What Irked You Today?

[Ace-Garageguy]

There's both the "chicken and egg" effect and the "snowball effect" to blame for the current state of affairs.

The beginning was when some little bean-counters realized they could get a bonus for cutting costs by going to other countries (that paid their workers a LOT less than any Americans could work for) to have manufacturing done. Management thought it was a good idea, because they could sell at a slightly reduced price and pay themselves and upper management a LOT more money. Greed, pure and simple. Nobody was content to make a decent profit while paying a fair wage to US workers. Nope, they had to make FAT profits and end employment for the workers in THIS country who would have done the jobs. The chicken-and-egg phase...which came first?

Management blamed offshore-sourcing on the American public not being willing to pay for US-made quality goods, but the truth is that the prices of offshore-made carp goods undercut the prices of quality goods to an extent that people who are simply too stupid to know the difference between carp and good stuff buy carp 'cause it's cheaper. Example: buy a $100 pair of hiking boots and a $25 pair of hiking boots. The good ones will last for years, the cheap ones will disintegrate and split in one season. Which is really the cheaper deal? If you say the $25 pair, you're the kind of moron consumer who's driving the problem.

Rather than seeing the inherent and illogical long-term fallacy of implementing this stupid policy, management everywhere embarked on a pathetic monkey-see, monkey-do course of action...like they usually do. OMG...we HAVE to do what everybody else is doing to keep up. OMG OMG. 

When the manufacturing jobs began disappearing in this country, and with them a large chunk of the middle class that used to make the stuff and got paid enough to buy decent stuff, the problem began to compound and feed on itself, because there were fewer and fewer well-paid middle-class Americans who could AFFORD to buy good stuff. This is where we are now...the snowball-effect stage.

Short-sighted maximize-today's-profit-screw-tomorrow management has done this to us, and nobody had the nads to stand up and call it like it is. Every time YOU buy some cheap junk, YOU make it worse. But a large and scary part of the problem is that a good deal of what USED to be American manufacturing expertise and capability has simply evaporated. Getting it back is going to be a pretty tough act.

What to help rebuild the American economy? Don't buy carp from companies that cut American workers out of work.

(Speaking of which, I'm working on an article about the US plastic-injection-molding industry. I've been in talks with several companies in THIS country who are capable of doing what we're told only the Chinese can do now. While initially it looks like kits produced here would probably cost around 15% more than what we're getting from China from all the manufacturers today, it also looks like with some tuning of the system the costs to have completely US-made models could be easily competitive. Frankly, I'd happily pay 15% more RIGHT NOW to have all my kits made here. Just in case you're number-challenged, that would make the typical $25 kit cost $28.75.)

 

Edited June 26, 2016 by Ace-Garageguy

[blunc]

It looks like Bill typed the "novel" that I didn't... (Bravo, Bill).

The constant "off-shoring" of products that used to be made in the USA all in the name of "quarterly profits" and the current trend of utilizing temp/contract workers so that companies don't have to deal with health insurance and other HR issues, seems to me (from my "bottom up" view point) to be some of the main causes of impending economic ruin.

I worked at a semiconductor company that decided to close the plant I was working at but one of their customers said that the computer chip that was being built at our plant performed better than the same chip when it was built at the companies plants in other countries. My plant was kept running for three years to satisfy the customers' end of life buy...that customer was Bosch. That plant closed five years ago and has been leveled to build apartments or "self-storage" (both seem to be interchangeable these days).

Imagine a german company forcing a plant in the USA to stay open because the product they were buying was built better here than anywhere else.

We will continue to receive carp as long as we accept carp.

Edited June 26, 2016 by blunc
updated plant status

[bobthehobbyguy]

As said you can't blame it all on corperate greed. Companies A and b both make sprockets,  Company B starts doing their manufacturing overseas. All the consumers want is cheap and company starts losing market share to  comoany B. To survive Company start manfacturing overseas also.

Now you have two issues to deal with you have to have somebody willing to invest in rebuilding those factories here. However the bigger issue is the consumer using the price as the only factor in there purchase rather than price and quality.

[Harry P.]

