those in Japan and North America, despite wage disparities being much, much greater (rule of thumb: Chinese labor costs are essentially zero). And even when the factories are identical, productivity almost always significantly lags in the lower-wage country. The prime reason for job losses in the manufacturing sector is productivity improving faster than sales, just as has been the case with farming for almost a century. |
Every wanted to see a Chinese production facility?
On 12 Oct 2003 19:38:18 -0700, jim rozen wrote:
In article , Carl Byrns says... And what would you do, Ed? Close the borders to imports? Yeah, that'll work. Carl, you apparently haven't been following this tale through its entirety. Ed has never suggested protectionism, and has pointed out its folly to those who have. Actually, Ed has proposed zero sum trade, and that is a form of protectionism. Gary |
Every wanted to see a Chinese production facility?
"jr" == jim rozen writes:
jr In article , Ed Huntress jr says... You have to ask yourself why this is happening. If NAFTA and China trade are supposed to leave the high-end jobs in the US (they're even supposed to *increase* the number of high-end manufacturing jobs in the US, according to their supporters), why have average manufacturing wages, adjusted for inflation, declined by 7.6% in the US over the last 25 years or so? There's a pattern, and there are numbers, and they fly right in the face of the free-trade doctrine. jr Ah, but it's more than the 'low end' jobs that are begin outsourced. jr Great article in the NY Times last week that says there's a bunch jr of investment houses that are beginning to open branches in India jr and hiring analysts from those counties. Of course right now jr they say 'we're only sending the scut work overseas' but I think jr this is the same thing that GM was doing when they said 'we're jr opening that engine factory so we can sell the cars in, um, jr China.' jr If I were running a software company or an investment house, jr and I could hire software engineers or MBAs and PhDs at jr half the cost to run my operations, I'd be stupid not to jr take advantage of that. The software industry has been doing this for years. The results are mixed, but there is no doubt that you will face increasing competition from low cost countries in this field as well. jr It's interesting to hear all the handwaving and backpedaling jr when the company speakers explain why they're not just moving jr most of their operations overseas. jr Jim jr ================================================== jr please reply to: jr JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com jr ================================================== -- Sun Microsystems cannot have these opinions even if they wanted to. |
Every wanted to see a Chinese production facility?
On Sun, 12 Oct 2003 23:22:16 GMT, "Ed Huntress" wrote:
"Gary Coffman" wrote in message .. . Domestic manufactured product prices have grown 12x over the period (my example of a $3400 car then to a $38,000 car today). Not a lot of that can be attributed to wage growth. I don't get the point here. But your conclusion about wage growth is not correct. Average individual money income in 1967 was $2,464. The same income in 2001 was $22,851. (http://www.census.gov/hhes/income/histinc/p01.html). That's apples and oranges. In the first place, those are per capita numbers, not per worker numbers. Minimum wage in 1967 was $1.65 an hour, which would equate to $3300 a year, and most workers in manufacturing made more than minimum wage. But there were many fewer women, and basically no children, in the work force in 1967. In other words, they made zero, but your figure averages them in to come up with the low per capita figure, which is not reflective of actual wages. OTOH the 2001 figures reflect a work force with nearly full employment of women. That pushes the per capita figures closer to actual wages. A more accurate and relevant figure for 1967 can be drawn from table P-8 http://www.census.gov/hhes/income/histinc/p08.html . Here you'll find that the median income for males 35 to 44 was $7,636. That is $33,137 in 2001 dollars. By contrast the 2001 income for males 35 to 44 was $41,104, which represents a only 24% real increase over the 33 year span. Vehicle prices are about the same percentage of individual incomes as they were in 1967, and 1957, and so on. They've remained very stable throughout our entire lifetimes. Not so. As more correct figures show, a $3400 car could be bought by a 35 year old male worker in 1967 for 3400/7636 or 44.5% of his annual income. But in 2001 the numbers are 38000/41104 or 92.4% of his annual income. That's a better than 2x price increase with respect to same year wages. So while incomes corrected for inflation of equivalent workers have increased by 24%, auto prices corrected for inflation have increased more than twice as much. Gary |
Every wanted to see a Chinese production facility?
