Interesting article on US manufacturing

By the way I loved those comics with you in them Hess. That temp guy was funny.

ignorant wrote: Strategically yes.... manufacturing in the US makes sense. I see your point. but blindly saaying ,"we need it here" is silly.

Call it what you will..but you admitted we need manufacturing here with your first sentence. It's true. We do need it. Sustainable or not. Consider that we go to war with China. Where are we going to get the majority of our computer parts from? Certainly not them.

Also consider..if we had steel manufacturing here..when the steel was purchased not only would America get the steel but the money would stay in this country as well. A President advocated that at some point in our past. I think he was right.

While I ain't no fancy MB and A I see the writing on the wall. Like Hess said...when you allow yourself to be a hostage don't complain when you're all tied up.

scottgib wrote: I agree with most of what he said, but would add that I have been convinced for years that what benefits a corporation is not necessarily what is best for a nation, its economy, and its citizen’s well being. The primary issue is the current systems infatuation with short term profit.

racerdave600 wrote: And I've been preaching for years that the US is poorly lacking in long term planning. Everything we do is built around next quarter earnings, not what's best for the country or even the company producing the goods.

..I agree with these points. Also, this is what I mean by inept CEO management. This is also the point I'm trying to make about Wall St. Both camps only care about nxt quarter's earnings. Therefore, all companies are trained to think in that fashion to ensure a high stock price. Remember now - I'm not an MBA but I think most CEO's salaries are dependent on stock price for some reason I haven't learned yet in MBA school.

We have a stock price dependent on Wall St's opinion and the management's salary dependent on the stock price. If management therefore kisses Wall St's arse they'll remain rich guys. The future, economy, and nation be damned.

Maybe Capitalism isn't perfect?

Xceler8x wrote:

ignorant wrote: Strategically yes.... manufacturing in the US makes sense. I see your point. but blindly saaying ,"we need it here" is silly.

We do need it. Sustainable or not.

negative. I've worked in plants that built crappy old legacy products with crappy old legacy machines with crappy old managers...

Manufacturing in the US must be economically viable and it must be organic. Read about Nucor steel.. Learn why they built factories in farm towns. Learn why they are successful at driving intershift competition.

Then tell me that we just blindly need it.

Admit it, WE got lazy all around, because the marginal benefits didn't make sense.

But once again, all I see is a ton of finger pointing, little real analysis and a whole lot of whining and bitching...

As for tariffs, I whole heartedly disagree. Look at the chicken tax, worked real good. No foreign cars in this country at all. Tariffs only breed innovation OUT of the system. We get fat and lazy..... Then somone sneaks in a better product, think CVCC.... Then crap.. You're back in the same mess. The government should encourage manufacturing in america, by investing in technology and putting a boot in a whole lota lazy folks collective asses.

I rarely post in this sort of thread, prefering to lurk and learn, but I am really enjoying the fact that this subject seems more civil thatn some other like threads.

My Take:

As soon as we became the world's primary economic Super-Power, the economic race became ours to lose; nobody stays in first forever.

Cycles require flexibility, and economic cycles require economic flexibility. I wonder how ready we (as a Country) were prepared for this cycle (the prospect of back-sliding).

Let's look at the strengths we have now, in terms of our younger work force..

Video games teach mindless repetetive behaviour; production lines require the same. One costs money; the other pays money.

If we can just make it cool to put stuff together for real, as opposed to destroying electrons for play (the reinforcement being a paycheck). the results might not be as bad as we imagine.*

We have to play to our strengths, people, and frankly, I'm old and tired.

*Providing that we can convince the Mexicans to rebuild our facilities, then convince them not to run them for way less money, as well.

I heard an analyst compare our current economic status with the decline of the Dutch empire (and a couple others). The thrust of the idea was that we'd been very successful and built a great empire through production and expansion. Then the economy was shifted from being based on production to being based on banking. We decided we could make more money banking, investing, borrowing, and lending than could be made with solid construction. The result was an economy that collapsed without a basic set of tangibles to be based on.

Salanis wrote: I heard an analyst compare our current economic status with the decline of the Dutch empire (and a couple others). The thrust of the idea was that we'd been very successful and built a great empire through production and expansion. Then the economy was shifted from being based on production to being based on banking. We decided we could make more money banking, investing, borrowing, and lending than could be made with solid construction. The result was an economy that collapsed without a basic set of tangibles to be based on.

Right on, brother; if that wasn't your point, then it certainly was mine. Well put.

http://www.amazon.com/Age-Diminished-Expectations-Third-Economic/dp/0262611341 <-- read that book

http://www.amazon.com/Great-Unraveling-Losing-Our-Century/dp/B000OZ28CE/ref=pd_sim_b_2/104-6230749-6464754

Or that one...

The biggest thing that Krugman drives home is we have allowed ourselves as a country to continually accept lower productivity with stagnation in innovation. Eventually, being fat and happy catches up with you.

ignorant wrote: Eventually, being fat and happy catches up with you.

