Comments on: Offshoring Production to the USA

By: M. Simon

M. Simon — Mon, 19 May 2008 00:42:18 +0000

I am not sure what will happen as they continue to try to bleed profit from these companies by closing factories and consolidating workforces. When you lose your experienced professionals, then you are just like every other call center. It may be cheaper in the short run, but your business will fall apart in the long run. And with the dollar staying cheap, I think that’s going to be a trend that grows.

I think it will continue in the vein of the “Japanese” invasion under similar circumstances:

Sell high, buy low. i.e. the Japanese paid top dollar for American assets, couldn’t make a go of them and then sold them back at deep discounts. We have been running that con for several centuries. The marks never seem to wise up. It is a wonderment. BTW some Japanese figured out that you had to do cultural studies, just as you would in any foreign market, to understand how America operates and their auto companies are now prospering here. Watching movies and reading newspapers is not enough.

BTW got a link from your blogger meet up with Eric. I’m one of his co-bloggers. Also a UC alum. As is my #2 son.

By: mishu

mishu — Thu, 15 May 2008 11:40:35 +0000

China’s inflation rate has been steadily growing over the year and is now 8.5%. We’ll see more off shoring such as this as this trend will likely continue. It was only a matter of time that China would lose its comparative advantage.

By: Ellen K

Ellen K — Tue, 13 May 2008 04:26:50 +0000

My husband works in telecommunications. Quite a few American companies and manufacturers are being purchased by European corporations as bargains. Unfortunately, the Europeans don’t understand that we haven’t got the type of cradle to grave healthcare and they try to hire folks for peanuts and few benefits. They also don’t understand that in this country, most corporate level sales operate on commission to the salemen. Without it, there’s no incentive to do anything because there’s no reward. The turnover in some sectors, most notably sales and manufacturing, has been steady and it’s growing. I am not sure what will happen as they continue to try to bleed profit from these companies by closing factories and consolidating workforces. When you lose your experienced professionals, then you are just like every other call center. It may be cheaper in the short run, but your business will fall apart in the long run. And with the dollar staying cheap, I think that’s going to be a trend that grows.

By: Don Hodges

Don Hodges — Tue, 13 May 2008 00:11:05 +0000

Wow – the opinion devolved rapidly from “surprise” to “Now I remember, developers and pols are sharks all over the world…”

The vig is just a little more affordable in South Carolina USA, where you can see it all in the closing and “entitlement/permitting” docs.

By: Shannon Love

Shannon Love — Mon, 12 May 2008 23:04:22 +0000

Lex is right about the “overhead”.

It’s probably like Mexico, where you either have to budget 20% for bribes or expect huge delays.

By: Lexington Green

Lexington Green — Mon, 12 May 2008 21:51:48 +0000

Compounding the issues Shannon mentioned, there is probably also a lot of political uncertainty to acquiring land for a business in China, with a need for bribery or bringing in unwanted "partners", etc. The relative simplicity, transparency, finality and security of America's land-title system is one of the under-appreciated foundations of our success, and indeed, of our world power. Jonathan R.T. Hughes is very good on this, as is Hernando de Soto.

By: Shannon Love

Shannon Love — Mon, 12 May 2008 19:34:30 +0000

I can see how land cost might be high in China.

After all your talking about a place densely inhabited for the last 3000 years. Besides, land prices will depend heavily on the availability of transportation and power infrastructure both of which would be constrained.

In short, you could buy land cheap enough but it would probably cost a lot to find a piece of land on which you could build a working factory might be relatively rare.