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Dramatic Shifts In Manufacturing Costs Are Driving Companies To US, Mexico

Soulskill posted about 3 months ago | from the let's-debate-onshoring dept.

Businesses 233

hackingbear writes: According to a new Cost-Competitiveness Index, the nations often perceived as having low manufacturing costs — such as China, Brazil, Russia, and the Czech Republic — are no longer much cheaper than the U.S. In some cases, they are estimated to be even more expensive. Chinese manufacturing wages have nearly quintupled since 2004, while Mexican wages have risen by less than 50 percent in U.S. dollar terms, contrary to our long-standing misconception that their labors were being slaved. In the same period, the U.S. wage is essentially flat, whereas Mexican wages have risen only 67%. Not all countries are taking full advantage of their low-cost advantages, however. The report found that global competiveness in manufacturing is undermined in nations such as India and Indonesia by several factors, including logistics, the overall ease of doing business, and inflexible labor markets.

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Growing pains. (4, Insightful)

HeckRuler (1369601) | about 3 months ago | (#47721357)

Chinese manufacturing wages have nearly quintupled since 2004

They're going to have growing pains. Developing a middle class and shifting from expendable factory workers to knowledge workers doesn't happen overnight. We had our own struggles during the era of the robber-barons. I hope they have an easier time of it.

Re:Growing pains. (5, Insightful)

CaptainDork (3678879) | about 3 months ago | (#47721419)

Good point, and I don't think they will benefit from lessons learned elsewhere. America has had to compensate for lack of a cheap labor force by implementing technology. It took a while, but regulations now protect the workers (and consumers).

China, on the other hand, has always had plenty of cheap labor. They have solved problems with brute force instead of applying technology.

As that culture changes for China, they will make the exact same mistakes the other industrialized countries have made. China's water and air conditions are miserable ... a condition that is reminiscent of the 1900s in the US.

Re:Growing pains. (2, Informative)

Reason58 (775044) | about 3 months ago | (#47721493)

China's water and air conditions are miserable ... a condition that is reminiscent of the 1900s in the US.

...and they have almost 18 times the population of 1900 America.

Re:Growing pains. (1)

Anonymous Coward | about 3 months ago | (#47721533)

China has moved out of the 1900s and into the 1930s. They are now cracking down hard on drugs from some sudden media push to 'clean up' morals. There is a Chinese William Randolph Hearst over there right now.

Re:Growing pains. (4, Funny)

K. S. Kyosuke (729550) | about 3 months ago | (#47721603)

In some areas, they're rapidly approaching the 1950s [wikipedia.org] , though. Give it a few years and they'll have their president assassinated just before they land on the Moon.

Re:Growing pains. (3, Interesting)

angel'o'sphere (80593) | about 3 months ago | (#47722253)

ROFL,

posts like this don't really make sense.

China, on the other hand, has always had plenty of cheap labor. They have solved problems with brute force instead of applying technology.
So had the USA 150 years ago.

As that culture changes for China, they will make the exact same mistakes the other industrialized countries have made. Very unlikely as their management of their currency and the investments in third world countries show.

China's water and air conditions are miserable ... a condition that is reminiscent of the 1900s in the US.
True and false at the same time. Pollution is bad in China, but they are working on it, just 5 years after it became a majour problem they are trying to fix it. The USA had the same pollution levels into the 1970s!!! not 1900. And they needed decades to even consider fixing the problem. Astonishingly a guy who no one had thought had any clue at all was one of the spear heads of the clean air acts and other legislations: Ronald Reagan!

Re:Growing pains. (5, Interesting)

i kan reed (749298) | about 3 months ago | (#47721439)

Unfortunately, without the democratic framework that the US had in its own gilded age, I'm not sure there's an available set of tools for the populace to push into a progressive era, like the US had, where super corrupt elements of the government(like unelected senators) were run out, and labor was given some basic respect under law.

Wages only do so much for social stabilization. Some changes have to come into power structures.

Re:Growing pains. (1)

K. S. Kyosuke (729550) | about 3 months ago | (#47721639)

Wages only do so much for social stabilization.

In China, they already have their own class of the ultra-rich. I imagine that can't be of great help when it comes to social stabilization.

Labor unions aren't bad, all things considdered (4, Interesting)

TiggertheMad (556308) | about 3 months ago | (#47721723)

China also has a long history of violent peasant revolt, so i'm sure it will work out one way or another...

Re:Labor unions aren't bad, all things considdered (0)

Anonymous Coward | about 3 months ago | (#47721995)

Unions are a mercenary group. The abused slave always has had the power to rise up and slay their master. Instead, we feel it most altruistic to pay someone to throw the bricks we refuse to throw ourselves.

Re:Growing pains. (1)

Anonymous Coward | about 3 months ago | (#47721653)

I was going to say something snarky like "gosh, I wish the US had some basic respect for labor under the law and super corrupt elements of the government were run out." If we had a progressive era, we've lost it. we're coasting on it's coattails.

But really, despite our problems, we still have it rather good. We have OSHA, we have unions (although they're super weak right now), and in theory, one can sue one's employer to right a wrong. I agree. Wages only do so much for social stabilization, and some changes have to come into power structures.

I think a lot of folks who complain about government take for granted the beneficial environment created for business and life by having Rule of Law.

Re:Growing pains. (3, Insightful)

MightyMartian (840721) | about 3 months ago | (#47722105)

A lot of people who complain about government are people who would like to terminate most, if not all, labor protections. They bury that desire in ideological ruminations, and have convinced vast legions of rubes that the only good government is a non existent government, and somehow the magic of market forces will protect workers.

Re:Growing pains. (0, Offtopic)

micahraleigh (2600457) | about 3 months ago | (#47721775)

"Social stabilization" is just a way of saying "the direction of the herd."

