A website devoted to that topic: Reshoring Manufacturing
Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago School economists and fellow travelers.
13 thoughts on “Manufacturing in the USA”
Why anyone would consider manufacturing in the US is a mystery to me. The employment laws are getting so arcane and arbitrary, and the populace has been taught to be so sensitive and grievance oriented, that any interview, let alone hiring, has become fraught with risk. Most people who are interested in making things, have little patience with PC behavior, endless sensitivity BS, and the like.
I get a monthly newsletter, the local county “Business Journal”-every issue has three constant themes-
The new businesses are ALL service – restaurants, nail salons,etc OR Gov. contractors.
The local builders are in a constant struggle to be able to build houses while compiling with acres of regulations.
And the employer advice column is always filled with businesses that got taken to the cleaners by the state, for violating some weird rules, usually about “equality” in some form, like sex harassment or race or whatever. I have vowed to never hire another person unless personally known by me to be a rational human being. – machines are cheap and effective.
Real example- our local A+W, there for sixty years, had one employee deal with another employee in a inappropriate manner. What this was exactly I do not know- what was light and accepted flirting 30 years ago is apparently a capital crime today. But the resulting settlement closed the restaurant. Now it sits, empty.
I honestly do not know how people run a business under such conditions. Dad built aircraft engines before during and after the war- he was enthusiastic, but really started to hate his job in the late sixties- it went from a build the best engines we can and get the job done, to an endless paper work trail to get rid of even the shiftless employee. He stated unless there was a flagrant, deliberate offense, it was cheaper to just shuffle them off to a place where they could do minimum damage. The scary thing is the gov. is filled with people like this, who never get the shuffle.
The problem nowadays it it resembles a lottery- it only takes one offended individual to destroy a small firm. And there are unintended consequences- the employee hired because the firm is scared to NOT hire them, can drive away customers. I have been in restaurants where the freak show tatted and multiple pierced servers nearly turned my stomach. Or the person may be simply incompetent.
You want to make stuff in the USA? Buy robots. Lots of robots.
I read “Tragedy & Challenge” by Tom Brown based on your earlier recommendation. It was interesting reading about his experiences, but, my gosh, has he developed a cynical streak. His list of mid-sized companies towards the end was really helpful. Renishaw looks like a real winner.
Why anyone would consider manufacturing in the US is a mystery to me.
Oh, there are challenges wherever and whenever you are. One year it’s the government collapsing, the next year it’s private society. The only thing we can be sure of is that some crisis or another will hit us. You never step in the same river twice, as the old sage said. But it still manages to be the same damn river nonetheless.
Why consider manufacturing in the US? Lower inventory carrying costs and out-of-stock situations, less vulnerability to supply-chain disruptions, lower transportation costs, and perhaps less intellectual-property theft. Closer connection between product design and product manufacturing. Depending on political factors, freedom from tariffs. And for some market segments, ‘made in the USA’ means at least something.
The employee problems you mention are real, but…as the A&W example indicates…they aren’t specific to manufacturing. And other countries aren’t always free of such problems–for example, the considerable difficulty & expense in reducing employment in France.
One of the things many people confuse is manufacturing output/volume/value with manufacturing jobs.
Manufacturing output has increased almost every year since ww2. That’s per capita and adjusted for inflation.
Manufacturing jobs have decreased as manufacturers have become more productive. More production with fewer workers. That’s a trend that’s been going on since Boulton & Watt introduced portable power in 1790 or so.
We should be glad of this. Most unskilled manufacturing jobs are pretty crappy and don’t pay any more than most other unskilled labor.
Here’s a video of a seagrams bottling from the 60s. It is running slow, perhaps 100 bottles per minute. A comparable line today will run 4 times as fast wit a tenth the people.
How would you like to spend 30 years twisting caps on, or placing labels for the same money you could make at McDonalds?
Which is a lot of verbiage to say that plenty of companies want to manufacture in the us.
In spite of all our roadblocks. Other countries have other roadblocks and difficulties.
One way to avoid the personnel problems is to avoid personnel.
