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Everything is made in China now!(20 posts)

Everything is made in China now!DougSloan
Jan 6, 2004 8:11 AM
I just started noticing, but almost every single "value priced" product I buy now is made in China -- furniture (even solid wood, nice looking stuff), electronics, holiday decorations, photo frames -- you name it. Even had an Airborne mtb.

Is this a good or bad thing? Is this due mostly to lower costs of labor there? Are American workers pricing themselves out of the market? What role does tax structure and business overhead (in a general sense -- real estate, insurance, litigation) have?

What are they buying from us?

It seems to me that we are shipping the vast majority of our production jobs to China. Don't know whether to be bothered or not...

Doug
Clinton's fault.OldEdScott
Jan 6, 2004 8:13 AM
NAFTA. The Democrat wing of the Democratic Party will take care of that when it re-seizes power.
so, you are saying that it's bad? nmDougSloan
Jan 6, 2004 8:24 AM
Well, I have mixed emotions.OldEdScott
Jan 6, 2004 8:32 AM
DLC/centrist/Clinton free trade-ism instinctively sticks in my craw, because it seems anti-working class and that's my ideological bias. But ... during the Clinton years, I finally became a pragmatist and realized that ideological purity is worthless if you can't win elections, and signed on to things like NAFTA. Now that the Democrat wing of the Democratic Party is showing signs of life again, I find myself reverting.

Politics is evolution and adaptation.

Maybe some day I'll go back to being a Commie, who knows?
microcommies are pretty close to anarchocapitalists.dr hoo
Jan 6, 2004 8:49 AM
At least in practice. I once got a Marxist and a hard line Randinan objectivist to agree on so many things, they went into business together. I consider it one of my finest moments.

Employee owned businesses do pretty darn well, compared to capitalist exploit-the-labor-for-the-stockholder businesses.
I know your joking...oldbutslow
Jan 6, 2004 4:36 PM
but, NAFTA is North America Free Trade Agreement. Maybe you meant WTO or MFN?
Isn't it grand?TJeanloz
Jan 6, 2004 8:24 AM
A lot of things are made in China these days. Especially those things that require a lot of low/no-skill labor and are dense in nature.

Is this a good or a bad thing? Could it be both? There are a few factors:

(1) Labor costs; labor costs are not as big an issue as people think they are. It's a hot-button issue, because the net effect is that jobs in the US are shifted to China. But savings in labor costs are relatively small, with a few exceptions. Labor is generally [there are exceptions] a very small part of production costs. Often it's one of the smallest parts.

(2) Environmental compliance; in the United States and Europe, environmental abatement systems are increasingly required for any operation that paints or finishes anything. These systems are really expensive (~10MM). You could build a [nice] factory in China for half the cost of the environmental system in the US. Needless to say, China doesn't have the same environmental standards. This is, I suppose good for the US - we have a cleaner environment, and more time to enjoy it now that we've lost our jobs.

Where do we go from here?

Specialization. We need to identify and produce those products that (a) we can build better than anybody else; or (b) cannot be cost effectively shipped. I did some work for a company that made plastic bottles for the food industry. They were not concerned in the least about losing business to China - shipping costs were too high, because their product was high volume/low cost (mostly air). A container full of plastic bottles didn't sell for enough to cover the shipping costs.

The bottom line is that there are production advantages in the United States: very low cost of capital, access to a large consumer market, good access to natural resources, [generally] business-friendly tax regime. China will be the next economic superpower, but there will still be room for the United States.
Plus that troublesome slave labor thing...Cory
Jan 6, 2004 9:00 AM
I haven't checked on this since I did a story on it a couple of years ago. At that time, though, quite a bit of made-in-China stuff was produced wholly or partially with what amounted to forced labor. Low wages, terrible conditions, children putting in 10- and 12-hour days in factories, stuff like that. At that time (this also may no longer be true), the labor cost of a pair of athletic shoes that sold for ~$100 in the U.S. was about 12 cents.
Let he who lives in a glass house cast the first stone,TJeanloz
Jan 6, 2004 9:06 AM
On the forced labor issue, it is a constant [European] criticism of the US that our prison system uses "forced labor" to produce things. And it's true. So we aren't entirely clean of it.