Unless you are running with the herd it shouldn't matter.

Re:Growing pains. (2)

i kan reed (749298) | about 3 months ago | (#47721923)

That sure is a generalization that doesn't even make any sense.

Guess what? Society affects you. Yes, you. No you're not special. People interact, and some of those interactions are coming your way, no matter how fiercely independent you pretend you are on online posts.

Re:Growing pains. (4, Insightful)

blue9steel (2758287) | about 3 months ago | (#47722135)

"Social stabilization" is just a way of saying "the direction of the herd."

Not really. Social stability is actually an important goal no matter your economic/government form. You can push people around and abuse them quite a bit because frankly they're mostly concerned with their own daily activities. Once you cross the line and get them all riled up with nothing more to lose though, look out because here come the pitchforks and guillotines.

"The public is like a sleeping dragon, do whatever you want as long as you don't wake them up." --source unknown

Re:Growing pains. (4, Insightful)

jfengel (409917) | about 3 months ago | (#47721793)

I gather that there is a countervailing trend, in the form of reformers in the government. China's version of "communism" is pretty far removed from anything visualized by the early social theorists, and it was plagued by a lot of outright insanity for decades, but it always had collectivism at its core. Mao was one of the great mass-murderers of history, but he wasn't corrupt, merely deranged.

I wouldn't call it a benevolent dictatorship, but I was put in mind of it by your mention of the unelected senators. They still had to campaign; it's just that they ended up stumping on behalf of the legislators-cum-electors. The most prominent example was the Lincoln-Douglas debates: they were running for the Senate but really trying to get legislators to vote for their party. It meant that national issues often trumped local issues, and the state legislature suffered for it.

My point there is that democracy, while important, isn't a cure-all. It's inherently adversarial, a conflict which has notably ground today's national legislature to a standstill. Even popularly-supported reforms get no traction, much less anything with even a whiff of controversy. And it's too inflexible to stop the largest discretionary component of our budget from pumping many billions to the military-industrial complex: I don't buy the theory that they're manufacturing wars for it, but even without that kind of explicit corruption it's still not as responsive as you'd like to imagine a directly-elected legislature should be.

I'm not an expert in China's structure, but I wouldn't count them out just because they're unfamiliar. Certainly the system is ripe for corruption, and they do need to fix it, but they have managed to reform themselves already even under one-party control. It will be interesting to see where it goes from here. There's much to do.

Re:Growing pains. (5, Interesting)

Amtrak (2430376) | about 3 months ago | (#47721937)

super corrupt elements of the government(like unelected senators) were run out

See I always saw that as a misunderstanding by the majority of people as to what Senators really are. The US Federal Senator's job before the 17th amendment was to represent the interests of the State they were appointed by not the people of the State. (We have the House of Representatives for that) So if your senators were corrupt then it meant that your State Legislator/Governor was corrupt. (A very distinct possibility i.e. Illinois) All we have done is taken the part of the Federal government that was supposed to be stable and turned it into the US House of Reps part II.

Also I contend that it is easier to buy a Senator now than it was before the 17th amendment. Now instead of buying off the majority of a State Legislator you would only have to buy off one man. Of course given supply and demand (There are more State Legislators than Senators.) the price of buying a Senator may be such that it isn't any different.

Re:Growing pains. (1)

micahraleigh (2600457) | about 3 months ago | (#47721541)

Their standard of living isn't the same. They cost *more* because their governments require more.

If by "developing the middle class" you mean, letting the earners keep what they earn, then, yes, China & co have a looong way to go.

Re:Growing pains. (4, Informative)

blue9steel (2758287) | about 3 months ago | (#47722063)

We had our own struggles during the era of the robber-barons.

Umm, wrong transition period, that was the Agricultural to Industrial changeover not the Industrial to Service one.

Re:Growing pains. (4, Interesting)

Anonymous Coward | about 3 months ago | (#47722251)

Yeah. And we're still in the second transition.

If we want to make analogies, it's worth considering that industrial workers' rights didn't really happen until the 1930s, over 50 years after the beginning of the industrial revolution in America. Most service workers still have no unions, or anything similar (not sure what it would be), to claw back profits from investors and executives. Which is why wages are flat even though American wealth continues to sky rocket.

I never understood conservative opposition to unions. In particular, wage slave, blue collar conservatives. Unions are an effectively privatized way to achieve wealth redistribution. The only alternative is taxation and government programs**, or for society to simply live with increased crime and dislocation.

Unions are the worst way to pursue income equality and social stability, except for all the alternatives.

** There's a strong economic argument that direct wealth transfers through taxation are the most efficient way to accomplish this. But I suspect that American politics in particular is just a tad too corrupt to make this a dependable and fair mechanism. There's too much regulatory capture and various forms of internecine backstabbing (among corporations jockeying for loopholes, among blue collar workers "racing to the bottom", etc). Unions are a nice, distributed mechanism which looks ugly and ineffective at the micro level, but at the macro level seems to work out pretty well in terms of outcomes.

Zooooom! (3, Insightful)

ColdWetDog (752185) | about 3 months ago | (#47721361)

Another race to the bottom.

I wonder if the landing is going to be soft and comfy.

Re:Zooooom! (1)

Presto Vivace (882157) | about 3 months ago | (#47721377)

As you suggest, more evidence of middle class collapse.

Re:Zooooom! (1)

MRe_nl (306212) | about 3 months ago | (#47721399)

Or "Trickle Down Economics" as it's been called for a while now.

Re:Zooooom! (2)

i kan reed (749298) | about 3 months ago | (#47721511)

This has literally nothing to do with trickle down economics. And I'm saying that as a person who recognizes the absolute uselessness of that concept to any sort of pragmatic economic policy.

