Getting U.S. to compete with overseas labor



#22

I know that much U.S. manufacturing and services (help desks, etc.) have been outsourced to countries such as Mexico, China, and India. Yet there are examples of good products and services still in the U.S. Over 80 persent of Sears Craftsman tools are made in the U.S. They carry a lifetime warranty, and are used extensively in auto and truck racing. MPC Computer Corporation (formerly MICRONPC--which spun off from MICRON Electronics Corp.) has all of its Computer Help Desk reps and Technicians/Engineers based in the U.S. What can the U.S. do to be more competitive in the world market?


#23

Not much. However, the Fed. res. keeps printing money, the Fed. gov't keeps issuing dept--->together, this amounts to currency devaluation, and so, in time, our currency will sink and we will compete again. Never mind that the $8 indian flute and $6 malaysian t-shirt will each rise to $200 in today's money.

Oh well. Might as well bite the bullet and go earn an MBA and do some "financial services." After all, if you get to touch a lot of money, a little bit of it aught to rub off on you ;-)

regards,

Bill

#24

Frank,

The only 'advantage' non-US/non-European economies have is the ability/tolerance of their populations to defecate in their own water supplies. Lack of civilzation = lower overhead.

Some companies in US are already noticing that many help-desk issues are not well-served by shipping overseas and some of this is coming back to US esp where communications skills are important. Also product design seems to be staying in US/Europe for many things.

Your Craftsman tool example is a good one: they get lotsa business from "Made in USA" folks and don't want to lose that. The tooling/metal quality etc is better than any schlocky import (excepting quality European imports like Proto).

Manufacturing labor costs for many consumer items is only a few percent of the total price of the item even when made in US/Europe in modern automated factories. I'll gladly pay 20% more to not enrich China.

I regard execs of American cos that outsource to Red China as traitorous - not because of the labor issues, but because they are financially strengthening a country that is/will be a US enemy. WalMart, for example, is essentially the funding agency for Red China's military.

The only thing I want shipped to Red China from these shores is ammunition - while being expended.

Workers in China and India both have a 'bargain basement' approach to quality. And it's not about assembly quality, it's about fundamental design quality. Look at today's Chinese HP12C vs an original US (or even Singapore) HP12C: worlds of difference.


Bill Wiese

San Jose


#25

> Manufacturing labor costs for many consumer items is only a few percent of the total price of the item

One of the electronics industry magazines recently said that one of the American semiconductor manufacturers just opened a huge, new plant in Texas. The stockholders were asking, "Why didn't you put it in the orient where labor is cheaper?" The answer was that by far the major expense was in the equipment, and the labor cost was almost insignificant by comparison, even in the U.S..

#26

Quote:

"The only 'advantage' non-US/non-European economies have is the ability/tolerance of their populations to defecate in their own water supplies. Lack of civilzation = lower overhead."

This is false and unfair. I would not use my time here or this wonderful MoHPC site and its technical resources (storage/bandwidth) to prove it. Usually absolute generalizations in complex matters like human behaviour and national relationships are of low value; the development of historical and social processes cannot be synthesized in an insulting manner.

And, yes, I know; my own country has much to improve in. But I can assure you that we are not living by the "quoted rule".


#27

I strongly support what Andres has just written in his message above, every word.


#28

Please don't take too much offense at my comments, they are primarily directed to Red China and India...

Bill


#29

just nuke'em!

#30

Bill: I accept your clarification. I cannot talk about nor criticize the countries you mention, because I have little contact with them, have not visited them, had no business with them (at least, by now), etc. And I prefer to relativize the indirect information appearing in the media. But I think they may just be trying very hard to improve their standard of living, as many other countries have struggled for years before. That doesn´t make them an enemy, in my humble opinion. Perhaps that may make them a rival, but the meaning is very different. The approach should be different too.

One of the things I used to admire in my visits to the USA (28 times) was the respect for the individual. I don't think all the people from any country should be considered the same, as if them (or we) were just identical atoms of a chemical element, and only counted by number.

