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Why Amazon Can't Manufacture a Kindle In the US

Soulskill posted more than 2 years ago | from the american-line-workers-try-to-eat-them dept.

Handhelds 598

theodp writes "Ever wonder why all those job listings for Amazon subsidiary Lab126 — the internal group behind the Kindle and, by all accounts, an upcoming Android tablet — have travel requirements? Over at Forbes, Steve Denning explains why Amazon can't make a Kindle in the U.S., and why that really does matter. 'The idea that there is a lot of outsourcing going on is hardly news', writes Denning. 'The idea that it is irreversible and destructive of the economy's ability to grow is less well known. Even so, it's not exactly new news: the HBR article that I cite is two years old. What is really new news is that (1) these fairly obvious truths haven't yet dawned on economists at the Federal Reserve Bank of San Francisco, CEOs, accountants, politicians, among others and (2) the way to manage in a radically different way to deal with these issues is now more fully articulated than it has been before.' Denning concludes his trilogy-of-management-terror by noting that the decline is also occurring in software."

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Too Cheap (0)

Anonymous Coward | more than 2 years ago | (#37166468)

Cos they are cheap

The Expertise IS here (1)

sycodon (149926) | more than 2 years ago | (#37166590)

All the expertise cited in the article IS here. It is just relegated to small specialty shops that cater to small runs.

Golden Girls! (-1)

Anonymous Coward | more than 2 years ago | (#37166472)

Thank you for being a friend
Traveled down the road and back again
Your heart is true, you're a pal and a cosmonaut.

And if you threw a party
Invited everyone you ever knew
You would see the biggest gift would be from me
And the card attached would say, thank you for being a friend.

Re:Golden Girls! (0)

maxwell demon (590494) | more than 2 years ago | (#37166508)

Thank you for being a friend
Traveled down the road and back again
Your heart is true, you're a pal and a cosmonaut.

That's confidant, not cosmonaut.

Not that I can see any connection with this story, either way.

Re:Golden Girls! (1, Offtopic)

Lieutenant_Dan (583843) | more than 2 years ago | (#37166574)

I like the comonaut version better. It aligns better with the Marxist message that was an inherent part of the show.

Re:Golden Girls! (0)

Captain Hook (923766) | more than 2 years ago | (#37166680)

it's troll which has been showing up in a couple of articles over the last day or so, ignore it and mod it into oblivion.

Re:Golden Girls! (0)

Anonymous Coward | more than 2 years ago | (#37166708)

It's older than that. I remember seeing it a year or so ago.

Comparative Advantage... (2)

cfulmer (3166) | more than 2 years ago | (#37166500)

Sure, places like Taiwan are better at manufacturing electronic components than the US is. The US is better at building airplanes than Taiwan is. So, we trade -- the US builds airplanes while Taiwan manufactures electronic components. As a result, we get less expensive electronics and less expensive airplanes. That's a good thing which makes everybody better off.

Re:Comparative Advantage... (5, Insightful)

Moryath (553296) | more than 2 years ago | (#37166542)

Not really. The US used to have much better manufacturing plants than Taiwan, South Korea, China... what happened is that companies decided to outsource for slave-labor wages.

What is killing US manufacturing now is both slave-labor wages in other countries and the fact that the fab plants have moved there. This wouldn't have happened in the first place if the dickfaced politicians on the take from an elitist multibillionaire class hadn't been so gung-ho on "global free trade", aka Slavery Exported.

Re:Comparative Advantage... (1)

Anonymous Coward | more than 2 years ago | (#37166610)

Wrong. What happens is the country with the newest fabrication plants and production facilities cannot simply replace them every year. There are only a small number of companies that can afford to build these plants, and they cost billions to build. The days of the tiny production line died in the 1970s.

By the time a new facility is up and running, they're already out of date because newer faculties are being built elsewhere. Probably overseas, because the various governments give them tax breaks and incentives. Which also happens in the US.

Apple are the heavyweight in cheap consumer electronics, and American owned. We should be asking why they aren't building in the US, especially as most of what they "build" is putting together other companies' components.

Re:Comparative Advantage... (3, Insightful)

houghi (78078) | more than 2 years ago | (#37166726)

aka Slavery Exported.

Would it have been better if that slavery would not have been exported?

Re:Comparative Advantage... (4, Insightful)

vlm (69642) | more than 2 years ago | (#37166802)

aka Slavery Exported.

Would it have been better if that slavery would not have been exported?

Yes, because the bleeding hearts couldn't stand seeing it locally, so they got rid of polluters, sweatshops, abusive management. IF we could export those guys to China, they would clean up China, which is pretty much a hellhole. Better than it was 10 years ago, but still a hellhole..

Re:Comparative Advantage... (1)

postbigbang (761081) | more than 2 years ago | (#37166840)

But there was more.

Bad management and labor relations caused huge quality problems. Product lifecycles became stretched, rather than market-sensitive. Complexity started to become difficult to maintain, let alone engineer. Supply chain was horrible in the US, but like a quartz watch in Japan, then Taiwan/Singapore/HK.

People gave a shit what the outcomes were, and consumers tired of buying trash from US vendors. Now US tech and automotive products and components are largely made overseas. Greed won, then greed lost, as it always has, as it always will.

Re:Comparative Advantage... (0)

Anonymous Coward | more than 2 years ago | (#37166734)

No, it wouldn't have happened if companies better fought unionization long ago. Let them unionize but fire them when they strike and replace them with workers who are willing to work for what they truly deserve.

No, unskilled workers are generally not worth what they are paid in this country.