Re:Zooooom! (1)

Opportunist (166417) | about 3 months ago | (#47721657)

Why? Slowly but surely we're all trickling down, I'd say the shoe fits.

Re:Wooooosh! (0)

Anonymous Coward | about 3 months ago | (#47721719)

It's a joke re the only thing that seems to be trickling down is the global minimum wage.

Re:Wooooosh! (1)

i kan reed (749298) | about 3 months ago | (#47721833)

Literally the opposite of the point of the article we're discussing, but sure. Why not. What a joke. Haha.

Re:Zooooom! (2)

Ralph Wiggam (22354) | about 3 months ago | (#47721647)

On on Slashdot could an increase in manufacturing jobs be used as evidence of "middle class collapse".

Zooooom! (0)

Anonymous Coward | about 3 months ago | (#47721459)

Watch Republicans campaign again to get rid of the minimum wage.

Re:Zooooom! (1, Informative)

bobbied (2522392) | about 3 months ago | (#47721667)

Watch Republicans campaign again to get rid of the minimum wage.

Exaggerate much? Republicans don't wan to get rid of the minimum wage. Why would anybody campaign to get rid of the minimum wage? It would be stupid to just out and hand the democrats a loaded guy and say "Shoot me in the face!" trying to get rid of the minimum wage.

This republican knows of nobody trying to get rid of the minimum wage and I dare say you don't either.

BUT, that's not to say the democrats are not manufacturing such outrageous claims about republicans (i.e. lying about republicans intent) and turn the opposition of RAISING the minimum wage into something it's not.

Re:Zooooom! (4, Informative)

Ralph Wiggam (22354) | about 3 months ago | (#47721771)

Exaggerate much? Republicans don't want to get rid of the minimum wage.

You should try paying attention.

"I think it's outlived its usefulness," said Rep. Joe Barton of Texas. "It may have been of some value back in the Great Depression. I would vote to repeal the minimum wage."

http://www.nationaljournal.com/white-house/can-obama-unilaterally-raise-the-minimum-wage-20131205

Re:Zooooom! (1, Informative)

bobbied (2522392) | about 3 months ago | (#47721845)

Exaggerate much? Republicans don't want to get rid of the minimum wage.

You should try paying attention.

"I think it's outlived its usefulness," said Rep. Joe Barton of Texas. "It may have been of some value back in the Great Depression. I would vote to repeal the minimum wage."

http://www.nationaljournal.com/white-house/can-obama-unilaterally-raise-the-minimum-wage-20131205

You should use the whole quote too:

It's particularly unpalatable for Republicans, as the majority of them oppose to raising the minimum wage at all. "I think it's outlived its usefulness," said Rep. Joe Barton of Texas. "It may have been of some value back in the Great Depression. I would vote to repeal the minimum wage."

I'd vote to get rid of it it too, but I'm not running a campaign to repeal it. Joe Barton isn't campaigning to repeal it either. You are claiming republicans campaign to get rid of it. Big difference. There is no campaign by republicans to get rid of it.

Re:Zooooom! (0)

Anonymous Coward | about 3 months ago | (#47721797)

>Sen. Lamar Alexander (R-Tenn.), the ranking Republican on the Senate's labor committee, said in a hearing Tuesday that he would prefer to see the minimum wage abolished.

http://www.huffingtonpost.com/2013/06/25/lamar-alexander-minimum-wage_n_3498975.html

Or you could just google it.

Re:Zooooom! (5, Informative)

Ralph Wiggam (22354) | about 3 months ago | (#47721799)

I submitted my previous post to soon. You could dismiss one Congressman as not representative of the party.

So here is the official 2014 platform of the Republican Party of Texas.

Minimum Wage Repeal- We believe the Minimum Wage Law should be repealed.

Prevailing Wage Law- We urge Congress to repeal the Prevailing Wage Law and the Davis
Bacon Act.

Workers Compensation- We urge the Legislature to resist making workers’ compensation
mandatory for all Texas employers

http://www.texasgop.org/wp-content/uploads/2014/06/2014-Platform-Final.pdf

Re:Zooooom! (0)

bobbied (2522392) | about 3 months ago | (#47722011)

Yes, it's in the platform in Texas.. SO? Such verbiage plays well here.

That does not make it a campaign. It's like saying this is what I would vote for repeal if given the chance. There are ZERO republicans out trying to push legislation to abolish the federal minimum wage, then basing their campaign on such actions. Would we prefer to do away with the minimum wage? Yep, already said that. but you said there was a republican campaign to repeal it, there is not, not even in Texas where it would play well.

The only people campaigning on this are democrats... Only they have to trump up this idea that republicans are actively out to abolish the minimum wage when it's not happening.

Re:Zooooom! (1)

blue9steel (2758287) | about 3 months ago | (#47722269)

Republicans don't wan to get rid of the minimum wage.

Sure they do, it just doesn't poll well enough right now. Any rational, educated person knows that minimum wages are a policy with significant trade offs. On the one hand a price floor creates oversupply and reduces demand, so effectively it creates unemployment. On the other hand the equilibrium wage could easily be at a level we as a society don't find conscionable, or with sufficient automation technology it could even fall below subsistence levels. Since our society no longer has a frontier with unclaimed land as an escape valve we have to provide some mechanism to resolve this problem.

Re:Zooooom! (5, Insightful)

i kan reed (749298) | about 3 months ago | (#47721503)

I'm gonna disagree.

This is supposedly a sign that the race to the bottom is actually done. The bottom filled out and is rebounding, and "we" mostly resisted our worst political urges vis-a-vis protectionism and removing regulatory protections that exist for good reasons. An equilibrium has been reached, and all the sacrificing has been mostly of the short term kind.