I still hope my daughters will live in a plural, varied and respectful world, in a future which appears to be not soon enough...

#31

We're in an ever-descending spiral of globalization. The US should go back to an isolation policy. We should be independent,self-reliant, and not meddle in outside politics. We should require that all goods sold here be produced here from our own raw materials, built by our own citizens. We should secure our borders and tell the rest of the world to go its own way, without our aid. If we're left alone, all will be fine. If attacked, we should bomb 'em back to the stone age.


#32

USA First wrote:
>The US should go back to an isolation policy. [...]

You obviously do not believe this, otherwise you would not hide behind an alias.

While I believe that the US should limit its involvement with other nations, especially in cases (e.g. Somalia) where there is little or no gain to be made from such interference, the reality is that the US is dependent on outside imports (oil in particular). Even opening up the Alaska Wildlife National Reserve will only provide oil for 2 or 3 years. So any isolationist talk is meaningless.

**vp

#33

Perhaps I hold a minority opinion, but I believe world trade to be a good thing. We all benefit through voluntary trade with others, and I don't see a big distinction between my City, my State, or my Country; if someone else can supply my needs better than I can, I trade with him. The extreme opposite of globalization is individual isolationism - self sufficiency. I'm glad I don't have to hunt/grow my own food.

Our best chance of achieving peace with others is through trade. Vendors don't bomb their customers. A growing, happy middle class in China is absolutely the best thing to keep that country peaceful. People with cell phones and PCs at home don't want to go to war.

Our biggest fears now should be the small-group terrorists who don't want consumer electronics and Starbucks, and who will gas/explode/poison us just for the hell of it.

How to be competitive?? Keep the US as the best place for free-market economics. Attract innovators here. Minimize bureaucracy. Maintain the rule of law. Teach our children a love of knowledge. Tame the lawsuits and the "entitlement" mentality. Let people know the way to riches is through hard work and intelligence. Learn the cultures of the world, so we can market to them. Our music and movies sell well around the world - so can our other products if we work at it.

=John=


#34

hear, hear!

(and let's bring back the old HP calculator division)


#35

John, Katie: I do agree!

#36

The United States should encourage development in the United States and not use outsourcing as a first resort. This may include the following actions:

* Implmenting a high tax rate for importing goods - raise the cost of using cheap labor.
* Improve labor relations with unions and open more local plants.
* Find a way to reduce the cost of health care so everyone can afford it.
* Offer vocational training at the high school level for students who are interested, or at-risk students.
* Put the tax advantages where it benefits the U.S. the most: propose lower taxes for companies who open factories here.

It is nice to get someone who is in the U.S. in customer service for a U.S. product.


#37

It is morally wrong to use taxes to encourage or discourage behavior. That makes government the arbitrator of good and bad. Actions should be legal, or illegal, and generally illegal only if the actions involve the use of force or fraud against another person.

Raising taxes on imported goods reduces the competitive drive necessary to build better products here. Our auto industry demonstrated how lack of competition allowed it to drop quality in the 1960s and 1970s. Raising taxes on imported goods also raises all prices to US consumers. Those who wish to pay more for goods are welcome to do so, but don't mandate higher prices for the rest of us.

Health care costs will respond to market pressure when they are subject to market forces. The free market has delivered us dirt-cheap cell phones, clothing, air travel, and food. It can do the same with health care if we let it. Once people have to shop for medical care using their own money, they will choose prudently, perhaps leaving themselves enough money to buy their plasma screen TVs.

If it's "nice" to get US customer service, then reward the service provider. Thank them, and buy their products. There is no stronger economic force than that of consumer preference. Consumers killed Sears, Digital Equipment, A&P Grocery, etc, and they can kill other companies or trends. But to do so, consumers must truly value the better product, and be willing to pay for it. WalMart's success says that many consumers prefer low prices over US manufacture. Whole Foods' success says that some customers value quality over price.

We are lucky that we have a mostly free marketplace where consumers can choose. Some of us suffer, when high-volume replaces high-quality (like in calculators), but for the most part, all are served here.


