Tool Manufacturer moves to China

[Warren]

Easy answer: They find a more inviting environment for their business. And, we buy micro-chips and refridgerators from other manufacturers. The same as we buy cars, TV's and, dare I say it, table saws from other countries.

My nephew wanted a new car, fast, well designed and built. He purchased an all-wheel drive Porsche that goes a lot faster than I want to. He never considered an American produced vehicle as we produce nothing in the class of auto that he wanted.

I'm currently driving a loaded F-150. I suspect my next truck, again value for cost, will be a full sized Toyota. I'm still a bit upset that Ford dropped the Bronco and did not replace it with a similar vehicle. Tried the p/u not happy with it. Ford left me, I didn't leave them. I do miss my Bronco though. Went through 6 of 'em over the years. Big, tough, decent payload, agile, everything I wanted and now they offer nothing that would interest me. I'd go back to them in a second if they offered something I wanted at the right cost.

[iceman61]

Still, the loss of industrialized jobs in the US is somehow alrming to me. One important social question is, are we jepardizing the health and welfare of the foreign workers who risk safety, and health from the products they make, and is it polluting the country in a cost that will be borne by future generations. They may be willing to work for less per hour, but should they also be subjected to less stringent health, safety and environmental restrictions than here in the US?

This is exactly the way I see it too. What is really disheartening is that China taxes the American companies making a product in China to the point that they cannot make a product in China for less or even the same ammount as their China industrial competitor in the form of tarrifs. I believe Holland & France do the same. Why don't we? Imports should be taxed such that it would be cheaper to make or build it in America in my personal opinion. Jobs have moved to Mexico, Africa, Korea, Vietnam, and now China. Jobs will continue to move to other countries until there is a balance of sorts in world wages & standard of living.

A couple of points about this thread:

First, manufacturing is beginning to move back because the cost of shipping is beginning to erode the labor cost advantages of manufacturing offshore. A weak dollar also helps.

Second, there are businesses that have managed to be profitable while taking care of their workers.

Third, successful firms and their employees remember that there is no "I" in team. Those firms are few and far between, but they exist.

Finally, for all the hand-wringing and moaning about American industry, we are still the world's largest exporter.

You couldn't prove that if you lived where I live. We have had 3 factories so far dismantle machinery & ship to China, with 2 more following suite. Here our main export is machinery & jobs. The bad thing is this is an industrial town of about 30,000 counting the kids.

[LCHIEN]

OTOH, in the global economy, products need to be made by the lowest cost producer. Isn't that what its all about, politics aside? Everyone doing what they do best and starving if they have no marketable skills.

[Knottscott]

I suppose this is as good of a time as any to remind people to buy from the many American woodworking businesses whenever possible, or the same fate could come to many of those remaining businesses.

The first example that comes to mind is Forrest....they have an outstanding product that's American owned and American made, and are priced competively with other comparable premium blades, and often with lesser blades. Regular retail price is on par with any competitor's premium blades (ie: Tenryu Gold Medal is typically $90-$110, Freud Premier Fusion is in the $100 range) and sale prices often bring the price of the Forrest way down in the 30%-40% off range. Ridge Carbide is another incredible American owned and American made blade (~ $80 shipped thru Holbren with the "BT310" discount). Whiteside is another excellent example of American made, American owned products. Infinity is American owned, American engineered, with a combination of American and foreign made products... most of the foreign made blades are made in Italy. These are just a few examples of excellent choices regardless of where they're made...they just happen to benefit the local economies.

[dkerfoot]

This may sound backward, but I will soon start manufacturing electronic goods in the USA. This is based 90% on economic factors, not sentimentality.

Why not China? They are set-up to do huge quantities. I'll be manufacturing in lots of 500 or so. (this allows incremental firmware updates and improvements along with all the other advantages of Just-In-Time manufacturing) The Chinese don't want to talk to you unless you are ordering at least 10k or more.

India is similar to China in that they tend to focus on higher volumes. Plus, the currencies in both India and China tend to follow the Euro more than the Dollar.

Why not keep production in Eastern Europe? They are becoming more expensive on because of high taxes and now with the weak dollar, they have an automatic 50% cost disadvantage.

Mexico has had to pivot and take on more small volume custom manufacturing capabilities due to competition with China. It is very similar to the surviving machine shops here in Michigan - the ones that have survived have learned to adapt to smaller volume, custom work. Often, they do the initial tooling runs and then the tooling is shipped to China for full-production work. The Peso is closely tied to the dollar, giving Mexico a new advantage. I could probably save 10-20% on costs, but since I don't have a team of engineers to send down to Mexico to oversea production and quality control, it probably makes sense to have them manufactured right here in Michigan.