I know posting anything that isn't a hyper-cynical prediction of doom-and-gloom isn't too popular on slashdot, but this happened with Japan in the early 90s, and it happened with the United States(to the British Empire) in the 1850s. This isn't an unprecedented development. Cheap labor isn't infinite and eventually labor starts to get positively valued again.

Re:Zooooom! (1)

ShanghaiBill (739463) | about 3 months ago | (#47721889)

Another race to the bottom.

How is jobs shifting to a higher wage country a "race to the bottom"?

Re:Zooooom! (1)

mspohr (589790) | about 3 months ago | (#47722073)

I think the US middle class has already "landed" in a spot where they can't earn a living wage. Now that the rest of the world has "caught up" with us living on subsistence wages, we might see some jobs returning to the US. Of course, that doesn't mean that wages will rise in the US but at least people will have an opportunity to get a job.

The oblig. quote from Snow Crash (5, Insightful)

RevWaldo (1186281) | about 3 months ago | (#47721381)

When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else:

music
movies
microcode (software)
high-speed pizza delivery

.

Re:The oblig. quote from Snow Crash (1)

Anonymous Coward | about 3 months ago | (#47721755)

It's funny how three of those four items on the list seem dated now. We have not led in music since Beatlemania. In fact, I bet you can name five British bands that are better than the best US band you can name. Even most of our R&B hits (which suck anyway) were composed by Swedes.

In movies, we are still the superpower.

In software, our importation of talent will probably keep us in the lead for another generation, but not two.

In high-speed pizza delivery, Italians have us beat. Their secret weapon is the scooter with a giant insulated container on the back, with slots for pizza boxes. They zoom through the narrowest alleys and can pull right up to your door. Their times between order and delivery are consistently far quicker than the US. After seeing this in action, I became convinced that we actually lag quite a bit in pizza delivery technology.

Re:The oblig. quote from Snow Crash (1)

K. S. Kyosuke (729550) | about 3 months ago | (#47721877)

What, are you saying that Italians have extensive pizza know-how? Impossibile!

Re:The oblig. quote from Snow Crash (2)

phantomfive (622387) | about 3 months ago | (#47721791)

* Heavy equipment
* Airplanes
* Farming
* Robotics
* Brand management
* Banking
* Manicures
* etc

Some of those are not comparative advantages, not absolute advantages, but that's all you need. The US has a growing manufacturing sector. Look stuff up at least on Wikipedia before posting stupid stuff. In 2013 the US exported $2.3 Trillion worth of stuff, and that wasn't all movies and music.

Also, 'microcode' has an actual meaning and it isn't what you think it is.

Re:The oblig. quote from Snow Crash (1)

K. S. Kyosuke (729550) | about 3 months ago | (#47721935)

It doesn't matter think what he thinks it means (or what you think it means, for that matter), it matters that Stephenson most likely used it for its alliterative qualities. The text betrays Stephenson's terminological intents quite conclusively.

Of course it's cheap - it's automated (0)

Anonymous Coward | about 3 months ago | (#47721383)

Manufacturing doesn't employ that many people anymore.

You can locate the machines in a legal jurisdiction you control, and watch your capital. Of course it's moving here.

What isn't moving, of course, are jobs.

Re:Of course it's cheap - it's automated (1)

wiredlogic (135348) | about 3 months ago | (#47721861)

You should walk through a Chinese factory or even an American factory where production volume doesn't warrant the investment in automation.

"U.S. wage essentially flat" (0)

Anonymous Coward | about 3 months ago | (#47721391)

First "blame BOOOOSH!!!" post.

(posted by iPhone from Golf Cart 1)

Re:"U.S. wage essentially flat" (0)

Anonymous Coward | about 3 months ago | (#47721463)

(posted by iPhone from Golf Cart 1)

Keep your head down and hit the ball, lest you be blamed for anything bad that might happen due to your policies.

I fear the press has turned on you some, so it's time to keep yelling "fore!" until they get tired of bashing you or your last term ends. Why don't you just retire early? No need to resign, just play golf.

Is this really good news? (0)

Anonymous Coward | about 3 months ago | (#47721397)

The cynic in me thinks this is just the next chapter in globalism: now that moving work overseas has crushed wages in your real market, you can make your product in that market and save on shipping.

Re:Is this really good news? (1)

bobbied (2522392) | about 3 months ago | (#47721477)

It's a race to the bottom. It's why we keep printing money here in the USA.

Re:Is this really good news? (4, Insightful)

Amouth (879122) | about 3 months ago | (#47721537)

Yes it is. Stop viewing it as crushing wages and more a normalization of wages. It takes time to cycle out bad habits from manufacturing companies here int he US (and in some part due to labor unions although unions are not all bad).

For example i've seen plants where people work their way up, as they have more years, and as they gain higher pay, they move to different jobs. But the reality is you shouldn't have a 30-50$/h person driving a fork lift. But due to the way they organize them selves and their people that is what you see.

I'm all for a fair wage for a fair job. But that wage should be based on the contribution to the goals, to the product. And as someone moves up in rake and wage they should be expected to contribute more value.

The mentality that everyone is entitled to an x% wage increase for every year of service for the simple fact of being there doesn't make sense. Doing it because they increase their knowledge and skills that can be contributed back to the organization does make sense.

The off shoring of jobs to 3rd world conuntries for manufacturing due to cheap labor that they could abuse is also a failing of the company, but it is made possiable in part by the 1st world workers not being able to show the value added for the ratesthey command. As this balance equalizes the rates and contribution should also. At that point (and what seems to be happening) is that the offshore people are starting to command more for the value they are giving, and with that there comes the question of if the difference in labor costs justifies the increase in logistics cost. There is a tipping point where the difference will cause the Jobs to move back, and be more distributed.