But yeah, working conditions in China, particularly rural China, are below Western standards. But they are quite comperable to where Western standards were in a similar place in the economic cycle (circa say, 1880).
forced prison labor?DougSloan
Jan 6, 2004 9:49 AM
I don't think prison labor is forced here, even if it's an exception to the 13th Amendment banning slavery. Might be coerced or encouraged by early release promises, but I don't think we force it. Wages may be comparable to Chinese labor, too. I could be wrong, though.

Doug
I don't know the details,TJeanloz
Jan 6, 2004 9:56 AM
I just know that Amnesty International is always b!tching about it.

I think its a case of the work is not "forced" - but prison life is significantly more tolerable if one does the work [i.e. you get paid a tiny amount for the work, which you can spend at the canteen to supplement your inadequate diet].
slavery is not banned by the 13th amendment.dr hoo
Jan 6, 2004 11:22 AM
Read the text. Slavery is perfectly constitutional, merely limited.

The relevant text is "...except as a punishment for crime..."
semantics?DougSloan
Jan 6, 2004 11:36 AM
I guess you might be technically correct, if you mean slavery as punishment for a crime is not banned. Otherwise, slavery is banned.

Amendment XIII

Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Section 2. Congress shall have power to enforce this article by appropriate legislation.
technically correct indeed.dr hoo
Jan 6, 2004 11:54 AM
Isn't that what law is about? Being technically correct?

This is just one of my favorite bits of constitutional trivia.

But in the context of the discussion, forced labor is constitutional. It may not be legal depending on state statute, but a state CAN force labor from convicted criminals. I don't know of many examples, other than the chain gangs brought back in the south a few years ago. And even then I think they paid them a nominal wage.
Prisoners make all kinds of stuff,TJeanloz
Jan 6, 2004 12:04 PM
License plates are the normal example. But prisoners in some Western states (notably Colorado) churn out most school furniture. If you work in the public sector, it's very likely that your furniture was produced in a prison labor program.

UNICOR is the Federal company that manages the prison labor programs - www.unicor.gov
of course, but do you know of anything they make where...dr hoo
Jan 6, 2004 12:11 PM
... they get NO PAY at all? Or, more centrally, where they are forced to work for no pay at all? That would be true slavery.
yes, butDougSloan
Jan 6, 2004 1:32 PM
I agree, but that's what I already said above:

DougSloan 1/6/04 9:49am

I assumed you were trying to make a point other than the one I already made...

Still have to deal with "cruel and unusual."

Doug
Doesn't always work that way:Dave_Stohler
Jan 7, 2004 11:38 PM
Case in point: Carrier Corp.

Carrier has managed to dominate a specific market segment: Refrigerator units for overseas containers. Big market, and one that's growing. Up until now, Carrier made these units at their big manufacturing facility in Syracuse, NY. As of last month, however, they gave notice that they will be building a new facility somewhere in the orient to build these units, someplace closer to where the containers are built (probably Korea). As a result, Syracuse is losing 2000 good-paying jobs.
I think that's exactly the way it worksTJeanloz
Jan 8, 2004 6:42 AM
(1) I'd be surprised if there were not serious environmental issues with building refrigerator units, given their use of freon (or whatever they're putting in them these days).

(2) These products are easy to ship at low cost - in fact, they are specifically designed to ship.

It makes pretty good sense to me that they would want to build these near where they are needed. Now, your case in point would be accurate if most of the World's shipping containers were built in, say, Albany. This sort of thing seems like just the sort of product that should go overseas.
Productivity has had larger effect on production jobsContinental
Jan 6, 2004 9:20 AM
Manufacturing productivity in the U.S. has increased at an annual rate of 4.8% for the last 12 years. This means that a factory employing 100 people in 1991 only needed 57 people to make the same amount of product in 2003. This is disruptive and displaces workers, but improves the overall standard of living and strengthens the economy. Utilizing low cost Chinese manufacturing has a similar effect. Workers are displaced, but we get lower cost, higher quality goods.

U.S. Society as a whole benefits from higher productivity and from imports, but many manufacturing workers pay a heavy price. The debate shouldn't be about productivity and trade because these clearly and obviously benefit society. The debate should be about how to take care of the segment of the working class whose jobs are being sacrificed. How big should the Government role in protecting these people be? Should we rely on individual intiative and provide little bit of temporary help with short term unemployment, or should they be guarenteed a middle class cradle-to-grave dole?

I do wonder what the Chinese workers think when they make some of the junk that people here buy.