Ed Huntress scribed in
: So what? How long do you think they'll be making them for *anyone*, if they have to chisel wages just to keep afloat? That's a one-way road, Carl. The Chinese are going to beat them all to hell, no matter what they do. One they're in a wage race to the bottom, competing with a low-wage country, there's no stopping, until they go overseas themselves or go bankrupt. the answer is simple and clear gentlemen, we have to get over to china and start labour unions there, pronto. yes indeed, a subversive campaign to educate the chinese workers in having and needing unions to up their wages so they can live like Americans. production costs will skyrocket and th erest of us will be ok.... (-: swarf, steam and wind -- David Forsyth -:- the email address is real /"\ http://terrapin.ru.ac.za/~iwdf/welcome.html \ / ASCII Ribbon campaign against HTML E-Mail - - - - - - - X If you receive email saying "Send this to everyone you know," / \ PLEASE pretend you don't know me. |
Every wanted to see a Chinese production facility?
JJ scribed in
: "Ed Huntress" wrote: It's all relative, Carl. Which way do you want the US to head? Toward two rice balls per day, with all of us commuting to work on bicycles? yes to the bicycles (then you can beat the middle east too, by not needing their oil and they'll all go bankrupt, that's the real way to beat Saddam and friends) no to the rice balls. no way.... Hey - wouldn't this help with the obesity/fitness problem here? Probably settle this low carb nonsense too. yes. swarf, steam and wind -- David Forsyth -:- the email address is real /"\ http://terrapin.ru.ac.za/~iwdf/welcome.html \ / ASCII Ribbon campaign against HTML E-Mail - - - - - - - X If you receive email saying "Send this to everyone you know," / \ PLEASE pretend you don't know me. |
Every wanted to see a Chinese production facility?
"Gary Coffman" wrote in message
... On Sun, 12 Oct 2003 20:14:25 GMT, "Ed Huntress" wrote: The US economy since WWII has been built on an underworked, overpaid middle class. May they rise again. The reason for that was that at the end of WWII the US was the only major industrialized nation left with an intact infrastructure. The rest of the world was either smashed flat, or was made up of remnants of a colonial infrastructure which held them to peasant level. So the US could allocate resources profligately without enduring any negative consequences. I'm real curious about why you think that should have led to such a big social and economic change in the US. What's your rationale? With numbers, please. No fuzzball theories. g Ed Huntress |
Every wanted to see a Chinese production facility?
"axolotl" wrote in message
... Ed Huntress wrote: It's mostly a strawman. If you don't mind my not wanting to type it all out again, you can read what I said about it in my second China article: Ed, The articles are so good that I printed them out to sit and _read_ them. Clearly, what you state is what is happening. You have arrived at the question - now that we know what has happened what can be done to fix it. The legislation outlined doesn't seem to address the central issue, the enormous sink of Chinese workers. Thanks for your comments, Kevin. It makes the work worthwhile. It sure as hell isn't the money they pay me. g As for what actions to take, better thinkers than I have wrestled with that question without much in the way of an answer. I have a theory I'd like to investigate, though, if I had a couple of research assistants (hah!) and about a year to study it. It's complex to explain, but it's directed NOT at restricting trade with protectionism, but rather with expanding the idea of "offsets," which other countries apply to our commercial aircraft and military hardware manufacturers to balance their trade. I'm sure most economists would shoot that idea all to hell, and our government is opposed to offsets, but they're beginning to look pretty good to me. Ed Huntress |
Every wanted to see a Chinese production facility?