Re:Comparative Advantage... (1)

vawwyakr (1992390) | more than 2 years ago | (#37166904)

Possibly true but what you are advocating is basically just paying the American poor...less. So great we get to keep the jobs here but we make sure that in order to keep them we keep people more poor than they are now. I suppose something is better than nothing but I'm not sure how much better it would be. Hey all those safety standards are costly too lets get of those (works for China: http://www.guardian.co.uk/world/2011/aug/22/vinegar-contaminated-antifreeze-china-ramadan [guardian.co.uk] , lead paint, etc). Heck worker safety should go too so we can save more costs. Damn worthless unions and their creation of that waste of space middle class. If we could just turn back the clock and get back our upper and lower class system.

Re:Comparative Advantage... (0, Insightful)

Anonymous Coward | more than 2 years ago | (#37166964)

And what do you do for a living, exactly? More to the point, what do you do with your weekends? Thank a union member for that.

Re:Comparative Advantage... (1, Insightful)

Charliemopps (1157495) | more than 2 years ago | (#37166770)

B.S.
Politicians are always toadies. They are here, and they are in China.
Irrelevant of government regulations, bad business leaders WILL find a way to fail. It's what they are good at.

In most of these cases, wages aren't the driving force behind cost of manufacture. It's environmental regulation. In the US water is more expensive, electricity is more expensive, waste removal is more expensive, and most importantly, proving you meet all the environmental guidelines is expensive. Where-as, in Asia you build your plant next to a river for convenient removal of waste... free water... electricity is practically free from coal fired power plants. No government official ever shows up for an inspection.

Even if our politicians cared (and they don't) how would they ever regulate us into a position to compete with that? And yes, you're going to rattle of a bunch of stuff that all comes down to implementing tariffs... which would be horrible for our economy, China would see as nearly a deceleration of war, and our government would use the proceeds of to invade another middle eastern country.

It's not a problem the government can (or wants to) solve.

Re:Comparative Advantage... (1)

ginbot462 (626023) | more than 2 years ago | (#37166788)

>> Slavery Exported

Sounds like something from tvtropes.org, it's even Capp'd.

Re:Comparative Advantage... (1)

umghhh (965931) | more than 2 years ago | (#37166848)

I find artcles interesting and the discussion that followed plain usual and boring really. The fact is that specialization is a driving mode of operation that helps cutting costs and focus on improving the stuff in front of you of which you may have more clue than anybody else as it is in front of you. That said it is also good if you do different tings from time to time i.e. defocus to learn new perspectives. This is one side of the story. The other is that outsourcing and focus on 3months periods of economic activity has its limits and US society and economy is starting to see the deadly part of the process. It is still not too late. Yet another facet of the story is that if a country has 60% of its economy in so called financial industry which as all industries do produce stuff in its focus area which is in this case money, then two things happen: so called talent goes where money is produced and money loose its value. Both processes are lengthy and take quite an attention span to realize what is going on. But as soon as you do you will realize that there is no way for an economy to survive if you concentrate on finance only. UK and US are a good example of this. When all these processes culminate in one big paroxysm of financial crisis then we get what we see right now. Of course a role of Chinese is not to be underestimated. Their control of money supply and value of currency means that they in principle made their economy booming, and their people supporting lavish lifestyles of US citizens with generous subsidy. This will end badly as soon as Chinese gov will not longer able to support the money value and ensure that there is a cheap labour available.

we live in fascinating times, are we not? I do not know t he anwer. I doubt if anybody does but something will happen and we will see some violent convulsions of global economy and its local counterparts. This will probably be very unpleasant for us all.

Re:Comparative Advantage... (0)

Anonymous Coward | more than 2 years ago | (#37166558)

You mean that USA should open its borders for anyone, or anything, free to come and go? Like, a true global economy? Oh, sorry, i forgot to tell you that it does not work. And thank you for the fish.

Re:Comparative Advantage... (5, Insightful)

Anonymous Coward | more than 2 years ago | (#37166562)

Read the article - it seems you completely missed the point. When you trade entire industries, you are also changing the comparative advantages of the remainder. If you get stuck in a feedback loop you will essentially keep going until you have gutted entire sectors of the economy - this is exactly what the West have been doing for many years.

Re:Comparative Advantage... (0)

Anonymous Coward | more than 2 years ago | (#37166566)

Better or did you mean cheaper?

Re:Comparative Advantage... (0)

Anonymous Coward | more than 2 years ago | (#37166602)

That's a good thing which makes everybody better off.

That's the economic theory at least.

Unless you're one the ones that gets laid off because your manufacturing job gets off-shored, but job losses aren't considered part of economic theory.

Re:Comparative Advantage... (-1)

Anonymous Coward | more than 2 years ago | (#37166728)

Yes, when we talk about macroeconomics we ignore the levels three or four down, so we don't get bogged down in bullshit like this.

Those who don't speak the language of the meta-level where macroeconomics takes place have NO PART IN THE DISCUSSION.

Re:Comparative Advantage... (1)

maxwell demon (590494) | more than 2 years ago | (#37166794)

Yeah, at the macro-level, if one person has an income of a billion dollars per day and another gets nothing, on average both are super-rich.

Re:Comparative Advantage... (0)

Anonymous Coward | more than 2 years ago | (#37166710)

US are better at building airplanes , I agree. But you must be aware that when planes are sold to China, they 'll keep one for analysis and reverse engineering, in a few years I suspect China will sell low cost planes. What will be left for US (and Europe) : tourism , Disneyland parks, etc

Re:Comparative Advantage... (3, Informative)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#37166724)

Software and high speed pizza delivery...

Re:Comparative Advantage... (2)

Kjella (173770) | more than 2 years ago | (#37166750)

It's a nice theory in a employment market that's saturated. What happens when there's real unemployment in low cost countries? You produce more locally and say "Thank you US, but we don't need your high price goods and services". India and China aren't low-tech countries anymore, there's very little they couldn't make themselves. It might be that we in the western world can no longer charge as large a premium on our labor, hopefully the gap will be closed softly with our salaries stagnating and theirs growing, not some sudden and ugly market adjustment. Of course from a purely selfish POV I'd wish it wouldn't happen, but I know there's a lot of smart, hard-working people in low cost countries too. That the western worker is so much better than everyone else is a bit of hubris and any real differences that can be attributed to the education system is closing. In all honestly, it's fair if we all get paid for what we do not what country we happen to be born in - some get the almighty dollar, others monopoly money simply because they live in a poor country.