Raven says buy robots. I would agree but say buy automation. Robots are only a small part of that. I do think more can and should be done with them.
Some thoughts here http://www.packagingnews.com.au/industry-4-0-and-iiot/robots-get-results
And here https://www.packagingdigest.com/robotics/the-right-way-to-use-robots-in-packaging-machines-2019-05-31
Everywhere I go in DFW I see huge warehouses, either building or just built. I’m not talking square feet, I’m talking acres, maybe 10’s of acres. These warehouses will have to be paid for, lit, heated and cooled. People will have to be paid to unload trucks, others will have to place stuff on shelves, still others will have to take stuff off the shelves and more still will have to box and label and load them back on other trucks. Lots and lots of people and supervisors and executives and HR and security. All of these are Americans expecting to earn American wage rates.
The stuff will have taken weeks to get from the manufacturer to a ship. The ship will take further weeks to cross the ocean, If it makes it at all. Then days if not weeks to make it from the port to the warehouse.
At every point, a proportion will be damaged, stolen, lost, misdirected or simply delayed. Your Black Friday deal has been ordered, if everything goes according to plan, it will arrive sometime after Labor Day.
A couple of years ago, a Korean shipping company went broke in the fall. Dozens of large container ships were stuck outside of ports because there was nobody to guarantee the cost of berthing and unloading the ships. This went on for months and when it ended, the owners of the contents discovered that they were on the hook for the costs over and above the shipping costs agreed and for delivery after Christmas, just in time to be marked down. At least a couple of big container ships seem to catch fire every year or sink. For the people with cargo on board, sinking is better, the cargo is just lost. In the case of a partial loss, there’s this quaint provision of admiralty law called general average where the owners of the surviving cargo have to pay the cost of salvaging the ship and cargo. A process that generally takes many months and seems to usually amount to 30-50% of the value of the cargo, on top of the far smaller amount of the shipping cost.
With labor costs rising in China, I suspect the moment will soon be past where mass imports will be profitable. It may already be cheaper to run automated operations here than in China. Our infrastructure is much better. We could move on to India or Africa, still people there that think a couple of dollars a day is a good deal for now.
The UAW just lost another election at the VW plant in Tennessee.
I don’t know how many elections they have lost now. Lots of angry lefties on facebook. It sounds like the VW workers are pretty content.
The Japanese car plants that were built in the 80s as a result of Reagan’s tariffs (Forgotten by the GOPe commentators), were all expect to be unionized.
The VW vote was about 52/48, not a repudiation exactly. A former boss that used to run a business in the E.U. described the process of trying to fire a worker as pointless. The whole relationship between workers and management is governed by laws and then there are the almost universal unions. This all goes double for Germany. That’s what makes the VW irony so delicious.
The Europeans that I have met exiled here to service equipment seem divided between those that see the U.S. as a sort of lawless noman’s land and those that enjoy the freedom.
MCS: “The VW vote was about 52/48, not a repudiation exactly.”
Funny. The UK’s Brexit referendum was also 52/48 — and the hard-line Brexiteers take that as overwhelming UK support for separation from the EU. As they say about African democracy — one man, one vote, one time.
Comment ID is weird again.
The UAW has insisted on repeated elections at that VW plant, This may be the fourth.
well you know the rules, ‘the beatings will continue, ’till we get our way’
“The UK’s Brexit referendum was also 52/48 — and the hard-line Brexiteers take that as overwhelming UK support for separation from the EU”
Is that true though? I thought Brexit supporters argue that there was a vote, they won, so the result should be respected. If the vote had been 52-48 for Remain, the establishment would be telling Brexit supporters to sit down and shut up and the decision was made forever, no? It’s not their fault Cameron woefully miscalculated how the vote would go.
When you consider the outstanding success that the UAW has had protecting jobs, you have to wonder what the 48% were thinking. Not that management has distinguished themselves either.
The real problem is that VW is a minor player. The latest number I could find was 3.5% for 2014, just above Subaru. There isn’t much that the workers can do to keep the plant open but a lot to make it close.
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