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View Diary: The secret of the so-called "skills gap" (191 comments)

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  •  But it's the total cost, not cost per hour per (21+ / 0-)

    worker, that you need to consider.

    So if you send your manufacturing to China, you commit yourself to these costs:

    - upfront setup and development sunk costs - more if you need a dedicated facility, less if you're outsourcing a more commodity type product/skill

    - risk to your intellectual property

    - cost to send your managers to China to oversee and supervise your assembly

    - language barrier and management from the US to oversee the incoming product

    - in many countries, the cost to provide your own power and security

    - shipping your product from China back to the US

    - disruption due to various political events outside your control

    All these things are part of the outsourcing cost and typically outsourcing is not an agile activity - that is, you can't just do it and undo it within a few weeks. If you're not producing the product to be sold in China or elsewhere in Asia, it can be pennywise and pound-foolish to outsource, especially if you have an option to instead go with a more automated process within the US.

    American wages are high for a reason - we have infrastructure and highly trained workers who are near the end customers. The market correctly recognizes that those factors are worth a premium.

    Fry, don't be a hero! It's not covered by our health plan!

    by elfling on Mon Nov 26, 2012 at 07:20:53 AM PST

    [ Parent ]

    •  And the most important costs of all. (1+ / 0-)
      Recommended by:
      sethtriggs

      Ecological costs.

      "As channels of distribution 'lengthen', in both distance and complexity, so also are the 'products' that flow through them, (be they tea, raspberries or religion), corrupted."

    •  The intellectual property risk is the huge one (9+ / 0-)

      You wind up giving away any advantage you might have for a very short term gain.

      Because some Chinese company is going to copy your product, and produce something similar for much less.

      Unless you're Apple, and really have brand loyalty, it's hard to compete on cost. And frankly, most US manufacturers wouldn't know good (and original) design if it fell on them.

      Which is a real shame, because we used to make very cool and leading edge stuff. We USED to see innovation and taking the lead in technology as opportunities, not danger.

      Of course, we also used to think research and development was critical, and not the first thing to cut.

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