Re:Comparative Advantage... (1)

Shadow99_1 (86250) | more than 2 years ago | (#37166822)

The real issue becomes the cost of living in both nations... the 'low cost' nations with growing wages have fairly low costs of living (outside a few specific areas, ie Chinese city land issues), while the costs in 'high cost' nations with stagnant wages keeps increasing... This directly applies to how much cash people have to do things and is why we are said to be destroying the middle class in the developed world and forcing or poor to go onto welfare to live.

Currency undervaluation (1)

tepples (727027) | more than 2 years ago | (#37166896)

In all honestly, it's fair if we all get paid for what we do not what country we happen to be born in - some get the almighty dollar, others monopoly money simply because they live in a poor country.

Are you aware of the Balassa-Samuelson model [wikipedia.org] ? A country whose economy consists largely of goods and services that must be consumed locally, such as perishable food or beauty services, will have an undervalued currency. But as the economy becomes more efficient at producing goods for export, its currency will become stronger. So if a company outsources production to a given country due to a currency undervaluation advantage, then over time, there will be less and less of this advantage of keeping production there.

tl;dr: Experience in production of goods for export diminishes undervaluation of a country's currency.

No no no no no... (4, Insightful)

Robert Zenz (1680268) | more than 2 years ago | (#37166522)

...it dawned upon them a very long time ago. But at the end of the day they'll get a bigger paycheck if they outsource something to lower the costs. Let's be honest, there's always someone somewhere on this planet who does it cheaper...and now guess what Capitalism is about.

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166586)

Yep.

If we brougth back the labor industry that we have outsourced, then prices for computers, cell phones, etc. will sky rocket... I don't want to pay $500 for a Kindle just to support a guy who didn't go to college, who will earn low-middle income wage for the rest of his life and depend on unions to get benefits... no siree

Re:No no no no no... (1)

Joe_Dragon (2206452) | more than 2 years ago | (#37166624)

You are way off.

* All people are not cut out for College
* College costs to much
* Benefits like 40 hour work week, over time, not working off the clock, a safe work place to much for you??
* Other Benefits should not be tied to a job

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166694)

I will agree that not all people are cut out for college, I mean, I need my toilets cleaned at my 10-story office space I lease out in Manhattan.

College does cost to [too] much, but if you pick the right degree that you know you can do for the rest of your life (or majority), then it pays itself off. Besides, the best years of your life are in college, not at south Bronx Vocational School.

That third bullet of yours just makes no sense...

Benefits should be tied to a job and not taxes.

Re:No no no no no... (1)

maxwell demon (590494) | more than 2 years ago | (#37166674)

So you prefer to pay them with your taxes through public welfare instead?

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166796)

No Mr. Powers I prefer them... to die.

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166676)

That guy who didn't go to college who is getting a decent wage will be buying stuff. That stuff means businesses will be also making stuff. This means jobs and expansion.

I'd rather see people get "overpaid" than barely eke a minimum wage -- it means they have more disposable income, which means they are buying stuff. The more stuff being bought, the more jobs appear.

Re:No no no no no... (2)

delinear (991444) | more than 2 years ago | (#37166594)

Not to mention if they did keep manufacturing in the west, it wouldn't stop the other countries doing it cheaper, it's just that they'd be producing (and people would be buying) cheap knock-offs instead of cheap originals.

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166630)

Agreed. One day the folks on Wall Street are going to wake up and realize that people in East and South Asia can do their job just as well and more cheaply. That will be the day that people in North America will decide that this is an issue.

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166774)

That people in Asia are smart and are just as capable of producing high quality & high tech items. Yep, that will be the day...

Re:No no no no no... (4, Insightful)

DrXym (126579) | more than 2 years ago | (#37166776)

The problem with outsourcing is often the savings are illusory. I worked in a company that moved a pile of work to new offices they built in India. Indian workers got paid less which means greater savings right? Except the Indians were joining and leaving as if the place was a revolving door. No knowledge was retained at all. They'd stay long enough to get their free trip to the US or whatever perk and then leave for somewhere else. On top of that the quality of work was very poor, there was zero initiative by staff to improve or take tasks on by themselves. It meant someone in a different office had to hold these guy's hands and practically dictate a solution otherwise you got shit. In the end the penny dropped that this thing was a disaster and they sold the entire operation to an outsourcing firm. The sad part is they continue to use the outsourcing firm for production support.

I think there are times when outsourcing works, but looking at the balance sheets is not necessarily a good indicator. I also wonder why the US or Europe tolerates the situation the way it is. That enormous deficit is in part because the US has gone from being a producer to being a consumer. One would have thought that tipping the scales the other way would be a huge priority of any government. And if that means leaning on the likes of Amazon through cajoling & encouragement then so be it.

Re:No no no no no... (0)

Anonymous Coward | more than 2 years ago | (#37166878)

Why US and Europe tolerates? It's not because they want to, but actually countries holding the production and energy supply power can dictate what to do and what not, since a big debt owned by US and Europe. They can only do what benefits to those China, India or even Russia.

Dell is still here? (0)

hairyfish (1653411) | more than 2 years ago | (#37166530)

Someone needs to tell the author that Dell are still in business and still making lots of money. Maybe those economists aren't so crazy after all.

Re:Dell is still here? (0)

Anonymous Coward | more than 2 years ago | (#37166604)

Dell's tablets suck. I use their servers exclusively, nearly so with their desktops, I've switched from Toshiba to Dell for laptops, but their tablets suck.