#38

John --

Your short essay probably sounds sensible on initial reading, and is articulately written. However, I think many of us would disagree with quite a bit of it:

Quote:
It is morally wrong to use taxes to encourage or discourage behavior. That makes government the arbitrator of good and bad. Actions should be legal, or illegal, and generally illegal only if the actions involve the use of force or fraud against another person.

That's a bunch of hooey. It is absolutely the role of good government to reward activities that benefit societal good, and to discourage those activities that detract from it. Nothing "morally wrong" about it. Hence, tax breaks for investment in downtrodden areas, and "gas-guzzler" taxes for thirsty vehicles, for example. Needless to say, tax incentives can be unwise, excessive or exploited, but the principle stands.

As for limiting illegality to coercion or fraud, where would that leave land-use planning?

Quote:
Our auto industry demonstrated how lack of competition allowed it to drop quality in the 1960s and 1970s.

"Drop quality" from when, the 1950's? US-made cars of the late 1950's were a monument to wretched excess. Huge, heavy, thirsty, and stylized, they were unsustainable products of an indulgent automotive era. In the mid-1960's, good taste and sensibility returned (e.g., 1964-68 Ford Mustang), but gasoline was still over-abundant and underpriced in the US, compelling economy-minded motorists to buy European. Most of Volkswagen's product line was readily available to US consumers without excessive tariffs.

The bad US-made cars of the 1970's were a consequence of high inflation and outdated engineering. US makers were not well prepared to meet the new challenges of tough standards for emissions and fuel economy.

Quote:
The free market has delivered us dirt-cheap cell phones, clothing, air travel, and food.

Advanced technology (as well as free enterprise) has made cellular telephony possible. "Dirt-cheap" foreign labor has delivered us inexpensive clothing. Deregulation's complex tiered pricing has made air travel economical for many of us. Questionable and inhumane practices in the meat industry, as well as inferior ingredients (e.g, high-fructose corn syrup) have made food cheap.

Quote:
Health care costs will respond to market pressure when they are subject to market forces. Once people have to shop for medical care using their own money, they will choose prudently...

There's a real danger in treating health care as just another commodity, as you seem to advocate. Health care isn't something people "shop for"; it's something they use only when they need it. Oftentimes, there just isn't time for informed comparison shopping.

What would really help to control health care costs while still providing needed services are three things:

  • Practice of healthful activities and ways of life.
  • Emphasis on greatest-return expenditures (e.g., prenatal and primary care).
  • Provision of full coverage for routine care, in order to prevent unfunded trips to the emergency room.

Quote:
WalMart's success says that many consumers prefer low prices over US manufacture.

Maybe so, but for those who can afford to pay higher prices at a small local store, it's a shortsighted preference. The reasons are too numerous to mention here.

For those who shop at Wal-Mart by economic necessity, that tells another story...

-- KS


Edited: 9 Apr 2005, 9:55 p.m.


#39

>What would really help to control health care costs while still providing needed services are three things:

>
> 1. Practice of healthful activities and ways of life.

You can say that again. When we had the supermarket strike here last year, it was pathetic to see the picketers on the TV news, crying for someone to pay for their health insurance, standing out there weighing 300 pounds each. They seemed to have no awareness or concern that such overweight makes it cost double to take care of all their health problems they incur. It's like saying you want to drive like you're doing bumper cars, and expect someone else to pay for your irresponsibility.

Of course it will also help to put a lid on the frivolous lawsuits. Living is risky, but some people want to take it out on others who are also in the same risky business of living. It again gets back to taking responsibility for one's own choices, and not expecting any doctor to be unhumanly perfect.

Then there's the matter of several parties abusing insurance and other involved parties.

I try not to post things that are not calculator-related, but I had to sound off on this one. Oh-- there's the matter of health insurance for the workers that are assembling calculators. There-- I got some calculator content in.

Edited: 9 Apr 2005, 10:19 p.m.

#40

I promise this is my last posting in this thread. After this, back to calculator thinking, mostly.