When it comes to logistics costs, unless you are in extreme high capital investment processes (thing IC Fabrication) normally the Cost of Goods Sold (non-capital) are they moving costs which are lowest when you do manufacturing within the region of sale. By the labor gap closing, the best place to increase margin is to make adjustments to the logistics costs, which means changing how you do business.

But over all this is good, this is a very good thing. the closer all global labor markets are, the more likely the manufacturing will be to distributed so that you are preforming the work in the region of sale. once this happens the supply & demand for any given region should level out, and you should see better balanced net imports/exports. Rather than any single economy being unbalanced. once you get balanced then the life of the average worker will on average get better and more stable.

Again, this is a very good thing, it is a long and ever changing road, but just like the universe this is, as the nature of all things, a move towards less entropy and is natural in any system.

Re:Is this really good news? (0)

Anonymous Coward | about 3 months ago | (#47721853)

There are 2 reasons for annual pay raises.

1. Inflation. Basically, cost-of-living adjustments.

2. Unless you are an utter piece of furniture, you should have picked up some extra value in the business. You're presumably going to know more of who to go to to get what done and how, and you're going to have polished your own skills.

But not to worry. Pay-for-time is no longer an issue. You get laid off, you look for a new job. After several months of desparation, you finally land one at a wage that wipes out all those increases. I hear Home Depot is hiring.

Re:Is this really good news? (1)

whistlingtony (691548) | about 3 months ago | (#47721893)

I've driven a forklift... I made 5cents over minimum wage. I know It's a logical fallacy to disregard your post just because one little bit is wrong, but... I'd like to know what plants you've seen where someone driving a forklift was making $30-50 an hour... I don't think you've seen that at all. I'm sitting in the middle of Intel, as a technician, and I don't make that much. Perhaps I need to quit my job and go drive a forklift?

Re:Is this really good news? (1)

Amouth (879122) | about 3 months ago | (#47722139)

That's the whole point, they don't pay people 30-50$ an hour to "drive a forklift" they where paying it because the union contract required x% pay increase each year of service, and the forklift guys had been there for 20+ years still driving a forklift (the ~30 ones). the ~50$ was a different plant, where operators who had been there for 20-30 years who could no longer physically do the work required by operations (long standing, heavy lifting, etc.) where assigned to be the forklift drivers as it was a job within their physical abilities and was used as a "golden job before retirement" this was also exasperated by the fact that they had bad policies around promoting from within from the shop floor. It didn't mater your skills or years of service or knowledge of the business, if you didn't have a 4 year degree you couldn't be salary, and you could't be a supervisor as that was salary only, let alone a production/process engineer or a manger. So if you were an operator or a technician and you didn't have a 4 year there was no where to go but within the hourly positions.. Yet they would still get the annual pay increases even though the job did not show the value of that raise.

Its bad policy & management of the workforce and the distribution of talent which can have a very profound effect on the labor rates which translates to a cost of good sold. which can cause the viability of producing local vs producing oversees comes into question.

The Real question then is... (2)

bobbied (2522392) | about 3 months ago | (#47721401)

Are we in a race to the bottom or the top?

If manufacturing's biggest variable cost is labor, companies will flock to the place where their variable costs are the lowest.

So, the question is, have we started to reach wage parity now by virtue of wage reductions in the USA (race to the bottom) or the fact that wages in places like China have reached parity?

IMHO, it's both. The standard of living here in the USA has stagnated just like the last 6 years of the economy and the demands of labor outside the USA has driven costs up. But we are severely limited in this country because we face a huge increase in energy costs once the economy starts to actually do more than tread water. Manufacturing won't return, not yet.

Re:The Real question then is... (2)

smooth wombat (796938) | about 3 months ago | (#47721437)

Last 6 years? The economy has been stagnated long before that. We had declining job growth since roughly 2005 and wages haven't kept pace for nearly 2 decades.

Re:The Real question then is... (2)

bobbied (2522392) | about 3 months ago | (#47721505)

Last 6 years? The economy has been stagnated long before that. We had declining job growth since roughly 2005 and wages haven't kept pace for nearly 2 decades.

Not arguing that. But the last 6 have been pretty bad and the only experience most of the readers of Shashdot generally have.

40 years of class warfare (0)

Anonymous Coward | about 3 months ago | (#47721559)

longer than that [talkingpointsmemo.com] :
quote:

<ul><blink> persistent sluggish growth or recurring asset bubbles.<blink><ul>

nah, that does not sound at all familiar...

Re:The Real question then is... (0)

Anonymous Coward | about 3 months ago | (#47721593)

Last 6 years? The economy has been stagnated long before that. We had declining job growth since roughly 2005 and wages haven't kept pace for nearly 2 decades.

And Obama said his policies would make it better, not worse.

Of course, he said that about Russia.

He said that about the Middle East.

I'm seeing a pattern here....

Re:The Real question then is... (1)

n1ywb (555767) | about 3 months ago | (#47721665)

Last 6 years? The economy has been stagnated long before that. We had declining job growth since roughly 2005 and wages haven't kept pace for nearly 2 decades.

2 decades? More like four. Wages flatlined in the early 70's [wikipedia.org] .

Re:The Real question then is... (2)

ShanghaiBill (739463) | about 3 months ago | (#47721977)

2 decades? More like four. Wages flatlined in the early 70's [wikipedia.org] .

That is only for manufacturing wages, not wages in general. Protip: If you want high pay, don't get a job where you compete with a servo motor.

Re:The Real question then is... (5, Insightful)

rogoshen1 (2922505) | about 3 months ago | (#47721553)

It wasn't always like that though. Blame globalism if you want; but in the post war years, DETROIT was the richest city in the United States. It did not get that way due to service industries and intellectual property creation. They took raw materials, and made cars. for profit. and did not pay slave wages. The rust belt was bedrock of the American middle class.