Can't say I've received a Dell product in the past five years that wasn't assembled in Mexico from Asian components either.

Even Dell is feeling it (3, Interesting)

Missing.Matter (1845576) | more than 2 years ago | (#37166622)

http://www.statesman.com/business/content/business/stories/technology/2009/10/08/1008Dell.html [statesman.com]

Dell told its 905 workers there that the factory will be closed by January in a cost-cutting move that will send more of the company's manufacturing overseas.... Analysts said they expect Dell will transfer much of the work now done in North Carolina to lower-cost contract manufacturers in Asia, who already make PCs for Dell's rivals.

Re:Even Dell is feeling it (1)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#37166810)

I'd be curious to know how much of that is specifically tied to cost cutting/outsourcing and how much is tied to the rise of "easy adequacy" in computer specs...

Dell's stateside 'manufacturing' capability has(at least for a long while now, if not always) been assembly of components from elsewhere into final machines. This allowed them to achieve extremely fast turnaround for more or less any combination of modular parts were supported by a given chassis type. They weren't making custom motherboards, or fabricating cases from sheet metal and injection moulding feedstocks; but they could slap pretty much any combination of CPU/RAM/HDD/PCI/PCIe/PCI-X option cards into your choice of chassis, and have it shipped from a domestic location within a day or two.

However, it isn't clear that that is as useful as it used to be. For server customers? Probably, though the bigger ones would also be more likely to trade an extra week or two lead time in exchange for a discount if they are buying hundreds or thousands of the things. For Joe User? Not so clear. If he is buying a Dell, as opposed to building his own or ordering from one of the numerous outfits who will build a 'DIY'-style PC for you, he would probably rather have a cheaper box with specs chosen for broad appeal, rather than a more expensive box with precisely tailored specs...

For reasons of pure shipping speed(unless you fancy paying air-freight from the pacific rim...) overseas finishing cannot compete with the turnaround times of domestic finishing, which makes me wonder how much of this is driven more by a decline in demand for swift customization...

Outsourcing (3, Insightful)

homer_s (799572) | more than 2 years ago | (#37166548)

Much more destructive than the recent outsourcing to China and India has been the much bigger outsourcing to a place called Technologyville.

Outsourcing to Technologoville has been going on for close to 300 years now and has destroyed countless jobs, not to other poor people, but to machines. Clearly, CEOs, accountants and other must see the job-destroying evilness that is technology and stop all "outsourcing" to Technologyville immediately.

Value addition, cheaper goods accessible to more people and an increase in living standards are no reasons to continue this brain dead policy.

Re:Outsourcing (0, Redundant)

w_dragon (1802458) | more than 2 years ago | (#37166636)

That's right. Automation is evil. Every job that has ever been done by a person should always be done by a person. Tilling and planting a few hundred acres of farmland should take hundreds of people! Building cars shouldn't be automated at all since people are far more precise than machines! We should go back to a time where the majority of people work in agriculture and assembly lines!

Also a great, big, whoosh to anyone about to mod this down :P

Re:Outsourcing (2)

maxwell demon (590494) | more than 2 years ago | (#37166742)

Reminds me of the following:

"That digger has just one driver. Couldn't you replace it by 100 men with shovels? Then many more people would have work!" -- "Sure. I could also replace it with 10000 people with teaspoons."

technologyville == lower wages (1)

Colin Smith (2679) | more than 2 years ago | (#37166858)

Exactly the same economics as China. The difference is the workers run on electricity or fossil fuels etc.

Of course on top of that is a what, 30%, 40% handicap on the flesh and blood worker in the form of income tax etc. Just for working.

Machines perform work, should they not be taxed in terms of the amount of energy they consume as a proxy for the amount of work they do? After all, humans are taxed in that manner.
 

Re:Outsourcing (3, Informative)

sesshomaru (173381) | more than 2 years ago | (#37166918)

Completely, missed the point:

The story is told in the brilliant book by Clayton Christensen, Jerome Grossman and Jason Hwang, The Innovator's Prescription :

ASUSTeK started out making the simple circuit boards within a Dell computer. Then ASUSTeK came to Dell with an interesting value proposition: 'We've been doing a good job making these little boards. Why don't you let us make the motherboard for you? Circuit manufacturing isn't your core competence anyway and we could do it for 20% less.'

Dell accepted the proposal because from a perspective of making money, it made sense: Dell's revenues were unaffected and its profits improved significantly. On successive occasions, ASUSTeK came back and took over the motherboard, the assembly of the computer, the management of the supply chain and the design of the computer. In each case Dell accepted the proposal because from a perspective of making money, it made sense: Dell's revenues were unaffected and its profits improved significantly. However the next time, ASUSTeK came back, it wasn't to talk to Dell. It was to talk to Best Buy and other retailers to tell them that they could offer them their own brand or any brand PC for 20% lower cost. As The Innovator's Prescription concludes:

Bingo. One company gone, another has taken its place. There's no stupidity in the story. The managers in both companies did exactly what business school professors and the best management consultants would tell them to do--improve profitability by focus on on those activities that are profitable and by getting out of activities that are less profitable.

Dell's management shortsightedly completely self-destructed their company by not hanging on to any of the necessary key components for manufacturing a computer. Eventually the firm they outsourced to said, "Why do we need to kick profits back to Dell?"

Sure Dell wanted more profits, but they didn't want to create a competitor who could absolutely destroy them in the market place, and in no way was that a good business strategy for Dell.

Re:Outsourcing (0)

Anonymous Coward | more than 2 years ago | (#37166954)

When can we outsource CEO's and shareholders to Technologyville? I mean seriously, they are the most inefficient and overly self-important people in most of these places.

american culture is to blame (1, Insightful)

Anonymous Coward | more than 2 years ago | (#37166560)

In the USA, people don't want to do things that are hard. They want the quick buck without having to understand the underlying technology. How many USA people really understands the physics behind flat panel displays or rechargeable batteries? Almost none.