"Carl Byrns" wrote in message
... On Sun, 12 Oct 2003 18:01:23 -0400, Gary Coffman wrote: On Sun, 12 Oct 2003 20:14:25 GMT, "Ed Huntress" wrote: The US economy since WWII has been built on an underworked, overpaid middle class. May they rise again. The reason for that was that at the end of WWII the US was the only major industrialized nation left with an intact infrastructure. The rest of the world was either smashed flat, or was made up of remnants of a colonial infrastructure which held them to peasant level. So the US could allocate resources profligately without enduring any negative consequences. But that day is over, and it won't come back barring a WWIII that again smashes the world while leaving the US largely intact (unlikely). Like it or not, the rest of the world either rebuilt, or is building up for the first time. The US is no longer in such a privileged economic position that it can dictate that the world's economy must be shaped solely for the benefit of its fat lazy overpaid and underworked middle class. In other words, the peculiar circumstances of Eisenhower America that you dream about have come and gone. They won't be back. There are six billion people working very hard to see that they won't be back. We have to adapt to that reality. Short of an imperialism that any civilized person would decry, 300 million people consuming 30% of the world's resources cannot be sustained in the face of 6 billion others who want to live and raise families too. Gary That's exactly right. You know, I've spent most of my waking hours for the past year studying this subject, and I can't think of a single factual, quantitative reason why you would draw that conclusion. Barring your philosophical ideas about it, Carl, what makes you think this should lead to a decline in the socio-economic stature of our middle class, in economic terms? With numbers, please. As I said to Gary, no fuzzball philosophy will do. g Ed Huntress |
Every wanted to see a Chinese production facility?
"JJ" wrote in message
... "Ed Huntress" wrote: It's all relative, Carl. Which way do you want the US to head? Toward two rice balls per day, with all of us commuting to work on bicycles? Hey - wouldn't this help with the obesity/fitness problem here? Probably settle this low carb nonsense too. :-) There's a good article about this in yesterday's New York Times Magazine (available for free online, if you're so disposed). They say it's all about Earl Butz's change in the corn subsidies. It's an interesting take on the subject. Ed Huntress |
Every wanted to see a Chinese production facility?
"Carl Byrns" wrote in message
... And what would you do, Ed? Close the borders to imports? Yeah, that'll work. See how well local content laws worked in Brazil or East Germany. I'm thinking about it, and an idea that's beginning to look attractive is the one that every country in the world (including those of western Europe) apply to our aerospace and military hardware manufacturers: 100% offsets. Do you see any problem with it? I'm floating the idea around. Ed Huntress |
Every wanted to see a Chinese production facility?
"Gary Coffman" wrote in message
... A more accurate and relevant figure for 1967 can be drawn from table P-8 http://www.census.gov/hhes/income/histinc/p08.html . Here you'll find that the median income for males 35 to 44 was $7,636. That is $33,137 in 2001 dollars. By contrast the 2001 income for males 35 to 44 was $41,104, which represents a only 24% real increase over the 33 year span. It's household, or family incomes that determine what cars can be bought, Gary. That's why I used per-capita rather than per-worker figures. That weeds out the changing patterns in the number of workers per family, etc. If you check car sales per capita, you'll see that it more accurately is reflected in per-capita incomes. Ed Huntress |
Every wanted to see a Chinese production facility?
"DejaVU" wrote in message
... Ed Huntress scribed in : So what? How long do you think they'll be making them for *anyone*, if they have to chisel wages just to keep afloat? That's a one-way road, Carl. The Chinese are going to beat them all to hell, no matter what they do. One they're in a wage race to the bottom, competing with a low-wage country, there's no stopping, until they go overseas themselves or go bankrupt. the answer is simple and clear gentlemen, we have to get over to china and start labour unions there, pronto. yes indeed, a subversive campaign to educate the chinese workers in having and needing unions to up their wages so they can live like Americans. production costs will skyrocket and th erest of us will be ok.... (-: Some of them have tried, but they get the early-20th-century American corporate response: machine guns in the face. Korea is headed that way, and China probably will some day. But they have 25% unemployment right now, and another 25% extreme underemployment, so economists are predicting that it will be 20 - 30 years before China's wages approach ours. Which brings to mind John Meynard Keynes' comment about how, in the long run, we're all dead. g Ed Huntress |
Every wanted to see a Chinese production facility?
