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View Diary: Another reason Romney must never be president: he's gullible (72 comments)

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  •  China is no longer the answer (20+ / 0-)

    Manufacturers who have outsourced production to China are increasingly facing a crisis. It is no longer the very cheap labour market it used to be and other factors make it increasingly less attractive.

    Wages have increased as China moves into being a consumer society itself. More of the workers are demanding and getting salaries to enable them to buy home produced products - part of the government's strategy to supplement the declining export markets.

    At the same time productivity in Chinese factories is dredful - in part a relic of the communist system to ensure people had jobs, even if nominally. The previous heavy reliancde on human labour means machinery that could improve productivity has not been installed and doing processes by hand is still seen as the way to go.

    There have been two TV programmes on British TV exploring whether jobs could be repatriated. One involved a retail expert who set up a factory producing fancy women's knickers. The other was a cushion maker who had factories in both Britain and China (and exports to the USA). What they both found was that the long lead times in having production based in China meant they items they produced in the UK could be changed far faster to reflect changes in fashion. The cushion maker ended up increasing production in the UK at the expense of the Chinese factory which he retained for the really low end of the market.

    While those two examples showed the advantage of having production close to your design base and their production was not at the low price end, it did demonstrate that if the owners chose the right product to be able to build the marginally extra labour costs into the final price, they could succeed.

    A rather more interesting recent development has been the move of a computer production from China to the UK - and one of the cheapest at that. The Raspberry Pi is an almost bare board system designed to enable students to learn programming, a skill that in the UK was stimulated by the BBC Micro project in 1981 and which helped, along with the Sinclair micros (sold as Timex in the USA) to start the games writing industry in Britain. What the people in the  Foundation realised that the early production problems caused huge delays because of the lead in/transport times and outweighed the advantage of lower import duties from producing in Taiwan and China compared to importing the components. Consequently the new slightly revised boards will be made in Wales. Although it represents only 20 jobs, there are huge sales to educational institutions and hobbyists in the pipeline (current waiting time in the UK is 13 weeks). Quite interesting is the fact it is based round an ARM design processor (you have at least one, likely in your cellphone but in other consumer products like TVs as well) ARM's history goes back to Acorn who produced the BBC Micro.

    Why doesn't Mitt Romney carry an iPhone? 1. He has staff to carry his cellphone 2. He has an Ann Droid.

    by Lib Dem FoP on Mon Oct 01, 2012 at 11:49:26 PM PDT

    •  i've read about the Raspberry Pi... (5+ / 0-)
      Recommended by:
      elwior, kyril, Mayfly, Hohenzollern, Eyesbright

      on some of the tech blogs i frequent.  they couldn't sell them fast enough.  $25.00 for a credit card sized computer to learn programming.  pretty incredible.

      I'm a blue drop in a red bucket.

      by blue drop on Tue Oct 02, 2012 at 12:16:41 AM PDT

      [ Parent ]

    •  Yep. Manufacturers are looking for alternatives (3+ / 0-)
      Recommended by:
      JerryNA, wonderful world, Eyesbright

      And none of them are pretty.

      Now, it should be said that for some items, it takes a lot of time to set up a new manufacturer. The fabric, the color, all of the specs, everything has to remain exactly the same, which often means building/buying new machines or tweaking the production line.

      The problem then becomes where do we go? Some of the other markets have cheaper labor, but water shortages. So if you're going to send production to, say, India, you have to consider that within six months or so, you may have to move again, which is going to delay production, which reduces inventory, which decreases revenue.

      This will happen slowly, but companies that create goods are already having to face this upcoming problem.

      I am out of the loop on production now, simply because I've been out of the industry for almost a year and the company I work for now is all American production so these issues don't come up.

      But I think that within a decade there will be a significant shift in manufacturing. China is going to lose this edge. They already are, slowly but surely.

      "...and if proud Americans can be who they are and boldly stand at the altar with who they love...then surely, surely we can give everyone in this country a fair chance at that great American Dream." ~ Michelle Obama

      by BoiseBlue on Tue Oct 02, 2012 at 07:19:29 AM PDT

      [ Parent ]

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