Academics are much more valued in Asia, so that's where people actually UNDERSTAND what's needed to make the core components of a Kindle or whatever. USAians with business degrees and even with software degrees don't understand the things they would need to understand. So it's only natural that the expertise and production moves over there.

In 1960s it was the opposite: US culture valued science and math, and the USA led the world in those fields. Since then, USA rests on its past while Asia adopted the science/math mindset, and it is kicking USA ass. USA is a has-been nation now and is being drained of all the value it built for itself as wealth and expertise leaves the country.

You can't change this unless you fix the US *culture* that values ignorance and the superficial and the appearance of things over the depth of things.

Re:american culture is to blame (1)

scottbomb (1290580) | more than 2 years ago | (#37166922)

That's becase, as the article points out, when you outsource the entire process of making the widgets to Asia, people in Asia learn how the widgets works. Those here in America are no longer making the widgets, so they don't know how they work.

This reminds me of the CEO (like Bill Gates) who complains about the schools not turning out enough "qualified applicants" for engineering positions at his company. The kids aren't signing up to be engineers because they see all those jobs going to China and India.

you're kidding, right? (1)

metalmaster (1005171) | more than 2 years ago | (#37166568)

What is really new news is that (1) these fairly obvious truths haven't yet dawned on economists at the Federal Reserve Bank of San Francisco, CEOs, accountants, politicians, among others

All of the above, except maybe the economist, are concerned with their bottom line OR whose lining their pocket. They wont bring their business back to the US without big incentives. At the moment, other countries provide greener pastures

Re:you're kidding, right? (0)

Anonymous Coward | more than 2 years ago | (#37166956)

What is really new news is that (1) these fairly obvious truths haven't yet dawned on economists at the Federal Reserve Bank of San Francisco, CEOs, accountants, politicians, among others

All of the above, except maybe the economist, are concerned with their bottom line OR whose lining their pocket. They wont bring their business back to the US without big incentives. At the moment, other countries provide greener pastures

At least they won't pay attention until so many jobs have left America that people are so poor they can't find a job and can no longer afford their iPhone/Droid/Etc anymore. Not to mention not being able to afford to buy a car, or pay your mortgage/rent, etc.

They don't care, the rich keep getting richer and the rest of us can go screw ourselves. I'm amazed the crowds haven't started forming with torches and pitchforks yet...

Re:you're kidding, right? (1)

blue trane (110704) | more than 2 years ago | (#37166966)

End the artificial scarcity of money. Say openly that unemployment represents economic progress, not industrial breakdown. Focus on innovation such as 3D printers that will make China's cheap labor advantage irrelevant.

Over seas they still have the company store where (1, Informative)

Joe_Dragon (2206452) | more than 2 years ago | (#37166582)

Over seas they still have the company store where part of the works pay go to having to pay to live at the factory and also where they don't need to spend on safety.

China factory's are like the factory's of the past in the USA.

As for software india code is a big mess.

Re:Over seas they still have the company store whe (0)

Anonymous Coward | more than 2 years ago | (#37166826)

Perhaps you should outsource your grammar.

Re:Over seas they still have the company store whe (1)

ScentCone (795499) | more than 2 years ago | (#37166960)

Not to mention the insidious trend of outsourcing the process of deciding when and where to use apostrophes.

Labor conditions (3, Insightful)

aaaaaaargh! (1150173) | more than 2 years ago | (#37166640)

Here is a suggestion you could make to your local politician:

Companies selling products in the US or Europe must be obliged by law to ensure that some minimal labor standards are maintained in the whole production chain, including all subcontractors suppliers. If minimum industrial safety and labor protection requirements are violated the management of the company selling to the end-consumer must be held accountable for it and should definitely face prison terms in serious cases.

Such laws would in the long term help people in countries like India, China, and certain regions of Africa (cocoa plantations, mining, ...), where workers are sometimes held and de facto treated like slaves. In case of cocoa plantations, for instance, there is a market of child slaves in certain region in the world. One child costs around $200. That's why chocolate is pretty cheap all around the world. (I am not making this up! This is well-documented.)

Anyway, with such laws in place and being enforced, it would become more viable to produce in the US and Europe again. Of course, some products, especially clothes and chocolate, would also become much more expensive.

Software is another matter. I don't believe Indian programmers are treated significantly worse in terms of working conditions than elsewhere, and salaries are relative, of course.

Re:Labor conditions (2)

starless (60879) | more than 2 years ago | (#37166740)

(I am not making this up! This is well-documented.)

Well, if it's well-documented, where is it documented?

Re:Labor conditions (1)

Lieutenant_Dan (583843) | more than 2 years ago | (#37166782)

You can start here [wikipedia.org] .

Re:Labor conditions (0)

Anonymous Coward | more than 2 years ago | (#37166808)

It wouldn't help them. Possibly they would lose their jobs if we would require for them to have the same standards as we do - that would just increase cost of manufacturing, add to this cost of transportation etc. and suddenly its better to use local plants. A lot of regulation save the poor again!
People don't care how it was made, I don't give a shit that some Chinese kid is dying out there so that I can have this cheap keyboard that I'm typing on right now. Why should it be regulated, artificially rising prices just so that some person that I couldn't care less about has it better (or worse, if job is lost) in life? He should try to make it better by himself, not get unasked for "help". If he can't, evolution will help.

Re:Labor conditions (0)

Anonymous Coward | more than 2 years ago | (#37166832)

"Companies selling products in the US or Europe must be obliged by law to ensure that some minimal labor standards are maintained in the whole production chain, including all subcontractors suppliers."

But some minimal labor standards -are- maintained.
It's just that our idea about what "some minimal standards" means, is different than that of the job creators.

Re:Labor conditions (1, Insightful)

Charliemopps (1157495) | more than 2 years ago | (#37166838)

And we'd prove what happened in a foreign country how? Oh that's right, we couldn't.

