US food price is acturally lower than china. what americans got to do is 'move back to downtown', just like 1920s americans, living in a flat close to factory, before cars were invented. travel by bus or bike...
then this game will be fair again... otherwise your cost model just can't compete.
If I were SMT, I'd feel the same. If what my customer wants is something I can profitably manufacture, I do so. If the customer needs larger volumes, I can serve as the contractor overseeing offshore production. The customer is happy because they only have to deal with me.
Escatec and SMT both understand that high-volume manufacturing will remain in Asia. In this case, Escatec's operation in Penang, Malaysia. As reported, SMT serves as another "gateway" for directing high-volume, low value-added work to Malaysia. SMT views this option as an asset.
The public sector with its high inefficiency and political decision making and resulting high taxes are the prime reason why the West is no longer competitive. The cost of living is high because everything includes 50 direct and indirect taxes.
The Chinese are heading in that direction now. The main source of cheap manual labor has been peasants on the farms, for whom factory jobs are a step up, with better hours and working conditions, and much better pay. China is confronting the problems associated with rapid urban growth because of the migration from rural areas to get those jobs.
But that pool appears to be beginning to dry up, and Chinese manufacturers must increasingly compete for workers, with corresponding rising wage scale and higher costs. There was a note here a while back about a big Chinese manufacturer that announced a full scale move to robotics in consequence.
The problem with going all robotic is enormous up front costs. It might be hard to get a US manufacturer to make the investment unless they saw a really good opportunity in it, and I doubt they would see such opportunities in low margin commodity products.
I see this as the converse of TI's move to do more product origination *in* China for products intended for the Chinese market. Time to market is critical, and the closer you are to your customer, the greater the advantage you have. Add that doing everything in China by Chinese vastly reduces the misunderstandings inherent in cross-cultural communications, and eases the problems of doing business there at all. The Chinese government will be far happier to see and approve you if you plan to do *everything* there, since "grow the economy" may be their number 1 priority.
Time to market is critical here, too, and the closer to the customer you are, the better you have it. The cost advantages of doing manufacturing overseas come when you have huge volume commodity products where competition is on price and the low cost producer wins. The costs become low enough that it's cheaper to do it there and ship here. When volumes are smaller and the products are higher in the value chain, domestic manufacture becomes feasible, and you get the possibility of a customer being able to send an electronic ECO and see the change put into production the same day. (Not to mention the fact that you are communicating in the same language, and may even be in the same time zone.) You can also get what you make to your customers a lot faster.
We aren't likely to see high volume consumer manufacturing in this country again unless it is almost entirely robotic. The trick is finding things to manufacture that can command a high enough price and carry a high enough margin to pay for the manual labor needed to make them.
Agree, Duane. Surface Mount Technology is ITAR certified and has military customers. Since they are "designing the labor out" of manufacturing products, they won't create a lot of new manufacturing jobs. But any products that can be made here rather than in China is a plus for the U.S. economy, right?
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