Labor costs in China are far below those costs here. No American worker is going to work at a job that pays a dollar a day (or whatever ridiculously small amount), but Chinese workers will. How do you get around that? How does an American company that has to pay its workers a competitive wage plus benefits compete with a Chinese company that makes the same product, but at a far lower cost?

[Tom Geiger]

Labor costs in China are far below those costs here. No American worker is going to work at a job that pays a dollar a day (or whatever ridiculously small amount), but Chinese workers will. How do you get around that? How does an American company that has to pay its workers a competitive wage plus benefits compete with a Chinese company that makes the same product, but at a far lower cost?

That's changing in China.  The people see the middle class life and want it for themselves.  They are buying new cars in droves.  The wages are going up accordingly and they may no longer be the lowest cost market...  also note that the Chinese government has artificially  kept the value of their money low against the dollar and that may be blowing up in their faces before long. So corporations are moving from China to Vietnam, which even has cheaper labor.

Edited June 26, 2016 by Tom Geiger

[bobthehobbyguy]

That is the main issue.  As long as cost is the only consideration for the consumer then you aren't going to be competitive.  The second issue is the use of poor quality materials for manufacturing the products. The cosumer has to want a quality product.

Edited June 26, 2016 by bobthehobbyguy

[Harry P.]

That's changing in China.  The people see the middle class life and want it for themselves.  They are buying new cars in droves.  The wages are going up accordingly and they may no longer be the lowest cost market...  also note that the Chinese government has artificially  kept the value of their money low against the dollar and that may be blowing up in their faces before long. So corporations are moving from China to Vietnam, which even has cheaper labor.

Ok, then, Vietnam. Or Cambodia. Or Pakistan. Or wherever. The point being, there will always be a labor force somewhere that severely undercuts out labor and production costs.

[mikemodeler]

The aftermarket parts situation in this country is really getting to be pretty bad. I deal with vintage cars and hot-rods almost exclusively now, and most EVERYTHING that's sourced from "overseas" or "south of the border" is garbage, pure and simple.

In the last few months, I've had brake master cylinders come in with the seals installed backwards. The wrong threads on "OEM replacement" hydraulic parts. Electric fuel pumps that failed in a week. Mechanical fuel pump diaphragms that dissolve in gasoline. Carburetor kits missing half the parts, and others that were labeled right but the contents were just flat wrong. Radiators that had the brackets in the wrong places. "Custom fit" disc-brake kits that required entire re-engineering (but were supposed to be "bolt on"). Temperature sending units that weren't even close to the temp range they were supposedly spec'd for. Water pumps that started leaking in a week. And on and on and on and on.

It's frustrating enough getting cars in that have had nothing but jacklegs and chimps working on them most of their lives and having to undo all the "expert" repairs all these morons have done over the years, but now we're having to re-do our OWN work because the "offshore" absolute crapp that's getting pushed off on the American consumer is trash. Either that or we have to re-engineer stuff that just doesn't fit or work as delivered.

There's something wrong. I've been doing this stuff off and on for over 40 years, and I've NEVER experienced such a high rate of JUST PLAIN JUNK getting sold as replacement parts ever before.

It's the Wal Mart effect Bill. There has been such a demand for lower prices because it is perceived as being necessary to survive in business. I have worked in the auto parts business for over 30 years, store, dealer, manufacturer level jobs, and between corporate greed and misreading the market, companies push cheaper product instead of quality.

The places where parts come from outside of the US can range from mudhut/third world facilities to ultra modern/operating room like places. The folks I talk to on a regular basis aren't as concerned about price as much as they are quality. Funny how that message gets diluted when relayed back to HQ.

[bobthehobbyguy]

However  Harry lower production and labor costs are meaningless if you are not getting the same quality level of product. Just means you are getting something cheaper.

Edited June 26, 2016 by bobthehobbyguy

[Harry P.]

However  Harry lower production and labor costs are meaningless if you are not getting the same quality level of product. Just means you are getting something cheaper.

And that's what the majority of American consumers look at first. Not quality. Price.

[bobthehobbyguy]

Exactly and until that changes we will continue buying sub standard products.