What? (1)

Anonymous Coward | more than 2 years ago | (#37166648)

I can't believe the stupidity I'm ready on here, well maybe I can this is after all SlashDot. Outsourcing = why the US no longer has jobs. Plain and simple. While you celebrate your cheap gadgets your exploiting someone in another country with practically slave labor. I've seen it first hand, I need no citation because you'll never find one since the lie needs to be perpetuated. Outsourcing has been good for a few (rich) Americans, not the working class. It's a joke when you see any politician going on and on why there is no work here and NOT one will ever mention outsourcing as a problem. GE is about to ship a whole division over to China, the CEO is the jobs czar, how ridiculous.

Re:What? (2)

slim (1652) | more than 2 years ago | (#37166720)

Uh-huh. American companies outsourcing abroad means fewer US jobs. So far so good.

More questions:
- Why would an impartial observer care one jot about that?
- For someone who did think it was an undesirable state of affairs, what can be done about it?

If you forbid US companies from outsourcing abroad -- they simply take their entire operation abroad, and cease to be US companies.
If you enforce protectionist import/export restrictions -- other countries respond in kind.

Re:What? (2)

vlm (69642) | more than 2 years ago | (#37166924)

- Why would an impartial observer care one jot about that?

Its an end run around feel good environmental and labor relations laws and it's inherently racist. We got rid of all the factory workers jobs and their benefits and "improved" working conditions. Now its time to race the white collar guys to the bottom. Its intellectually dishonest to prattle on about safe and humane working and living conditions being a human right, unless you are not an American, in which case you deserve to sit in the back of the bus with the other undesirables. Someone, please, just have the guts to stand up and say that the labor classes are, should, and always will be oppressed, no matter if they're white, black, red, yellow, whatever country. Repeal all the OSHA and EPA, git rid of all the unions, have the guts and honesty to say we will voluntarily send the whole stinking world back to about 1900. Anyone who won't is just a spineless coward or lying to line their pockets in the process of the destruction of their country.

- For someone who did think it was an undesirable state of affairs, what can be done about it?

Tariffs. Add the difference in costs between doing business in China vs doing business in USA to imports. You'll get a huge amount of astroturf paid by the retailers about how that'll eliminate American jobs, with really deep reasoning, like, because they say so, and because some paid astroturfer 50 years ago said so, so it must be true. Ask yourself, what jobs would be eliminated, they're already GONE! The few that haven't been exported yet? What are you going to do, fire us all 6 months earlier than planned? At least we'd go down fighting rather than the plan of slowly wasting away,

Re:What? (1)

Shadow99_1 (86250) | more than 2 years ago | (#37166970)

Well the problem with lost jobs here is directly related to how much we can afford to buy and how healthy our government spending can realistically be... The later being a big issue not so long ago. Eventually the companies will move away anyways as the US will have circled the economic drain. We've been at real unemployment as high as 20-30% for the past couple years, that is in no way sustainable. Nor is the consequence as more and more things move overseas and the number grows. Add to this an aging population and we just get more problems. Sure right now an aging population means more health care jobs (just about all I see in the papers these days), but that raises the costs of health care and eventually a majority of us just won't be able to afford those costs and the system will crash. We will lose jobs again and the unemployment rate will grow. Those costs for elderly health care also means less money going to any family they have when they eventually pass away, less inheritance tax for the state, and so less money available to feed into programs to help those without jobs survive. It's really not looking good for us and Japan is having even worse problems with negative growth rates causing them accelerated difficulties.

So frankly I don't give a rats ass about the companies now, we should know already that they won't be here when the shit hits the fan. We need to increase smaller business now as it's the only thing that will save us when the big guys leave.

Re:What? (1)

bberens (965711) | more than 2 years ago | (#37166828)

Outsourcing has been pretty good for us in the short term. In the short term it meant we all got gadgets to play with a cheap cost. In the long run though, without jobs that produce wealth, we won't be able to afford even the cheaply produced outsourced goods.

China's currency (4, Insightful)

MrKaos (858439) | more than 2 years ago | (#37166650)

The Yuan is not floated like many countries currencies are. This gives China a significant competitive advantage over all countries to produce goods and services in their country. China take the long view. They know that his will weaken manufacturing in several countries and drive demand to their economy where labour laws and conditions are under their control. Incrementally they will capture those markets.

The irony in all this is that China is still a communist country using capitalism to destabilise democracy.

Re:China's currency (1)

w_dragon (1802458) | more than 2 years ago | (#37166752)

Their currency works exactly like all the other ones. China just buys huge amounts of US debt to keep their currency down. There is a big difference between this kind of currency manipulation and just pegging the Yuan to the USD like Argentina did with their currency from 1991-2002.

You're misinformed about RMB (1)

brokeninside (34168) | more than 2 years ago | (#37166882)

First, through most of the history of the People's Republic of China, their currency was pegged to the US dollar.

Second, while this practice ended in 2005 when the PRC both switched to pegging their currency to a basket of international currencies and allowing it to float within a narrow spectrum, it's not really fair to say that the RMB is a floating currency. Such a policy of managing the float of a currency is something entirely different from the way that most major western currencies completely float on international exchanges.

Re:China's currency (0)

Anonymous Coward | more than 2 years ago | (#37166984)

They are also on a binge of building huge buildings/towns that no one uses. Each of the prefectures is responsible to create 10% growth year over year. They are doing this by building buildings no one uses.

You can not beat the economy long term it will come back and get you.

Short term term they are creating a huge housing bubble. With condos costing 150k-500k (USD) and most people making 200-300 dollars a month. They are creating jobs short term. But long term there is no one to put in those buildings. As once the building is built the guy with the job is now out of one.

They have one of *the* largest malls in the world. Yet there are only 2-3 small stores in it. This is a problem...