Plus, I will then be able to post the rather unusual claim for electronics: Made in USA.

I guess I could insist on buying only Michigan grown strawberries. But of course, then I could only eat strawberries for 3-4 weeks a year. So, I do eat California strawberries and wherever they are grown in South America during the winter months. Like most folks in Agricultural areas, I eat local produce when it is available. In January, I am very thankful for the global economy so I don't have to live off of cellar vegetables like turnips and rutabagas through the winter months (as the settlers did).

Like the old adage about the "Buggy Whip Industry" we have to expect things to change and we need to be ready to adapt. Working 30 years at a manufacturing company may be very comfortable, but it is also very dangerous. If you are in a position where you know you could never earn an equivalent living if your company closed, I suggest you start working on Plan B. Today!

I left my corporate job at a time when many of my co-workers were being let go. I could have remained at my job but because the company was shrinking, there was no chance of moving to a different department and I was burned out after 10 years. I decided to take advantage of the slow-down and I asked my boss to put me at the top of the "next to go" list. Why? This allowed me to receive a separation bonus, which helped me get my business kick-started.

Worrying about whether the global economy changes are "good' or "bad" is kind of like worrying about the weather - it won't change a thing. But, we can all be certain that sooner or later, a storm will come our way so now is the time to start preparing.

Great steps:

1. Become debt free - look up Dave Ramsey for help
2. Max out your retirement - Got a company match 401k that you aren't taking full advantage of? Would you turn down a raise?
3. Go back to school - especially if your company has a tuition reimbursement program. Would you turn down a mortgage reimbursement program?

Parting Thought: If someone else is capable of making a business decision that will ruin your financial security, you are their slave.

[Slik Geek]

I too am sad to hear this news. I liked the Vise Grip brand because it was made in the USA and they had quality products. I foolishly bought a cheap import locking pliers version once and learned my lesson. I just recently bought several additional versions of their tools for both work and home because of their good name and quality product.

Regardless of claims that the tools will continue to be made "to our specification", as the companies often claim, my experience has been that many of China's manufacturing plants regard specifications as "suggestions" more than requirements. Hence, I fear that Vise Grip quality will suffer.


I too am very concerned about our country's ability and capacity to make essential items. In the event of a major glitch in our political relationship with China, or in the event a war breaks out, we may find ourselves at the mercy of our supply lines from overseas for so much of our economy.

I do try to buy American, but has gotten rather difficult because of the flight of manufacturing abroad. Even medical product manufacturers and pharmaceutical makers are sending their production to China - in spite of their high margin businesses. That aspect scares me the most. Medical manufacturing demands the highest standards of quality control.

Part of the problem with manufacturing cost pressures is that our consumption has become primarily based upon lowest price. We would rather spend $20 on an item that will only last two to three years rather than $40 on one that will last 10 to 20 years. In that cut-throat environment, every penny of manufacturing cost becomes signficant. I am one person who is sick of that treadmill and have adjusted my purchasing practices to look at the longer term economics.

While I'm not a big fan of much of the "green movement" (because of foolish political decisions made in the name of "green" - don't get me started on that), I'm hopeful that this movement will turn us away from throw-away devices and towards higher quality, longer-lasting serviceable products that won't be discarded for a long time.


While we complain about the loss of jobs to other countries, we should keep in mind that the United States was the world's "China" or "Mexico" or "Viet Nam" many years ago. We took manufacturing jobs away from Europeans in the early 1900s, and then again after WWII destroyed much of Europe's manufacturing base.

[LCHIEN]

...


While we complain about the loss of jobs to other countries, we should keep in mind that the United States was the world's "China" or "Mexico" or "Viet Nam" many years ago. We took manufacturing jobs away from Europeans in the early 1900s, and then again after WWII destroyed much of Europe's manufacturing base.

You forget to mention that through the Marshall Plan we helped Europe rebuild its industries after WWII and in some cases they became more than competitive with us again. We also gave considerable help to Japan and they took many advanced ideas from our efficiency experts (whom our own industries ignored) that they gained a manufacturing advantage for a number of years.

Are we going to get any help? Actually if our dollar is devalued too much then our goods will become attractive to other countries and we'll become a net exporter of industrial goods to the world again, if they haven't bought our factories first.