I do not buy the argument that manufacturers have to pay shit wages to stay competitive. I think that's an excuse to either inflate managerial / executive salaries; or cover up for failing to invest in increasing efficiency.

Or it's due to the rise of the MBA. Labor is simply an input, a cost to be minimized. There's knock-on effects to selling your workers out in order to slightly lower production costs -- and those goons didn't look at the bigger picture or what we'd lose -- a stable, well functioning, organized society (Look at Detroit/Flint/Gary in 2014)

(In before some libertarian blames government regulation for companies moving production offshore.)

Re:The Real question then is... (0)

Anonymous Coward | about 3 months ago | (#47721765)

Moto of the MBA:

Externalized cost's don't real.

Re:The Real question then is... (2)

phantomfive (622387) | about 3 months ago | (#47721823)

(In before some libertarian blames government regulation for companies moving production offshore.)

They blame unions mostly. Car manufacturing hasn't really moved offshore (because of regulations, I guess), it's moved to states without unions, where they still pay high wages but don't have to pay union dues.

Re: The Real question then is... (0)

Anonymous Coward | about 3 months ago | (#47721895)

How did post war Detroit compare to other other industrial cities in Europe on the key "not bombed to near oblivion" metric?

Might that have helped with profits and allowed relatively good pay?

Re:The Real question then is... (2)

swillden (191260) | about 3 months ago | (#47721905)

Detroit got fat and lazy, and as a result foreign automakers ate their lunch. Japan in particular had cheaper, harder-working workers, coupled with more focus on efficiency and -- eventually, after they built enough capital and experience building cheap crap cars -- design and build quality. Detroit didn't believe they could lose, either the management, or the unions. In order to stay competitive, both would have had to make serious changes... almost certainly including some reductions in labor costs and some labor re-training.

It's not wages (0)

Anonymous Coward | about 3 months ago | (#47721689)

When manufacturing comes to the US, it is mostly done by robots and other forms of automation.

So, manufacturing coming back isn't all that it's cracked up to be.

Re:The Real question then is... (1)

RobinH (124750) | about 3 months ago | (#47721727)

Manufacturing has returned (slowly) but it's been in the form of automation, not jobs.

Re:The Real question then is... (3, Insightful)

phantomfive (622387) | about 3 months ago | (#47721811)

Part of the answer is automation. Although the manufacturing sector in the US has been growing consistently for a long time, in recent history the growth has come without new jobs, due to automation.

Which isn't to say they don't need workers: there is a shortage of skilled workers who know how to weld, or drive heavy machinery, etc.

Re:The Real question then is... (3, Insightful)

swillden (191260) | about 3 months ago | (#47721867)

IMHO, it's both.

Yep. And, frankly, it was and is obvious that it would be. I've been saying for years that globalism was ultimately a good thing, though in the short term it was going to be painful for the wealthy countries, as standards of living equalize. If this article is correct, the pain may be much less, and much shorter, than I'd expected. Not that there isn't still pain ahead, but if we're already getting to the point where overseas labor costs have risen enough to be offset by domestic education and infrastructure, then the future looks pretty good.

At the end of the day, though, I'm no more entitled to my job than some programmer in China. If he can do the job as well and will do it for less money, then he should have it. Cost of living differences make this painful in the short term, but if we just keep competition open, the field will level -- some of that leveling may come from decreases in my standard of living but most of it will come from increases in his. That's too bad for me, but great for him, and it's fair because he's no less a human being than I am.

Re:The Real question then is... (0)

Anonymous Coward | about 3 months ago | (#47721891)

Are we in a race to the bottom or the top?

If manufacturing's biggest variable cost is labor, companies will flock to the place where their variable costs are the lowest.

And by some reports, that's now the USA. Not because the people are cheaper, but because a lot of them aren't working at all. Robots cost about the same no matter what country they work in.

Although it's never just one thing. As long as Chinese labor was dramatically cheaper, it was worth the extra expense to ship stuff from there to here. As the cost of offshore labor goes up, the shipping costs begin to become a factor.

Case in point: duct tape. Famously not offshored, because the stuff was so heavy for its manufacturing cost that it was cheaper to make onshore.

They neglect the criminal environment... (0)

Anonymous Coward | about 3 months ago | (#47721407)

in the environment.

Unless that is what they mean by "overall ease of doing business".

Good for China, goods for us (1)

50000BTU_barbecue (588132) | about 3 months ago | (#47721421)

The socially corrosive mentality that one class of jobs, usually technical and electrical engineering, can be mercilessly outsourced needs to stop.
Lower-value service jobs like accounting, lawyers and notaries are immune to this phenomenon.
It's also good that more Chinese can earn better wages and hopefully benefit from the technology they are actually building.

Re:Good for China, goods for us (1)

pr0nbot (313417) | about 3 months ago | (#47721565)

Outsourcing is probably less of a problem going forward than automation, which is increasingly replacing white collar jobs as it has done blue collar jobs previously. Even lawyers' work is being automated these days, especially profitable work that requires you to be a lawyer but is otherwise low-skilled.

Re:Good for China, goods for us (1)

50000BTU_barbecue (588132) | about 3 months ago | (#47721645)

Well, another corrosive idea is that we keep being told how productive we are and how powerful our technology is, but we see very little benefit except for the top layer of society.

I just wonder how we were able to reduce our work week back in the 19th century with steam engines, but now we can't reduce the workweek again?

What? (1)

guyniraxn (1579409) | about 3 months ago | (#47721451)

"while Mexican wages have risen by less than 50 percent in U.S. dollar terms, contrary to our long-standing misconception that their labors were being slaved."