They are creating a housing bubble that will make what Europe and the US just went thru look like we were just playing trading penny stocks. Their entire economy will probably lock up hard. It is just a matter of time.

Even the slave wage labor companies there are just tooling up to automate everything. Machines can then be moved wherever. I predict mexico or south america is where they end up for US sales and Africa for European sales. As it is close to their major markets and the environmental laws are non existent and labor would still be relatively cheap.

We can't compete (1)

kmdrtako (1971832) | more than 2 years ago | (#37166660)

Kindles, and Nooks, and iPhones, iPods, iPads, MacBooks, and MacBook Airs, Lenovo ThinkPads, etc., etc., etc.

The summer before college (1978) I worked for an audio electronics manufacturer. I'd guess that most of the assembly line workers made little more than minimum wage.

I suspect that today, even if they wanted to, most companies here in the U.S. couldn't find enough workers willing to do that work for minimum wage, and even if they could, Foxconn, at let's say $1 an hour, is 1/10th the cost.

Now Foxconn is going to automate, presumably to further reduce their labor costs. Which then begs the question: Why can't Apple and Amazon build those same automated factories here? Then at least the 100 jobs to run the automated factory would be here, rather than in Taiwan or Shanghai.

But the answer is probably that even with automation, the cost of salary and benefits, including health care for those 100 people here would still dwarf the costs of doing in offshore.

Re:We can't compete (2)

c (8461) | more than 2 years ago | (#37166744)

Why can't Apple and Amazon build those same automated factories here?

Because, as the series of articles makes clear, most of the infrastructure needed to build and operate those factories is also overseas. Now just about everything needs to be shipped back. Expertise and equipment to build the factories, raw inputs at whatever level of refinement you choose, etc. Heck, is there even a local infrastructure for handling the waste by-products of these automated factories?

That's the point... it's not just a factory here and there. Unless you've got a factory that can take beach sand and petroleum in one end and pump iPad's out the other, you need an entire community to work around your factory to keep things flowing. That community is pretty much gone.

Re:We can't compete (1)

Missing.Matter (1845576) | more than 2 years ago | (#37166772)

Lenovo technically isn't outsourcing by manufacturing in China.

Re:We can't compete (1)

bberens (965711) | more than 2 years ago | (#37166846)

Slavery, it gets stuff done. [pyramids.png]

Not just the accountants (0)

Anonymous Coward | more than 2 years ago | (#37166664)

Accountants need to get beyond the mental prison of cost accounting ...

Anyone who has spent anytime in engineering knows, there's a huge amount of pressure to reduce costs. As a matter of fact, a sure way to get a promotion, raise, and maybe a bonus (or just keep your job) is to find a way to reduce the cost of the product, it's materials, or how it's manufactured: thinner parts, use plastic, or add more automation - respectively.

That's why you find plastic where it shouldn't be - like in automobile transmissions *grumble* and why shit doesn't last as long as it used to.

It's all about reducing costs to improve the bottom line. And with billions of people on this Earth, one of the easiest costs to reduce is labor.

Shrinking Ship (1)

MassiveForces (991813) | more than 2 years ago | (#37166672)

If in 81% of the US economy the money stays in the US, that's great, even though the rest goes overseas. Unless... there aren't enough exports within that 81% to match the 19% of cash going overseas, in which case, the amount of money in the US decreases. So. My question is, can the US just print more money until everyone is sick of selling things in the US for monopoly money and they invert their economies and no longer sell to the US? Because then there will be no outsourcing from the ensuing market crash, since it will no longer be cheaper to outsource anymore, and the process will reverse. You can see the pie chart in TFA more clearly here http://globaleconomyfinancialmarkets.blogspot.com/2011/08/when-you-buy-made-in-china-most-of-your.html [blogspot.com] .

Re:Shrinking Ship (1)

vlm (69642) | more than 2 years ago | (#37166754)

My question is, can the US just print more money until everyone is sick of selling things in the US for monopoly money and they invert their economies and no longer sell to the US?

Welcome to 2011

Because then there will be no outsourcing from the ensuing market crash, since it will no longer be cheaper to outsource anymore, and the process will reverse

No outsourcing will stop because there will be no employed customers left in the US. At least 20% of the population is currently un or under employed... Also when nothing is left in the US of a company except for overpaid managers, then the managers in outsourceland will take over. See GE, others. So no importers or customers left in the US.

Advert for project management (0)

Anonymous Coward | more than 2 years ago | (#37166678)

Having read the article (all 3 parts), to sum up - "learn SCRUM project management, oh, and hey, buy my latest book on 'radical' project management!".

*Yawn*

Pure BS (5, Informative)

afidel (530433) | more than 2 years ago | (#37166714)

The highly polished injection-molded case is made in China because the US supplier base eroded as the manufacture of toys, consumer electronics and computers migrated to China.

Considering I've worked on advanced injection molding machines IN the US this is such pure bullhockey.

The controller board is made in China because US companies long ago transferred manufacture of printed circuit boards to Asia.

Another BS line, again I've worked with an assembly line making PCB's and finished boards, right here in the midwest.

The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers.

The worlds largest lithium-ion battery facility is just being finished outside Dearborn, Michigan right now.

This whole article reads like some rant by a coastie who has no idea that we still make things here in the midwest, and if the MBA's would stop deciding to chase short term profits at the cost of long term brand erosion and control we would be happy to keep doing it. Over the next decade increased fuel costs paired with a decoupling of the Chineese Yuan from the dollar will lead many companies to pull manufacturing back to the US.

Re:Pure BS (-1)

Anonymous Coward | more than 2 years ago | (#37166762)

Your attitude is why people don't give a rat's ass about the flyover states.

Re:Pure BS (0)

Anonymous Coward | more than 2 years ago | (#37166968)

you sound fat.

