Posted on 09/10/2011 7:25:47 AM PDT by OldCountryBoy
...I’m late on the comments because I am helping a major US corporation once again ship a perfectly running, extremely profitable manufacturing operation overseas. By all means of evaluation, it makes no sense to ship it away. This operation meets all cost targets, highest yield requirements and etc.
It is moving because someone has a burr that says we can make it cheaper overseas.
Just wait until yields drop, requiring throughput to increase, and increased part costs due to the additional wasted parts that will be bought...
(Excerpt) Read more at forbes.com ...
He!!, Other than hands on service that has been outsourced too!
My son does data/phone troubleshooting for one of the large providers.
Management actually had the ba!!s to have him train a guy in India to do the job.
Guess where that is going.
There’s a groundswell building to buy American.
IMO a manufacturer could take advantage of that.
Problem is hardly anything is made in the USA anymore.
Certainly anything you are likely to need and buy.
That includes pharmaceuticals and foodstuffs..
Outsourcing has probably served their needs in the last couple of decades quite well.
On the other hand, you are an "insider" and understand what makes the whole company tick and you know there are going to be some losses which have a high probability of occurring in any given overseas venture.
Bad parts is one. I think by now everybody has noticed MOST ALL serious airliner rebuilds are done HERE, not THERE. If they are done THERE, those planes never come back into American or European service ~ and there's a real good reason for that.
But, back to the owners. Let's use this example ~ USPS! Everybody in the USA old enough to talk imagines he or she KNOWS how to fix any particular postal problem. Many speak of getting rid of the deadwood, or eliminating Saturday delivery, or simply "cutting USPS loose to compete".
Insiders don't talk that way. They see nearly 600,000 employees who don't steal. Consequently when the owners suggest something about the workforce being "deadwood", that talk just falls on deaf ears.
The insiders know something about postal cost propagation and the detail that has to go into how it can be managed. For instance, delivery service. It's one thing to say "eliminate Saturday" and its quite another to ADJUST all the residential routes in the country to do that. Remember, the mail will still get delivered, just that more of it will be delivered on any given day. So, what does it take to get 200,000+ carriers to deliver that mail? Will each lose a few stops to make up for the increased time at each stop due to more mail volume?
Remember, we are talking, in the aggregate, of Hundreds of Thousands of Tons of Mail ~ not just a handful of letters.
Insiders know that some routes will need to be shortened and some lengthened. Not only that, this will occur at a rate SEVERAL TIMES LARGER than the normal rate ~ and that will take up quite a bit of supervisory time having those folks out on the routes doing the proper evaluation.
Next question, how much OVERTIME will cutting back regular service on Saturday create?
No doubt outside observers, the "owner class" in this case, would never think of that one.
Let me give you an example from China. Every job in most of the industrial cities has TWO OR MORE PEOPLE ~ that's right. You have some people who work the morning and some the afternoon, but only 3 or 4 hours per day. Other jobs of greater complexity have people working 2 or 3 days in a row for longer hours, then not working for a week or so (they may adhere to that older 10 day work "week" instead of the Western 7 day work "week".)
Fiddling around with who works when and where can and will cause quality problems which will put the company right up against the older Chinese ethic that "if it looks good enough, sell it" ~ I'm not even sure "insiders" normally anticipate that one, but the way you combat it is downstream "total quality control" ~ meaning BE PREPARED TO PROVIDE COMPLETE REFUNDS AND/OR REPLACEMENTS FOR EVERYTHING ~ including the box!
I suppose you could infiltrate some Sigma 6 folks into the Chinese workplaces but what good would that do?
The "ownership class", in general, cannot be trusted to imagine the cost problems created with the absence of real quality control at a foreign site. That's not part of their 'bottom line' ~ and many of them probably think the 10 pound hunks of iron and plastic are perfectly good products.
Just nobody works there anymore!
I recently read that Americans pulled out $5.6T in home “equity” from 2000-2007. What struck me about that was when I noticed that it was $700B/yr. And we did it to ourselves. Eight years in a row. Good thing housing prices will always go up and we’ll never have to pay it back, or we’d be really hosed.
Is there a groundswell to buy American? I feel like that came and went in the 80’s. Now there is more of a sad realization that even a Hyundai is probably better built than what rolls out of Detroit.
Here is an interesting comment on that Forbes article:
“brokensky2 16 hours ago
The era of employment is ending. People forget that inventions, including the practice of employment, have an underlying purpose. The purpose of employment was to solve the problem of too few people for the necessary labors at hand. We now live in a world where automation, robotics and software outperform human beings.
The era of human work ended around 2006 when the cost benefit ratio of robots took a big jump forward. The economic catastrophe of 2008 pushed robotics forward faster. Foxconn, short-term profit focus and the downside of outsourcing will give automation, robotics and software another power boost.
The industrial age is surviving on pure, but ever diminishing, momentum.”
What do you all think?
new markets around the world need products, and do not have enough people or the skills to make them.
More likely given his status as an ideological and biological issue of 1960s Marxists rabble he will treat them like what happened to the Russian Nepmen.
The article left out what happened to the Russian Nepmen. Stalin put an end to NEP so you can guess what happened to the Nepmen.
Some great observations there. Thanks.
My favorite commentary about those days -- that apply over and over -- to account for our economic problems we need to
add in such things as income leakage which was defined by Morgan Stanley's Stephen Roach, a thought leader on Wall Street for over 30 years, basically as jobs leaving the country.
Just for the recovery from the 2001 recession Roach put the loss to our economy at 340 billion dollars as of late 2003.
That was seven, eight years ago.. then shit happened.
We have a clock showing our debt -- what's urgently needed is a clock showing loses to our economy because of the actions a-hole politicians, corporate execs, ideologues, and every bastard who's ever screwed America.
At least within a Western country governed by laws you have a good chance for recourse.
If given a choice I’ll go for the superior product. But if equal quality, USA.
I’ll pay more for the superior USA product. Problem is choices are very hard to find.
We have sent out production tools and our production abilities overseas. Not many tool and die makers out there under the age of fifty.
I read an article somewhere last week in which the author put forth the notion jobs are now “obsolete”. He further stated his belief that the people with jobs made enough money
to pay for everyone’s support.
I think this is where the libs hope this automation and increased production lead,to a socialist utopia where the a free to dedicate their time to fixing the ills of the world whilst someone else does the grunt work.
OOPS should have read “they are free to dedicate.....”
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