America has an unfortunate history of majority ganging up on minority. Until relatively recently, we had overt discrimination against blacks and other "minorities." Today, we have "politically correct" discrimination against meat eaters, smokers, big-car drivers, etc. But we are still ganging-up on the minority.

To be fair, rules should apply to all, not just a minority. Special taxes on only smokers, or only cheeseburger-eaters are wrong. Some cities in California are debating extra taxes on plastic surgery. Good grief. Perhaps the worst example is extra taxes on travelers - let's soak the visitor, because he/she doesn't vote here. (Hotel taxes of 15% or more.)

Most government meddling to tinker with a problem turns out to have unintended consequences. Tax breaks for blighted zones turn into "loopholes" for the rich, and the need for AMT to fix the problem. The very idea that tax breaks for some are good lead our politicians to invent tax breaks for the really special, like the Frank Perdue Chicken tax break, benefiting guess-who and no-one else.

As for charities, I'm very concerned that only the politically correct charities survive. Others, those whose advocacy may be less respected, get shot down. Does it really make sense to say that we question an educational charity because its students might be terrorists (i.e. Middle Eastern descent), but it's OK to have the millionaire's Opera Club be tax exempt? In reality, a good charity would owe little or no taxes as a regular corporation, because its expenses would match its income, leaving no net profit. Charities survived just fine before 1920, when there was no income tax. There's no need for an income-tax-deduction now to keep charity alive.

Health care is no more necessary than food or housing. Yet we are expected to shop for those. Indeed, our food choices influence our health. Imagine a world where food was treated like health care. Dining out would cost $50 per person minimum, but we'd expect 80% refunded by our food insurance plan. Anyone practicing "cooking at home without a license" would be considered suspect. We'd need a prescription for groceries, or at least for protein. People without food insurance couldn't afford food, so would go to the emergency kitchen, wait 5 hours for a meal, the cost of which, $500, would be billed to the county as a necessary expense. Give me a break. Medicine was free-market, mostly, until WW2. Insurance plans for medicine used to cover catastrophe, not routine visits. Doctors charged reasonable prices, and were reimbursed promptly by patients, rather than charging some $500 per visit to cover the loss of taking medicare patients at $20 per visit, and having to pay a full-time person to negotiate the insurance bureaucracy. (Yes, I do know about this, having a bro-in-law who runs his own medical practice.)

I'd love to continue debating all the points, but this is the wrong forum. Thanks for everyone's patience. Time to finish reading the manual for my new HP-28S, a daunting task.


#41

"Charities survived just fine before 1920, when there was no income tax. There's no need for an income-tax-deduction now to keep charity alive."

I agree, but now that we do have income tax, I wonder if it would be the same if charities were non-exempt. Saying that well-run charities themselves would not have to pay taxes (due to income being matched by out-go) is not the same as eliminating tax deductions for contributors, unless I misunderstood your point.

In either case, I'd be happier if the US Gov. did not forcibly take a significant portion of my earnings and give it to various 'charities' for me! Charities such as under-employed goverment workers, ex-presidents who like to travel, people who choose not to work, artists who cannot sell their work in the free market, and the list goes on - are charities to which I involuntarily contribute. This leaves less money (but some) for the charities I truly believe in. All in fun...

Best regards,
Don

#42

I disagree that it is morally right or wrong to use tax incentives and/or hikes. Is it morally wrong to give tax breaks to encourage people to go to college or to give tax breaks to invest in troubled areas of the U.S.? If it is morally wrong to do so, then why are colleges, hospitals, and charitable organizations not taxed like coporations?

As for consumer preference, I agree that preference is a huge factor. However, talking about morality, if more people knew (and perhaps cared?) about the bad labor practices Wal Mart uses (i.e. keep people overtime and then forcing payroll clerks to erase the time cards, refusing to pay health care and make employees "an hour" short of full time to avoid costs), Wal Mart would lose a lot of business. Everyone has China produced products: Target, K-Mart, and every other store we can think of.


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