"R. Anton Rave" wrote in message
om... "Ed Huntress" wrote in message v.net... With a good Chinese worker making $0.80/hr., and with productivity in their better export-oriented plants and shops running perhaps 2/3 of ours, there was no other possible outcome There is no way the best factories in China are 2/3 as productive as even the average U.S. factories, and what I've seen tells me that they're at best only 1/3 as productive. I've interviewed a number of US manufacturing executives upon their return from China, and they tend to be shaken up by what they've seen. One that I quoted in my first article on the subject had just visited a mold shop in China that he said was running at virtually the same productivity level as his shop in the US...and he runs one of the best mold shops in the US. He had visited three others that he said were slightly below his productivity levels, but not by an awful lot. It's a mixed bag. Most of China's manufacturing runs at very low efficiencies. But the export manufacturers -- particularly those that have a US or European partner that supplies the technology and the training -- are quite close, in terms of productivity, to that of the best Western shops and plants. This may be why Honda has estimated that its Chinese parts factories will be only 30% cheaper than those in Japan and North America, despite wage disparities being much, much greater (rule of thumb: Chinese labor costs are essentially zero). It costs Honda nearly $2,000 more to build an Accord in China as to build it in Japan. The reason is that many of the parts in an Accord have to be imported from Japan. And the prices for those parts are exorbitant, because that's how Honda gets profits out of China: they overcharge the Chinese division for parts costs, and take the extra margin out as corporate profits. Many foreign manufacturers in China do the same thing. The prime reason for job losses in the manufacturing sector is productivity improving faster than sales, just as has been the case with farming for almost a century. When you actually run the numbers, you'll see that it's partly productivity and partly excessive imports. The figures for job losses due to imports range from 500,000 to 1,200,000, going from the conservative economists to the more liberal ones. Mainstream economists are now saying it's something under 800,000. Ed Huntress |
Every wanted to see a Chinese production facility?
"Old Nick" wrote in message
... On Sun, 12 Oct 2003 13:25:07 GMT, Carl Byrns wrote something ......and in reply I say!: I am Australian, I assume you are American. We face similar problems. In addition I might say, many small countries such as ourselves see most of our money going overseas even if the US _could_ hold on to its jobs. snip extensive exhibit of good sense Hooray to it all. Ed Huntress |
Every wanted to see a Chinese production facility?
"Gary Coffman" wrote in message
... On 12 Oct 2003 19:38:18 -0700, jim rozen wrote: In article , Carl Byrns says... And what would you do, Ed? Close the borders to imports? Yeah, that'll work. Carl, you apparently haven't been following this tale through its entirety. Ed has never suggested protectionism, and has pointed out its folly to those who have. Actually, Ed has proposed zero sum trade, and that is a form of protectionism. Where did you get that idea, Gary? Zero-balance trade is the whole basis for the theory of Comparative Advantage, which, supposedly, is the theory under which we justify trade with low-wage countries. Our policy makers just left out the zero-balance part. The history of free-trade theories is based upon barter systems, which inherently result in zero-balance trade. If you try to do Ricardo's arithmetic that demonstrates why it's mutually beneficial for low-wage, low-efficiency countries to trade with high-wage, high-efficiency countries, and if you don't assume a zero trade balance, it falls apart. Yet, our policy makers talk about "comparative advantage" all the time, as if it actually was working according to the theory. Granted, a surprising number of them don't know what they're talking about, as I learned when I researched my China article. They talk about "comparative advantage," which has a specific meaning in economics, when they really mean "absolute advantage," which is another thing altogether. The US government frowns on offsets but they turn the other way, because, as they've said, no US manufacturer of aircraft or military hardware could sell anything anywhere in the world if they didn't accept offsets. But the consequences of offsets haven't really been studied very well, as far as I can determine. The idea that they're a bad thing seems to spring from an ideological concept as an article of faith, not from empirical evidence. If you want to see what a high-level Commerce official said about offsets a few years ago, you could take a look at the sidebar in my September article on defense procurement. Ed Huntress |
Every wanted to see a Chinese production facility?