Mexican wages rising less than China's doesn't mean that they're wages aren't still low. Where are you getting this misconception about misconceptions? It's not in the linked article.

Reading between the lines. (-1, Troll)

B5_geek (638928) | about 3 months ago | (#47721457)

If you read between the lines the real truth reveals itself.

North America can no longer be considered a 1st world. We are 2nd word and quickly heading towards 3rd-world status.

This is what Eisenhower warned us about.

Re:Reading between the lines. (2)

ebh (116526) | about 3 months ago | (#47721495)

2nd world is (was) the Communist bloc.

Re:Reading between the lines. (2, Informative)

HeckRuler (1369601) | about 3 months ago | (#47721585)

Have you ever been to a third-world country?
Have you lived there?
Because I think it's quite apparent that you don't have a clue what you're talking about. But here's a quick'n'easy test: Our poor are fat. Their poor are skinny.

Re:Reading between the lines. (1)

Anonymous Coward | about 3 months ago | (#47721837)

I think it's you who haven't been to many third world countries. Yes, there are countries with famine, but there are plenty of poor fat people in Nicaragua, Fiji, Egypt, Brazil, etc. I think that we are seeing a convergence in many aspects of life between the US and what everyone calls the third world. Belize looks kind of like Mississippi. Costa Rica and Mexico actually look better. We still have the lead in institutions - our courts work better, our cops are fairer, and our customer protections are more robust than any place in the third world. But I think these are the most important differences between the first and third world. Outright famine still happens, but is certainly the exception even in the latter.

Several other aspects that help. (1, Insightful)

eblum (624940) | about 3 months ago | (#47721507)

US culture and Mexican culture have more in common than US and Chinese and India cultures. There is a lot of US culture influence into Mexican culture, for example TV shows and movies, Christmas stuff, etc. This means that Mexican workers and managers are more likely to understand American's way of work than people from China and India. Both countries also have almost the same timezones, so there is a big overlap in working hours. This facilitates meeting hours. No more 6 AM and 8 PM meetings. If you have to go to visit the factory, you're only 2 to 6 hours away, not 20 hours o more.

Not flat. (5, Informative)

Anonymous Coward | about 3 months ago | (#47721513)

US wages are not flat. They're declining. Adjusted for inflation and the cost of living increases, your effective purchasing power is 1/3rd of that of your grandparents.

Your parents and grandparents were able to buy a house, two cards, and send 2 children to college on a single income. You can't. You can't even with you and your spouse working full time with decent jobs. Your children will need loans to go to college and you will need to fork out a lot of money for childcare while you both work. You should probably pay for private tutoring too, to make up for your lack of time with your children you spend working. (Parental involvement in education is key to educational success. THE number one factor. It's why lower income people stuck working 60+ hours a week with 3-5 part time jobs have children with bad educational outlooks)

Point is, you're getting screwed. The income gap between the wealthy and poor has increased exponentially in the last 30 years. And it's no accident. There are people working hard to make sure you and your children grow up stupid, in to a life of perpetual debt and poverty.

Re:Not flat. (1)

Anonymous Coward | about 3 months ago | (#47722077)

At $1,500/sem, My state University is much cheaper than daycare. That was with my dad making $70k/year. But he refused to help me with college and I had to claim him as income when applying for grants and loans because I was under his health insurance. He eventually quit his job, so my last semester of college I got to claim no help from my parents, which meant instead of paying $1500, I got paid. Going to college is a net profit around here if your parents are poor.

My co-worker got enough in grants to not only cover his tuition, but also his rent for the semester. He still took out student loans because of the 0% interest, and he purchased a new car. He immediately paid off his student loans after graduation. Everyone I worked with immediately got well-paying jobs post graduation between 2007 and 2009.

Turns out grants aren't considered income, and because college and materials are tax deductible, my personal taxable income was below $20k while in college. This also meant I got some pretty hefty tax rebates. I paid in under $200 of taxes, but I got back around $3k because of rebates.

I don't know why people think paying for college is so hard. Not to mention I was a white male with a 2.5gpa, a 23 on my ACT, my parents made a combined income of near $100k, and I had absolutely no scholarships or did any extracurricular activities.

Neither of my parents had college education. I grew up quite poor. My parents couldn't afford a TV until I was around 10, and we didn't have cable until I was around 16. About once a year we went to the movies when there was enough spare money, and we couldn't get any popcorn or anything because it was too expensive. Obviously my dad was making plenty by the time I was in college, but there was some major restructuring going on at his work that got him bumped up quickly. Every vehicle we had was about 8 years old and 150k+ miles when we got it.

Immediately hired out of college, just after this last recession, making nearly 2x what my mom was making, and full benefits.

Congratulations America! (0)

Anonymous Coward | about 3 months ago | (#47721547)

We wanted to shift manufacturing back to the US, and now we've done it (thus making Americans the new slave laborers)!

Somehow, I don't think this is how we envisioned it.

China itself is offshoring manufacturing (1)

peter303 (12292) | about 3 months ago | (#47721569)

To lower-cost SE Asia and African countries.

Labor Depletion (0)

Anonymous Coward | about 3 months ago | (#47721583)

If all these nations develop and no longer manufacture who is going to build my Rockem-Sockems? Walleeeee!

Manipulation of money (3, Interesting)

WindBourne (631190) | about 3 months ago | (#47721671)

The real problem is that other nations continue to manipulate their money relative to the $.
China, [google.com]
Indonesia, [google.com]
India, [google.com]
vietnam, [google.com]
etc. are but a few.

As long as this is ignored, then manufacturing will continue to stay with those nations that manipulate the most.