[Harry P.]

Exactly and until that changes we will continue buying sub standard products.

And that's not ever going to change. It's human nature to want a "deal" when buying something. Price is always the number one factor in most people's buying decisions.

[Ace-Garageguy]

... It's human nature to want a "deal" when buying something. Price is always the number one factor in most people's buying decisions.

It's just stupid, and you can't ever fix stupid. As I used in the example previously, a $25 item that lasts one season is much MORE EXPENSIVE than a $100 item that last years, but stupid sees nothing but the price on the item today.

Still, the low costs of offshore work forces aren't exactly passed on the the American consumer. Factors like production delays due to misunderstandings and distance (like we're always hearing about from the model companies), shipping costs, and a variety of other things (like pushing up the markup for sub-standard products so the middlemen make more profit on the carp) drive the prices the US consumer buys up to the point where a lean, mean US product COULD compete...if the effort were put forth to make it happen.

But all the "experts" naysay the possibility of making cost-competitive products in the US because that's what everyone else says. Nothing ever changes, really. People are sheep, and they willingly follow along without ever bucking the system...for the most part. They'll give you 1,000 reasons why something won't work without ever really trying to MAKE it work.

That's why, if it hadn't been for occasional tenacious visionaries who saw possibilities and WORKED to make them realities, we wouldn't have airplanes or electric light (among many other things we now take for granted). Everyone, all the "experts", KNEW they were impossible too.

With the high rate of failures and downright defective offshore parts the company I'm working with now is experiencing, and my constant harping on how poor quality parts are costing us much more money than anyone saves on carp parts by having to replace the stuff for free when it fails (cutting into billable labor time significantly), we are ONE company that's actively searching out good quality parts as a way TO IMPROVE OUR BOTTOM LINE.

THE HARD PART NOW IS FINDING ANY PARTS THAT ARE ACTUALLY WORTH ANYTHING.

 

[Ace-Garageguy]

It's the Wal Mart effect Bill. There has been such a demand for lower prices because it is perceived as being necessary to survive in business. I have worked in the auto parts business for over 30 years, store, dealer, manufacturer level jobs, and between corporate greed and misreading the market, companies push cheaper product instead of quality.

The places where parts come from outside of the US can range from mudhut/third world facilities to ultra modern/operating room like places. The folks I talk to on a regular basis aren't as concerned about price as much as they are quality. Funny how that message gets diluted when relayed back to HQ.

This is from someone INSIDE the parts industry who understands the problem. 

See? Idiot management has its head firmly up the idea that ONLY price matters.

Edited June 26, 2016 by Ace-Garageguy

[Harry P.]

Company X in the US makes widgets. Due to OSHA regulations, EPA regulations, unions, etc., it costs Company X $5 to manufacture one widget.

Company Z in China has no OSHA regs, no EPA regs, no unions. It costs them 35¢ to manufacture the same widget.

How does Company X compete with Company Z?

[Ace-Garageguy]

Company X in the US makes widgets. Due to OSHA regulations, EPA regulations, unions, etc., it costs Company X $5 to manufacture one widget.

Company Z in China has no OSHA regs, no EPA regs, no unions. It costs them 35¢ to manufacture the same widget.

How does Company X compete with Company Z?

Oversimplifying the problem to make a point is simply avoiding the issues, and it's thinking like that that got us where we are today.

To go farther with your example and inject some of the rest of the reality of the situation, in the US market, the $5-to-produce widget will sell for, lets say, $10 (twice what it costs to produce). But YOU WILL NOT GET THE CHINESE VERSION FOR $.70. You'll get it for maybe $6. Enough of a difference in price to get morons to ignore quality and shop price only, while still leaving plenty of do-nothing middlemen markup.

I've already stated that the typical Chinese-made model car would cost only approximately 15% more (based on extensive research and LONG conversations with people in the US injection molding industries) if it were made here and could avoid many of the scale and accuracy issues we're all familiar with.

Only 15% more. Think about it.

 

 

[bobthehobbyguy]

Plus to add to Bills comments for that additional 15% we would have workers paying taxes and spending the money here.