"Gary Coffman" wrote in message
... On 12 Oct 2003 19:38:18 -0700, jim rozen wrote: In article , Carl Byrns says... And what would you do, Ed? Close the borders to imports? Yeah, that'll work. Carl, you apparently haven't been following this tale through its entirety. Ed has never suggested protectionism, and has pointed out its folly to those who have. Actually, Ed has proposed zero sum trade, and that is a form of protectionism. Gary Oh, one more thing: what evidence there is suggests that offsets *stimulate* total trade, rather than restricting it. So it's silly to call it protectionism. Ed Huntress |
Every wanted to see a Chinese production facility?
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Every wanted to see a Chinese production facility?
On Mon, 13 Oct 2003 17:15:47 GMT, "Ed Huntress" wrote:
"Gary Coffman" wrote in message .. . Actually, Ed has proposed zero sum trade, and that is a form of protectionism. Where did you get that idea, Gary? Because the only way you can achieve zero sum trade in the short term is if the government artificially interferes with commerce and restricts imports so that they exactly match exports in dollar value. That is protectionism. The net effect is that higher price domestic producers have less competition in the domestic market, and can gouge domestic consumers to their heart's content. That's always the result of protectionism. OTOH, free trade allows the consumer to seek out the best value, wherever it may be, and maximize the value received for dollars spent. That rewards efficient producers and penalizes inefficient ones. In the long term, this also results in balanced trade, because in a free trade situation goods and value seek their own levels. But it does so naturally via the net movement of value from the less efficient nations to the more efficient ones. Economics is the study of allocation of resources. Trading systems are judged good if they maximize value, bad to the degree that they impede maximization of value. Thus protectionism is bad, free trade is good, because it allocates resources in the most efficient manner. Of course there is another thing, called political economy, which tries to devise systems which allocate resources for political purposes, ie narrow national advantage, rather than for economic efficiency. This is warfare by another name. Protectionism (and dumping) are its chief weapons. When you start talking about protectionist policies, you're talking about warfare systems instead of purely economic systems. Such warfare is also called economic imperialism. That's a generally discredited policy, known to lead eventually to warfare of the actual shooting kind. Gary |
Every wanted to see a Chinese production facility?
On Mon, 13 Oct 2003 15:18:07 GMT, "Ed Huntress" wrote:
Korea is headed that way, and China probably will some day. But they have 25% unemployment right now, and another 25% extreme underemployment, so economists are predicting that it will be 20 - 30 years before China's wages approach ours. And you'd like to extend that indefinitely by practicing economic imperialism. OTOH, the more business we and the rest of the world can throw their way, the more quickly they'll reach full employment, and become happy consumers (and slothful laborers) like us. It boils down to this, do you want 1.5 billion resentful serfs whose best option is to join the People's Army, or would you prefer 1.5 billion fat lazy overpaid and underworked middle class Chinese watching their widescreen TVs and sipping beer? Which would you prefer as a global neighbor? Gary |
Every wanted to see a Chinese production facility?
On Mon, 13 Oct 2003 11:06:29 +0800, Old Nick wrote:
Union workers are "pricing themselves out of the market" at least in part because they need the wages to buy the products they make But at least in part those products are priced so high because of the excessive wage demands of the union workers. It is a vicious circle. Just last week, a large factory announced that it was closing- idling 1200 workers. The jobs are going not to China, but to Singapore. It's hard to feel sorry for these workers- they were getting big bucks and bennies for assembly line work and they wouldn't consider even a small pay cut to stay employed. But the lower paid workers in Singapore will not be able to buy the very products they make. Singapore will probably export huge portions of whatever it makes. GM is setting up car factories in China. GM says they are building for the Chinese market only, but I wonder... *Someone* has to be making enough money to buy those products. If you follow Jim Rozen's theory that all US citizens will be working at Walmart, they won't be making enough to buy those products. There has to be a mass market large enough to absorb Chinese production. And that market has to be rich enough to pay for that production. If all the jobs are going to China, who is going to buy what they build if it isn't the Chinese? And how will the Chinese buy them if their wages don't rise? And what does that do to the comparative advantage of Chinese factories over US ones? There was a time, I think, when the memories of world war, less communication and transport ability, and national pride prevented this, because an American company was an American company and proud of being able to support the country's economy. But this is no longer so. "American" (and the others as well) companies are now simply international, with proft, or even worse "return to the shareholder" (most of whom have absolutely no knowledge of or interest in what the company actually _does_), being the _only_ motive. Indeed, there was a time when jingoism overrode good sense. But the purpose of a corporation is to earn value for its shareholders. Eventually it has to do that, or it will cease to exist, its shareholders will have lost their investments, its workers will be unemployed, and who benefits from that? Gary |
Every wanted to see a Chinese production facility?