Re:Pure BS (1)

drinkypoo (153816) | more than 2 years ago | (#37166816)

The problem with your idea is that it really is hard to find anything made in the USA. Virtually nothing I've bought in the last decade was made here, except stuff I got second-hand at yard sales and flea markets. Indeed, precious little of that was produced here. My truck is a Ford, with an International engine, but the casting was moved overseas and only assembly took place here, while virtually everything electrical was made out of the country as well. My car's a Mercedes made in Germany. Every part of my computer was made out of the USA. Every new tool I've bought for years except for some wrenches came from China, power and hand tools alike. I buy $5 sunglasses from China relatively indistinguishable from $80 Oakleys, down to the logo. Both say "Made in the USA" on them. They are about equally damage-resistant. Virtually every element of clothing in my wardrobe was made in another country, often Indonesia.

While we still make stuff here, it's a tiny slice of the stuff we use, and we don't make much stuff for export. Mostly we export knowledge, but our education system is a joke so we have to import knowledge workers. This is not good for national employment...

Pinball Games are made in the USA! (1)

Joe_Dragon (2206452) | more than 2 years ago | (#37166866)

And they now plan to start selling them at best buy now.

Re:Pure BS (1)

afidel (530433) | more than 2 years ago | (#37166920)

We exported $1.3T worth of manufactured goods last year, only imports of oil and trade imbalance with China based mostly on the artificially fixed Yuan left us as net importers. The US is still responsible for 21% of world manufacturing despite decades of shortsighted policies by Wallstreet and the MBA cast. Right now is a good time for us to reevaluate where we want to be, if we want to give up on remaining the worlds number one economy we can continue down the outsourcing path, or we could put the ~21% of the population in the midwest that are un/underemployed back to work making things. Unfortunately since that would mean slightly smaller Berger boats for the top 1% it's unlikely to happen.

Re:Pure BS (0)

Anonymous Coward | more than 2 years ago | (#37166872)

Not saying that you're wrong, but bear in mind that "no it isn't because I have personal anecdotal evidence" tells me, at best, that the statement is true for a sample size of one, and at worst is an outright fallacy. (Besides, my father once used the same technique to try and sell me on the efficacy of homeopathic medicine, so I know this situation plays out identically in every scenario.)

Re:Pure BS (1)

afidel (530433) | more than 2 years ago | (#37166934)

Huh, the guy said it was impossible to make things in the US, I gave counterexamples where I have seen those very things made in the US, how is that possibly a fallacy?

Re:Pure BS (3, Informative)

bberens (965711) | more than 2 years ago | (#37166890)

I'm glad someone said it. The United States manufactures more today than it has at any time in history. It's just that technology improvements mean we do it with a LOT less people. Slave wages mean anything that's not easily automated is outsourced. The primary reason manufacturing has shrunken so much as a percentage of our economy is due to the financialization of the economy that started in the late 80s/early 90s.

Re:Pure BS (1)

vlm (69642) | more than 2 years ago | (#37166978)

All anecdotes.

There exists a small tool and die shop in my hometown, really not much bigger than an "extreme home shop". When my dad was my age, there were over two dozen, all bigger than the remaining hanger on.

There exists at least one injection molding shop in the USA. And at least one battery line. How special. There is probably one in Afghanistan, too. Whats relevant is production size, China dwarfs us.

Its like saying Mayberry had a (quantity one) sheriff, and new york city also has cops, therefore there is no difference between them.

New News (1)

Thelasko (1196535) | more than 2 years ago | (#37166758)

News: [reference.com] noun 1. a report of a recent event; intelligence; information
2. the presentation of a report on recent or new events in a newspaper or other periodical or on radio or television.

News is by definition new. If it isn't new, then it's just information.

Solve all your problems by by reading this book! (1)

Lluc (703772) | more than 2 years ago | (#37166766)

While he does have some interesting things to say, the article reads like a sales pitch for some business strategy called "Radical Management" -- i.e. the author is trying to sell his book. Unfortunately he never explains what "Radical Management" is or how it will change the status quo.

Begging the question (1)

kervin (64171) | more than 2 years ago | (#37166768)

The idea that it is irreversible and destructive of the economy's ability to grow is less well known.

Because that effect has not been proven? Many, many very informed groups of leaders, business people, and scientists ( economists ) disagree with this forgone conclusion.

There seems to be a lot of that going on on slashdot lately.

It's complicated... (1)

cardpuncher (713057) | more than 2 years ago | (#37166856)

Evan Davis of the BBC made an interesting series recently on manufacturing in the UK (http://www.bbc.co.uk/programmes/b0125v5h). He's been one of the few people in the UK consistently to point out that the VALUE of manufacturing to the enconomy continues to increase even as the number of JOBS continues to decrease, so it's not all doom and gloom.

People are still making stuff, it's just that the stuff they make is increasingly complicated and valuable. In that respect, it's fine if assembly and easily-replicated technology go overseas. In some respects, it doesn't actually matter if high technology manufacturing processes go overseas - if they're economically important then they'll be taken by espionage if not by way of commerce so you might as well make some money on the deal.

The real problems are that (a) you end up without any jobs at home that underskilled workers can reasonably undertake causing social cohesion to break down and (b) you lose the critical mass of both talent and investment that comes from having a nexus of inter-related manufacturing skills nearby.

Did Forbes outsource their editors too? (1)

Mantorp (142371) | more than 2 years ago | (#37166942)

"Rechargeable batter" - sounds delicious. "Sets of a chain reaction" - is it one or a set?

Patriotism vs. Capitalism (1)

drewm1980 (902779) | more than 2 years ago | (#37166944)

Why does this article pre-suppose that multi-national corporations have any loyalty whatsoever to any country? Perhaps Dell screwed up by ceding it's manufacturing capability to it's main contractor (Asus) and then losing control, but that has nothing to do with America vs. China. Patriotism and Capitalism are inherently at odds.

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