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Another real killer of our manufacturing is our government. As I have mentioned before, I have a friend that is a consultant. He goes around closing down manufacturing plants and shifting the production overseas or to Mexico. Like automotive parts suppliers. It's a living (for him, anyway). I asked him what the biggest drain on the plants he was closing was and he said that the govermental red tape, regulations, taxes, etc. was the biggest killer of the US plants and not worker productivity, wages or anything else. He has even shut down Canadian plants and shifted their production to the Central US (mostly because he wants to help the US) and to Mexico because Canada is even worse than the US, and a Canadian customs guy gave him E36 M3. He was thinking: "Sure, give me trouble crossing your little border, shiny happy person. I'll shut your berkeleying plant down and those 200 jobs can to go the US and Mexico, hahahaha." The companies he is shutting down are owned by Germans, mostly. They could give a shiite less about the US economy, worker or anything but a short term bottom line.

ignorant wrote: The government should encourage manufacturing in america, by investing in technology and putting a boot in a whole lota lazy folks collective asses.

We agree!

I think we need industry and you seem to think so as well. I wonder if we would have more innovation if we paid engineers better. At this point a lot of jobs pay better and work less than engineers.

I worked as a manufacturing exec. with multi-national responsibilities for over 25 years. 10 in motor oil, and 15 in pharmaceutials. Never have I been part of or heard of a plant being shut down because of red tape, unless the product itself was outlawed (DDT, etc). Taxes have played a part, but the red tape is not much more than a PITA and a minor cost unless you do something stupid. Tax incentives (local gov. exempting companies so they will move to their location -- a practice I think should be outlawed), and raw material costs, in/out freight are the major factors. This doesn't apply to highly labor entensive operations like clothing, which is really an exception in that moves offshore are driven by labor costs and availability.

scottgib wrote: Never have I been part of or heard of a plant being shut down because of red tape, unless the product itself was outlawed (DDT, etc).

BIL, ex McKinsey, says the same thing.

I'm just telling you what the guy who shuts the plants down said was the reason production was being shifted out of the US. And not just governmental impediments to business (Red Tape), but taxes and everything else. Maybe you have never heard of SOX, that majic word used to strike fear in the heart of a middle manager and justify billing 80 hours of work for a 5 minute job. That's just one example. They don't have SOX in Mexico.

Scott, I'd like to hear your insider view on why the wholesale price of 800mg Ibuprofin went up several hundred percent in a few years.

SOX?

Es o si, que es, señor!

This is a new experience for me. Hess and I actually agree on something. I sure we will split dramically on some of the solutions, but his description of the problems is spot on.

SOX = Sarbanes - Oxley. The requirements that congress enacted after Tyco/Enron/Worldcom accounting fraud/fiascos. I have heard it called the accounting full employment act because the number of people that have been added to corporate finance and consulting company payrolls to comply with it.

It is a wonder boom to the IT outsourcing industry. SOX said "You can't lie to the street." That has been interpreted to be: "You can't fix one line of code in any minor sub system in your entire corporation without 150 pages of documention describing every aspect of the fix, most of which is made up boilerplate but we're going to charge you $8K for it anyway, SUCKER."

Q, you'll find that you'll start agreeing with me more and more. Eventually, you may start driving a Lotus. At that point, it'll be too late.

John Brown wrote: I made the statement two years ago. Invest in the Euro and Learn Chinese. You will need both real soon. Just in case you realize I am right.

LOL

About tow years ago my brothe's fathe in law as buying Euros. hisfamily was calling him crazy. Now he has a fat bank roll of Euros and is retired in Florida....

I am leaning Chinese, by the way.

SOX is crap, but anyone who says it is the reason a plant is moved etc.. is a moron. The business should be sustainable no matter the regulation. That is also why tarrifs don't work. Ipods are selling like crazy in Japan... Protectionism or not. The product is just that good.

Don't forget spouting the wonders of Toyotas...

On the subject of the price of 800mg Ibuprofin:

Personally, I would use 4 OTC 200mg instead. I do take 3 x 200 daily. This was my internist's recommendation.

Pricing on the Rx 800 is up for three reasons -- one is it is RX, and two it is what the market will bear and the manfufacturers have not decided to cut up each other so no one wins, and three the demand has gone way up as doctors substuted Ibuprofin for cox2 drugs..

Supply and demand pricing is no where near perfect, but it is the best system we have. There will always be anomolies.

When I was in the motor oil business in the mid '90's, we always complained that drinking water sold for more than oil per gallon, and we probably out advertised them. The margin on water was and still is ridiculous. Wal*Mart used to sell some of our products for less than they paid us, and our margin was not great. BTW, since this is a gear head forum, our oil was generally better quality and never worse than parity with anyone else, but our cost of goods was less. Contrary to our competition, we formulated our own additives and made some of them in-house. Others buy "black box" formulas and additives, not really knowing what is in them at a higher cost. It was complicated and patented.

Dr. Hess wrote: Q, you'll find that you'll start agreeing with me more and more. Eventually, you may start driving a Lotus. At that point, it'll be too late.

I doubt it. I am 6'4" tall. The only Lotus I have been in that wasn't accutely painful for me was an Elise with the top off. I also live in California and really enjoy it.

I bet you'd fit in a Seven without issue. I had my brother in my Europa once, and he's 6'3. Wouldn't say he was exactly comfortable though. There are some tall people with Esprits. You can drop the seat a little and after that it depends on where your height is. An ex-boss had a NSX. He was 6'4+. He fit in my Esprit but my head hit the headliner in his NSX. Like a Captain I sailed with said (Icelander), he had to try cars on like pants and see if they fit.