Here's the rub in this whole thing. Yes, you should be able to seek out
an efficient producer that can give you the best value for the dollar. However, when a society imposes policies upon business that effectively cause inefficiencies relative to a government that doesn't, the whole process is thrown out of whack. Reducing the dumping of contaminants down the storm drain is a good thing...and that's why we have laws to restrict the dumping. China does not have such laws (or they are ignored/bribed off). Are they then truly the "most efficient" or is that an advantage in the marketplace? Is a social security system where the employer contributes an "inefficiency" or a societal choice? When we make such choices, are we not giving those who don't an advantage? I personally believe we should remove the advantage for such items via real duties (not fake protectionist duties, lobbied for by certain industries). Although it won't correct the whole problem, it would be a step toward comparing "apples to apples". Hey, Ed....any idea of what percent of net goods (production) cost in the USA can be attributed to things like federal compliance and paperwork that is not required in China or other foreign countries? You have often said that 90% of the cost difference is labor (my guess at a number, not your words)....what percent is from the other things they can "get away" with that we can't in the USA? Koz Gary Coffman wrote: snip OTOH, free trade allows the consumer to seek out the best value, wherever it may be, and maximize the value received for dollars spent. That rewards efficient producers and penalizes inefficient ones. snip |
Every wanted to see a Chinese production facility?
On Mon, 13 Oct 2003 11:06:29 +0800, Old Nick
wrote: On Sun, 12 Oct 2003 13:25:07 GMT, Carl Byrns wrote something ......and in reply I say!: I am Australian, I assume you are American. We face similar problems. In addition I might say, many small countries such as ourselves see most of our money going overseas even if the US _could_ hold on to its jobs. I hope you are adopting the stance that you are only for the sake of argument. That's true, not all of this is my opinion, nor do I endorse everything I've written. Some of it is distilled from business owners _and_ union workers I know. As with many people who espouse extreme conditions as the answer to some situation, you seem to feel that in the world order that equalled China's, you yourself would be very comfortable. If you are a business owner, then that _may_ be financially true. I'm not endorsing any extreme answer. I am asking some hard questions and getting soft answers. If the labor rate in China really is 80 cents an hour, then it's game over, the Chinese are the winners, and the rest of us better get comfortable with being farmers because we will be the new peasants. -Carl |
Every wanted to see a Chinese production facility?
Gary Coffman wrote in message . ..
Their standard of living *is* lower than ours because their government's socialist policies (socialized medicine, nationalized broadcasting, nationalized power systems, tax policies, etc) penalize success more than our government does. Their theory is that the government should take care of everyone, whether they have earned the expense of their care or not. To do so, the productive have to be penalized to pay for it. Well, I won't give you any credit for having any ability to do much but parrot the conservative bull**** you eat daily, but you're certainly true to form. I very dearly hope, one of my fondest wishes, that YOU end up filing for disability at some time, tomorrow wouldn't be too soon, and then have to wonder what you're going to do for medical care while the first automatic denial makes it's way through the system. Better yet, I hope it's an industrial accident that is because of an OSHA violation, then you better not even bitch about OSHA to your wife, if you've been able to keep one. You keep trying to put everything in it's little category, and people aren't that easy to do it with, you will always be 100% wrong in your efforts. However, to say that your mentality and thought process follow "he who shall never be mentioned", would be deadly accurate, every conservative tactic is spelled out to the letter in a book called "Mein Kampf". Have a nice day. |
Every wanted to see a Chinese production facility?