[plastic-mechanic]

[iamsuperdan]

      Kinda make you wishfor a BB Gun huh   FWIW you're gonna want to get that off sooner than later or you'll have reminders of the encounter as long as you own the truck.

Not to worry, had my lot guys clean this pretty much right after I took the pics!

[High octane]

There's both the "chicken and egg" effect and the "snowball effect" to blame for the current state of affairs.

The beginning was when some little bean-counters realized they could get a bonus for cutting costs by going to other countries (that paid their workers a LOT less than any Americans could work for) to have manufacturing done. Management thought it was a good idea, because they could sell at a slightly reduced price and pay themselves and upper management a LOT more money. Greed, pure and simple. Nobody was content to make a decent profit while paying a fair wage to US workers. Nope, they had to make FAT profits and end employment for the workers in THIS country who would have done the jobs. The chicken-and-egg phase...which came first?

Management blamed offshore-sourcing on the American public not being willing to pay for US-made quality goods, but the truth is that the prices of offshore-made carp goods undercut the prices of quality goods to an extent that people who are simply too stupid to know the difference between carp and good stuff buy carp 'cause it's cheaper. Example: buy a $100 pair of hiking boots and a $25 pair of hiking boots. The good ones will last for years, the cheap ones will disintegrate and split in one season. Which is really the cheaper deal? If you say the $25 pair, you're the kind of moron consumer who's driving the problem.

Rather than seeing the inherent and illogical long-term fallacy of implementing this stupid policy, management everywhere embarked on a pathetic monkey-see, monkey-do course of action...like they usually do. OMG...we HAVE to do what everybody else is doing to keep up. OMG OMG. 

When the manufacturing jobs began disappearing in this country, and with them a large chunk of the middle class that used to make the stuff and got paid enough to buy decent stuff, the problem began to compound and feed on itself, because there were fewer and fewer well-paid middle-class Americans who could AFFORD to buy good stuff. This is where we are now...the snowball-effect stage.

Short-sighted maximize-today's-profit-screw-tomorrow management has done this to us, and nobody had the nads to stand up and call it like it is. Every time YOU buy some cheap junk, YOU make it worse. But a large and scary part of the problem is that a good deal of what USED to be American manufacturing expertise and capability has simply evaporated. Getting it back is going to be a pretty tough act.

What to help rebuild the American economy? Don't buy carp from companies that cut American workers out of work.

(Speaking of which, I'm working on an article about the US plastic-injection-molding industry. I've been in talks with several companies in THIS country who are capable of doing what we're told only the Chinese can do now. While initially it looks like kits produced here would probably cost around 15% more than what we're getting from China from all the manufacturers today, it also looks like with some tuning of the system the costs to have completely US-made models could be easily competitive. Frankly, I'd happily pay 15% more RIGHT NOW to have all my kits made here. Just in case you're number-challenged, that would make the typical $25 kit cost $28.75.)

 

There's both the "chicken and egg" effect and the "snowball effect" to blame for the current state of affairs.

The beginning was when some little bean-counters realized they could get a bonus for cutting costs by going to other countries (that paid their workers a LOT less than any Americans could work for) to have manufacturing done. Management thought it was a good idea, because they could sell at a slightly reduced price and pay themselves and upper management a LOT more money. Greed, pure and simple. Nobody was content to make a decent profit while paying a fair wage to US workers. Nope, they had to make FAT profits and end employment for the workers in THIS country who would have done the jobs. The chicken-and-egg phase...which came first?

Management blamed offshore-sourcing on the American public not being willing to pay for US-made quality goods, but the truth is that the prices of offshore-made carp goods undercut the prices of quality goods to an extent that people who are simply too stupid to know the difference between carp and good stuff buy carp 'cause it's cheaper. Example: buy a $100 pair of hiking boots and a $25 pair of hiking boots. The good ones will last for years, the cheap ones will disintegrate and split in one season. Which is really the cheaper deal? If you say the $25 pair, you're the kind of moron consumer who's driving the problem.

