Comment by temp8830
20 hours ago
USA is already effectively priced out of manufacturing due to high labor costs. Doing things with the "correct choices" simply makes the impossible even more so.
20 hours ago
USA is already effectively priced out of manufacturing due to high labor costs. Doing things with the "correct choices" simply makes the impossible even more so.
Central/Eastern European here. Our labor costs are comparable or even lower than China today. And the manufacturing is still struggling. So it's not only that.
That, and you have to ensure your energy costs (power) are low and you have a secure source of raw materials. I'm not an expert, but from what I've heard, the economic region over there has been doing a poor job on both those fronts. Furthermore, you have to talk about regulation vs safety. The EU has regulation. Maybe too much.
There are also network effects. Your plant that is energy intensive is closing? Now other manufactures must increase their cost as transportation is increased and local contracts harder to get. Your chemical plant, which has operated within good bounds for a decade can't get a permit to expand, or is protested? Your intake products now either go up in price or become unable to attain them at all.
In Central/Eastern Europe, the problem is increasingly one of demographics. You can sometimes find somewhat cheap labour due to shitty (geo)politics, stagnant economies and poorly trained workers, but big-picture-like, the age of labour abundance is over. These economies have nowhere to go but down, down, down, starved of talent due to the twin cancers of bad demographics and emigration. Some countries are better, some worse, but the overall trend is the same all over the region. Going gentle into that good night.
(China's predicament is not much better, with the added wrinkle that there's absolutely nothing whatsoever they can do about bad demographics due to their size, whereas Central/Eastern Europe can import people once we collectively get over ourselves and let go of uppity xenophobia).
>the age of labour abundance is over.
There IS labour over abundance. Unemployment in most EU countries is at record highs. And it shows no sign of slowing down.
The problem is it's mostly white collar labor overabundance. And those college educated people aren't gonna want to make sneakers in sweatshops.
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This is false, patently incorrect. With a good manufacturing line workers are not priced out by "cheap labor" they are priced out by almost zero cost labor, Robots are basically a rounding error compared to human's wages.
Robots bring very different tradeoffs on the table. But they are not built and maintained autonomously by the all mighty benevolent skynet, all working 100% on renewable energies abundant at geological scale.
Plus scaling industrial production is one thing, but if proletarians are unable to afford them because wealth distribution is exponentially concentrated, what is the point?
>But they are not built and maintained autonomously by the all mighty benevolent skynet, all working 100% on renewable energies abundant at geological scale.
No but they are significantly cheaper than an employee, A robot can pick up something and move it from A to B for upwards of 10 years. The programming and setup are a fraction of the time a robot can operate reliably
I cannot stress to you how reliable and little maintenance is required for a $60,000 fanuc robot.
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I live in Texas, which is still part of the USA, and we manufacture a great deal.
I have a friend who works as an environmental engineer at a chem plant. They work hard to keep things safe and clean, and rigorously monitor their output.
I'm sure we could do even more if we weren't competing in meany areas against legal jurisdictions which DON'T care about such things. We aren't "priced out". We are regulated out and out competed by jurisdiction which have many fewer labor laws and much more lax environmental monitoring. If we are out-competed on product, then we deserve to loose, which is where libertarians and free-trade have a point. But if we are out-competed on keeping people and the environment reasonably safe? That's when we enact trade barriers.
That is how you actually keep the environment and people safe.
I am not saying that you should tear down anything that works for you.
Trade barriers however are bullshit and don't work. And they are a lie. You are not building IPhones in the US because building an IPhone in the US would cost three times as much as it would doing in Shenzhen. And people would not be willing to pay that. And that's why they get an exception from the trade barriers. And that list of exceptions basically goes on and on and on...
Anyway, what works, works. This is especially true if that industry had been in the area for long, and therefore has access to a lot of skilled and experienced workers.
But it does not make sense to cry and complain that building such a thing from scratch is "banned". No, it is not banned. It's just a stupid idea, and there are laws against stupid ideas using limited natural resources.
This is what I don't understand?
We do manufacture things. Just not in California.
So why does it even matter if California bans manufacturing dangerous things? Who cares? Just manufacture it in some other state. As a bonus, you don't have to pay those high California taxes.
In what world is this a problem?
> We do manufacture things. Just not in California.
Texas beats California in total value of manufacturing shipments only because because of its petroleum and coal products manufacturing. And California beats Texas in manufacturing employment.
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> We do manufacture things. Just not in California.
California has the highest manufacturing employment and most manufacturing companies of any state, the second highest (behind only Texas) dollar value of manufacturing output.
It is just below the national average in manufacturing as a share of GDP, but its also the fifth highest state in GDP/capita; leaving it still above average in manufacturing GDP/capita.
California produces ~$350B in manufacturing GDP. It is the #1 state in manufacturing jobs in the US.
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Shipbuilding in particular has negligible labour costs, even for rich countries. Cost to build a ship is about 80% materials costs.
Which leaves plenty of room for a non-negligible 15% discount.
For most industries: No, you aren't. The limiting factor mostly is natural resources. Which is what the articles author is complaining about. "I am not allowed to use up the last drops of drinking water California still has! SOCIALISM!".
And the other limiting factor is knowledge/education. Your region has been known for 100 years to be highly skilled at building $THING? That knowledge is still there and has not fully retired? That's also a resource.
"High labor cost" is a smoke screen. We are not talking about acquiring from a pool of lazy dancing monkeys. The labor you need are for tasks that machines can not yet do. Those jobs are either really shitty, or need a lot of qualification.
Due to this: If you want to build a factory in an area where there aren't already similar factories, you first need to build a University and come back 25 years later.
The articles author should next try to build a business based on offering camel riding in Greenland. Camel riding? Banned in Greenland!!!1
The USA is priced out of manufacturing due to greedy capitalists and business owners. Acting like labor is an insurmountable expense is just hilariously out of touch.
Maybe those that own the wealth should pony up more in taxes or give away their factories to the workers so they can run it themselves (something tells me they'll do a better job than greedy owners that just care about money rather than building a community).
You sure it is about labor prices? These are highly capital intensive businesses.
You may want to ask your LLM to do very detailed research.
Ouch!
It's actually not labor costs at all.
The difference between the USA and, for example, China, in manufacturing is the difficulty of getting a new factory built.
If you have a product designed and ready for production, it will take you years to build a factory in the USA. All the while you'll be losing money managing the build, paying your employees and, most importantly, letting your competitors get a head start.
Likewise, if you build that factory in China, it'll be up and running in less than a year and you can start making your R&D money back, get to market before your competitors and not bleed money keeping your companies doors open.
The labor costs are easily offset by removing the logistics of moving the product.
Tesla Gigafactories are a pretty good example of this. The first two took ~3 years to build in Nevada and New York. The third, in Shanghai, took 10 months.
'Company learns from mistakes, third time it does something it does it better, quicker'
The 4th one, in Germany, took 2 years.
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I don't think we're priced out, there's still a lot of competitive manufacturing in the US. I think it stems from a regulatory side, primarily in unions and logistics, which is unfortunate because these provide very little or no benefit to citizens but make it sometimes impossible to invest heavily in manufacturing here. People can't create dense factories cities like Detroit if a union may come in and destroy it, and we can't move fast enough if it's going to take years to get regulatory approval to develop a large factory (the Micron factory in Syracuse comes to mind, although there are many like it).