On Mon, 13 Oct 2003 14:51:53 GMT, "Ed Huntress"
wrote: "Carl Byrns" wrote in message .. . And what would you do, Ed? Close the borders to imports? Yeah, that'll work. See how well local content laws worked in Brazil or East Germany. I'm thinking about it, and an idea that's beginning to look attractive is the one that every country in the world (including those of western Europe) apply to our aerospace and military hardware manufacturers: 100% offsets. Do you see any problem with it? I'm floating the idea around. Ed Huntress Yeah, Ed. I see a lot off problems with offsets. Maybe later- you can't dance away from my previous post with a handwave. As for closing the border to imports, look at what happened to the US auto product when there was no external competition: the Plymouth Volare, Ford Granada, Chevy Nova. 'Economy' cars that got 14 mpg when they ran, which wasn't often. Again- If you want to compare our workers with those in low-wage countries, you can say that we aren't getting as much for our dollar as we would if we employed people who have no plumbing and no cars. Is that what you're comparing us with? Why not? Much of assembly line work is broken down into tasks simple enough for a well trained monkey. You don't need a Phi Beta Kappa key (or indoor plumbing) to hang wheels on a car. True story: A US car plant was having terrible door/hood/trunk fit problems despite the fact that an inspection machine was used to detect misalignment. The problem was traced to the fact that the workers assigned to adjust the doors/hoods/trunks couldn't read and therefore couldn't understand the computer screen on the inspection machine and didin't adjust anything. They stood around 8 hours a day doing nothing and getting paid quite well for it. How can you say these guys are any better at building cars (or any production line job) than Chinese peasants would be? Hell, the Chinese peasants probably work with a lot more gusto than the US workers, secure in the knowledge if they screw up, they'll be back plowing the fields. No one wants to step in ox ****. How are the US workers worth $25.63 when they can't read? Or when they stand around 8 hours a day and do nothing? It's all relative, Carl. Which way do you want the US to head? Toward two rice balls per day, with all of us commuting to work on bicycles? And what would you do, Ed? Close the borders to imports? Yeah, that'll work. See how well local content laws worked in Brazil or East Germany. Ed, every time a US industry is threatened, they blame the aggressor. When the Japanese started building high-quality economy cars, the US car companies all cried they couldn't compete because the Japs will work for a bowl of rice. When Korea started building ships, cars, and computers, it was more rice bowls. When factories went up in Mexico, it was tacos. Now it's China and rice again. Do you see a pattern here? The US industry gets fat, dumb, and happy and then cries foul at the first inkling of foriegn competition. It never thinks of ways to compete. -Carl |
Every wanted to see a Chinese production facility?
"Carl Byrns" wrote in message
... I'm not endorsing any extreme answer. I am asking some hard questions and getting soft answers. If the labor rate in China really is 80 cents an hour, then it's game over, the Chinese are the winners, and the rest of us better get comfortable with being farmers because we will be the new peasants. The official minimum wage in China is 31 cents/hour. In the interior, footwear and textile workers often are paid 17 cents/hour. In the coastal cities, the "illegal immigrants" (those are the rural peasants who moved to the cities without permission; the number is well up in the millions) also make less than 31 cents/hour. The 80 cents/hour figure comes from a report of what moldmakers are paid in coastal cities. Engineers often make $1/hr or more, sometimes more than $2. An engineering director in a substantial manufacturing company may make $10,000/year. Roughly half of the people in China are rural peasants, and they make almost nothing per hour. They live in a classical peasant culture, which is to say, it is nothing like living in true poverty in the US. Chinese peasants have a life. No, the game isn't over, unless you think you have to sacrifice yourself on the pyre of "free" trade ideology. It pays to remember what Mickey Kantor, a former US Trade Representative (that's the head of our Trade Office, Dept. of Commerce) said about free trade. He said there is no such thing. Don't forget it. And then analyze our policies with a critical and non-ideological eye, questioning every presumption. That's the only way we'll figure a way to deal with it. And remember: Ideology kills. -- Ed Huntress (remove "3" from email address for email reply) |
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