[BobSch]

While I'm not a big fan of much of the "green movement" (because of foolish political decisions made in the name of "green" - don't get me started on that), I'm hopeful that this movement will turn us away from throw-away devices and towards higher quality, longer-lasting serviceable products that won't be discarded for a long time.

I had to take a bunch of stuff to the local recycling center over the weekend and was shocked at the number of TVs that were sitting in the dumpster. We're talking fairly new, big (30-36") sets, not the $80 cheapies. I asked one of the attendants and he said it was getting too hard for people to find some place to fix them. The sets are so integrated that there's very few individual components anymore and replacing the main board costs almost as much as a new set.

[Kristofor]

I had to take a bunch of stuff to the local recycling center over the weekend and was shocked at the number of TVs that were sitting in the dumpster. We're talking fairly new, big (30-36") sets, not the $80 cheapies. I asked one of the attendants and he said it was getting too hard for people to find some place to fix them. The sets are so integrated that there's very few individual components anymore and replacing the main board costs almost as much as a new set.

I wouldn't doubt the economics of repair vs. replace on any electronics, but there's another factor in play as well and that's technological obsolesence.

Unless they've recycled it, I have an IBM PC over in my parent's basement that still works, but a a 4.77MHz 8088 simply has very little current use as a home machine. The 35" CRT TV of 5 years ago is perhaps more similar to a Pentium 3 or so. If it was still working you might well keep using it, but you won't be able to connect it to your HDMI devices so it needs more "messy wiring" (think wife), it probably doesn't do HDTV, it certainly won't hang on the wall in the bedroom, so when something fails unless it's WAY cheaper and easier to fix it makes for a good excuse to upgrade.

Until we stop following the trend of Moore's Law, by the time something breaks there's a very very good chance it's already obsolete, or that at least there will be a bigger, better, cheaper replacement available.

Kristofor.

[LCHIEN]

Agree with Kris, that 35" CRT TV is not only costly to repair, its so obsolete they're hard to give away working, I imagine. I'm just waiting for mine to break... so I can buy a real TV. The main reason I haven't bought a FP, HD TV is that the cost is still coming down and the features going up. I could have bought one 2 or three years ago, but then I'd be missing HDMI inputs, 1080P, and 120Hz refresh for less money. Like I said, I'm waiting for my TV to break, and yeah, for a few more worthwhile HD content on TV, too. In the meantime I do have my 80" projection TV theater setup for watching serious movies and sports events when the mood strikes me.

[tewilk]

I seen the same problem with computer monitors... no body wants them, everyone wants the flat panel lcd. Placed 4 of them in the local paper for $15 and sold one after 3 weeks.

[ssmith1627]

I work for a clothing retailer at corporate. Our private label goods are made overseas just like all the national brand goods. I bet less than 1% is made in the U.S. I have a lot of reservations about the support we give to China in all this. They way they use N. Korea a sa pawn against us and a lot of other humanitarian concerns with how they treat their own people, their control over Tibet and their designs against Taiwan. It's tough.

But it is hard for me to worry too much about apparel type jobs. The manufacture of those goods should travel to lesser developed countries over time. Japan doesn't have their workforce making clothes. We, like them, should be focused on the high end -- tools, cars, airplanes, pharmaceuticals, electronics, etc. But we still protect this apparel industry strongly in this country. We pay an average of 15% duty on all the apparel we import which for us comes to around $16 million a year. It's much lower for electronics -- take a computer keyboard for example -- duty free. Makes no sense to me.

We do manufacture in many countries other than China. Bangladesh, Vietnam, Cambodia, Egypt, South Africa....the list is more than 20 long. I just wish they'd drastically lower the duties on apparel and jack up the other stuff. I'd rather my son grow up to build woodworking tools than polo shirts.

Steve

[Thalermade]

You forget to mention that through the Marshall Plan we helped Europe rebuild its industries after WWII and in some cases they became more than competitive with us again. We also gave considerable help to Japan and they took many advanced ideas from our efficiency experts (whom our own industries ignored) that they gained a manufacturing advantage for a number of years.

Did you say Japan? Can you say W. Edwards Deming ?



Russ

[LCHIEN]

Steve, i think ties between pyonyang (N Korea) and Beijing are small these days. N Korea is kind of isolated.

Other than that, you make good points.
OTOH, a 15% duty on computer parts will probably just make computers cost 15% more - 15% probably isn't enough to make US producers competitive.

[LCHIEN]

Did you say Japan? Can you say W. Edwards Deming ?



Russ

yes, russ, that's one of them I was alluding to.