Rather than seeing the inherent and illogical long-term fallacy of implementing this stupid policy, management everywhere embarked on a pathetic monkey-see, monkey-do course of action...like they usually do. OMG...we HAVE to do what everybody else is doing to keep up. OMG OMG. 

When the manufacturing jobs began disappearing in this country, and with them a large chunk of the middle class that used to make the stuff and got paid enough to buy decent stuff, the problem began to compound and feed on itself, because there were fewer and fewer well-paid middle-class Americans who could AFFORD to buy good stuff. This is where we are now...the snowball-effect stage.

Short-sighted maximize-today's-profit-screw-tomorrow management has done this to us, and nobody had the nads to stand up and call it like it is. Every time YOU buy some cheap junk, YOU make it worse. But a large and scary part of the problem is that a good deal of what USED to be American manufacturing expertise and capability has simply evaporated. Getting it back is going to be a pretty tough act.

What to help rebuild the American economy? Don't buy carp from companies that cut American workers out of work.

(Speaking of which, I'm working on an article about the US plastic-injection-molding industry. I've been in talks with several companies in THIS country who are capable of doing what we're told only the Chinese can do now. While initially it looks like kits produced here would probably cost around 15% more than what we're getting from China from all the manufacturers today, it also looks like with some tuning of the system the costs to have completely US-made models could be easily competitive. Frankly, I'd happily pay 15% more RIGHT NOW to have all my kits made here. Just in case you're number-challenged, that would make the typical $25 kit cost $28.75.)

 

When you mention the part 'bout ending employment for American workers, you forgot that these companies that laid off their skilled American workers expect us to still buy their products. I almost bought a new Ram truck that I would've had to order which I already knew, until they told me that MY truck would be made south of the border. And that's where I said NO WAY!

[mikemodeler]

Company X in the US makes widgets. Due to OSHA regulations, EPA regulations, unions, etc., it costs Company X $5 to manufacture one widget.

Company Z in China has no OSHA regs, no EPA regs, no unions. It costs them 35¢ to manufacture the same widget.

How does Company X compete with Company Z?

The race to lower costs has resulted in much higher overall costs for all consumers. How did I arrive at that conclusion? Look at the durability of what is produced these days! Have you seen price reductions on tools that were once made in USA that are now manufactured in China?  NOPE ! That costs savings will be used to offset warranty costs as a result of Chinese production. And most likely add to the companies' bottom line!

It's great that Company Z has a lower cost, but wages aren't the only component in their cost to manufacture products. This applies to many different categories of products and companies that previously tolerated low to zero defects are now tolerant of "some" defects as long as the landed cost remains "low". 

Companies that once took pride in their quality and addressed premature failure on parts now just listen to the customer complain and in some cases, offer compensation as a form of hush money. They KNOW what the problem is, but it remains cheaper and easier to let things be instead of fixing it. Engineers today are more concerned with cost savings and cheaper methods than superior product designs and lasting quality.

I would like to say that things will get better before they get worse, but experience has taught me otherwise.

[Ace-Garageguy]

Excellent and on-point post from mikemodeler. Thank you. 

[Harry P.]

I've already stated that the typical Chinese-made model car would cost only approximately 15% more (based on extensive research and LONG conversations with people in the US injection molding industries) if it were made here and could avoid many of the scale and accuracy issues we're all familiar with.

Only 15% more. Think about it.

Yes, and that 15% savings is exactly why all of our models are manufactured in China.

In any business, the bottom line is profit. If a business can manufacture a product here, or can manufacture that same product elsewhere for 15% less... what would any business owner do?

As long as there are other countries that undercut our production costs, there will be outsourcing.

And as far as scale and accuracy issues... aren't the kits engineered here? Only the actual manufacturing is done overseas, no?

[Mike_G]

 

In any business, the bottom line is profit. If a business can manufacture a product here, or can manufacture that same product elsewhere for 15% less... what would any business owner do?

I'd say it would depend on the business owner's personal ethics

Not everything is about money, nor should it be

 

 

 

 

 

 

[Harry P.]

I'd say it would depend on the business owner's personal ethics

Not everything is about money, nor should it be

In business, the bottom line is king.