[central_va]

If you, a manufacturer, can shave 5-8% off production cost you would have three choices to make:

1. Pass all of it to you customers.
2. Pass part of it on to your customers and keep some for profit.
3. Keep all of it as profit.

Well 1. wouldn't make sense. What would be the point of offshoring if your bottom line remains the same? If you are doing just to keep up with your competition and your bottom line profit remains the same then the whole offshoring experiment thing is simply a way of making Americans unemployed. Really sick sh+!.

Option 2. might make sense, throw a point or two at your customer. Would they even notice?

Option 3 is the more likely. Would the international stockholders stand for giving away profit to the customers? That would be outrageous to them.

[RegulatorCountry]

Prices didn’t drop at all, they remained the same or even increased over time. The manufacturers took it all as profit, so there goes another free trader argument down the drain.

[conservatism_IS_compassion]

If you, a manufacturer, can shave 5-8% off production cost you would have three choices to make:

1. Pass all of it to you customers.
2. Pass part of it on to your customers and keep some for profit.
3. Keep all of it as profit.

Well 1. wouldn't make sense. What would be the point of offshoring if your bottom line remains the same? If you are doing just to keep up with your competition and your bottom line profit remains the same then the whole offshoring experiment thing is simply a way of making Americans unemployed. Really sick.

Option 2. might make sense, throw a point or two at your customer. Would they even notice?

Option 3 is the more likely. Would the international stockholders stand for giving away profit to the customers? That would be outrageous to them.

I think no one would offshore for a lousy 5%. Way too much trouble. Companies offshore because they are being, or shortly will be, slaughtered by imports from the places they are tempted to offshore to.

Which means that by offshoring they are actually “running as fast as they can, just to stay in the same place.” And therefore "option 3" is not available; the competition from suppliers already offshore does not permit it.

IMHO.

[Paul R.]

If you, a manufacturer, can shave 5-8% off production cost you would have three choices to make:

1.Pass all of it to you customers.

2.Pass part of it on to your customers and keep some for profit.

3.Keep all of it as profit.

Well 1. wouldn't make sense. What would be the point of offshoring if your bottom line remains the same? If you are doing just to keep up with your competition and your bottom line profit remains the same then the whole offshoring experiment thing is simply a way of making Americans unemployed. Really sick sh+!.

That's not how it works.

If one is overpriced in the marketplace, all else being equal, sales will eventually shrink to a point where the business implodes. Been there, done that. Once one loses competitive scale of manufacture, unless some little "niche" can be found (sort of violating the "all else being equal" part), the death spiral accelerates.

If one already is competitive in the marketplace, then, again all else being equal, a "new" lower cost to customers gains one more customers. Profit per sale might not increase, but total profit will. Also, larger scale of manufacture in most cases improves profit (or competitive advantage) further. Been there, done that, too.

Of course, the above is greatly oversimplified vs. reality, in many instances. If what I've explained is "3d chess", compared to your "2d" analysis, then reality is often more like "4d". For example, "momentum" in the marketplace can be a very significant factor.