What is really helping move this back is NOT so much costs, but the fact that the younger generation are saying no to this and working hard to bring it back. Look at how Target, and Walmart are doing. These are basically front companies for these other locations. They are having no choice but to start bring back North American products.

Re:Manipulation of money (1)

wiredlogic (135348) | about 3 months ago | (#47721909)

They can't manipulate the cost of shipping raw materials and the manufactured output across oceans. That is part of the new focus on insourcing basic manufacturing.

Re:Manipulation of money (1)

Anonymous Coward | about 3 months ago | (#47721947)

It's a good thing the USD is never manipulated...

What About Software Jobs (1)

theshowmecanuck (703852) | about 3 months ago | (#47721751)

It doesn't cost anything really to ship software or service support / customer support. If the wages are even a bit lower I would suspect that a lot of those jobs will stay offshore. Some might come back because it is can be more hassle than it is worth resulting in bad product when using offshore programmers. Then again, it is the MBAs that often make the offshoring decisions, so who knows what their tiny little brains will come up with.

Outsourcing is Darwinian (1)

macraig (621737) | about 3 months ago | (#47721777)

This is the inevitable consequence of outsourcing. We've altered the local economies of those countries and the sucking sound is reduced, and so now the "outsourcing" will flow where the vacuum is now strongest... which perhaps just happens to be right here in our own back yards again.

What goes around comes around. Or something like that.

Total BS (3, Informative)

Charliemopps (1157495) | about 3 months ago | (#47721787)

This is complete BS, they come out with nonsense studies like this all the time.
My father works in manufacturing, they don't like going over seas, you have a hard time controlling quality, ensuring design specs, etc...
But there is no way they can stay in business without it.
According to my father, when doing analysis of where to send work The total cost of labor (including benefits an such) are roughly as follows:
US: $15/hr
Mexico: $1/hr
China: 10cents/hr
The minimum wage is mexico is $5/day, so yea...
China has the benefit of the manufacturer paying no benefits at all and the government keeping the employees healthy.
There are added costs like shipping, bribing government officals etc...
But the costs would have to be huge to make up the difference between $15/hr and 10 cents per hour.
Where US workers come into the picture is to save money on shipping. If you can send the product over in pieces, save a ton on shipping and then have the final product assembled here, you can get the best of both worlds.

Increased wages are liberating them (0)

Anonymous Coward | about 3 months ago | (#47721805)

"contrary to our long-standing misconception that their labors were being slaved."

No, in some of those countries (e.g China) they were slave labor during high production times of electronic devices, when to get college credit, students were pulled out of their classes and forced to work for free at a plant.
http://www.huffingtonpost.com/2013/10/10/playstation-4-foxconn-college-students_n_4078704.html

Thats slave labor and its still in America with the disability pay scale at some of our factories.

Hegemony (0)

Anonymous Coward | about 3 months ago | (#47721825)

Because the U.S forces the oil producing countries to deal only in U.S. dollars, no matter what they pay their workers, the developing nations have to sell their product at a loss in the U.S. to get the U.S. dollars necessary to buy oil.

Puritanism (2)

ThatsNotPudding (1045640) | about 3 months ago | (#47721841)

No one on the face of the planet does Puritanism better than Americans. From birth, we're close-order drilled that work is the *only* ethic, to the point that by the second week of vacation (if it exists), the average American worker starts to feel twitchy, as if they're 'cheating' by not working, or they won't be missed and thus discovered to be irrelevant by the queen and drones.

And this - with a little help from the One-Percenters - is why there will never be a Star Trek style future, where one works due to passion and not subsistence necessity.

How is it fair (0)

Anonymous Coward | about 3 months ago | (#47721949)

that these companies can exploit a global workforce but I can't exploit a global job market? Must be nice to be allowed to freely move around the world...

Mexico? (1)

Scot Seese (137975) | about 3 months ago | (#47721961)

Given the cost of labor, geographical proximity and ease of distribution thanks to NAFTA, I'm surprised more companies aren't setting up manufacturing in Mexico. In one of the more stable states, not the heads-in-a-duffel-bag / threatening to collapse the government states.

Oh wait, I just answered my own question.

Competition WORKS (1)

rdelsambuco (552369) | about 3 months ago | (#47722021)

American workers are now competing to offer their labor at the lowest possible cost. Improving public education has helped; American workers are beginning to understand and accept that they have no other choice.

The cycle continues (1)

ErichTheRed (39327) | about 3 months ago | (#47722245)

It's interesting to watch how things oscillate from one extreme to the other. In computers, it's the shift from terminals connected to mainframes, to PCs, to terminals that look a lot like a smartphone, and now a little bit back towards PCs. I'm guessing this insourcing trend will start swinging back the other way once labor here gets too far above the price levels it's at now.

The company I work for basically the opposite of leading edge -- we do IT services for a very staid, downtime-averse, risk-averse industry segment. They're just starting to figure out that offshoring whole development groups isn't giving them the savings they predicted, a fact that most companies realized a lot sooner. So not every industry oscillates in phase, but the pattern is everywhere.

Serious question though, for those with experience...one of the most often cited problems US manufacturers complain about is the lack of skilled factory workers. What exactly do people need in the way of skills that they didn't have 20-30 years ago when the manufacturing was offshored originally? If it's just running CNC equipment or similar, isn't all the programming and such done by the engineers? What is the skill they need?

FUCK BETA (0)

Anonymous Coward | about 3 months ago | (#47722273)

GOD DAMN YOU FILTHY BITCH ass mother fuckers and your fucking lame ass beta shit!
God damnit! FUCK YOU DICE! FUCK YOU! FUCK BETA!

Good riddance to your filthy filthy shit!
FUCK!
F
U
C
K
!
fuck you fuck you fuck you!

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