keeping it domestic

my my! you're getting better at this rhetorical stuff ed!

your point is absolutely correct - it's all a matter of deciding what we want to do. i think our reality is that we're simply hostage to wall st. if we had a flourishing industrial base as our economic powerhouse, like japan, and as we used to have in the 50's and 60's, that industrial powerhouse would have the most political influence. with a hollowed economy populated by debt slaves [you know, student loans, credit cards, over-inflated mortgages, and less directly, taxes to pay for profligate government borrowing], it's wall st that has absolute and complete power.

the trouble with the wall st model though is the long term military vulnerability it creates. with a strong industrial base, you can arm and deploy for major wars in a matter of months. with the debt slave model, you can't. indeed, you can't even "farm" your population of debt slaves if they're being overrun by billions of land-hungry "yellow perils".

"maybe"???

Well, I'm manufacturing electronics in the US. Pretty much all of the components come from Japan, Korea, or (in the case of TI) Malaysia.

I do get some older low-density linear ICs that are made in the US, very much specialty items. On some of my very old designs I use old-style wet slug tantalum caps made in upstate NY, though they're made with Chinese tantalum foil.

It's getting very difficult to get any of the mechanical parts made at all. I have been through five sheet metal operations in the past 20 years, they just keep closing as the work moves overseas. Problem is that all of the work I have seen done in China has had real quality control issues. The quality of the materials is very doubtful. I'm probably going to Canada, like I did with the PC board fab. I do not want to be doing that in-house.

Put your money where your mouth is, Mr. White. Start making products in the US. It's not easy, and it's getting exponentially harder. I'm making stuff based on 1970s technology too... you want to make something state of the art and it becomes that much harder.

--scott

No one person can do that. It takes industrial policy - yes. government policy. Chinese, Germans, Japanese all have it. We don't. We have the "free market." AKA Welfare/Debt State. Might change, might not. Depends on how the politics washes out.

I'm doing it today. I'm making products in the US. You can too. It's hard, and in the case of higher technology stuff it may well be impossible, but on a limited scale you can still make some products.

What you have to go through in order to get materials and support is far more than you did 20 years ago, and it's far more than you would have to do if you were in Guangzhou.

You can point fingers all you want and put blame anywhere you want, I have said nothing about _why_ the infrastructure is gone. I have only said that it's gone and getting it back is going to be as long a road as getting it in the first place was.

I don't claim to know _why_ it's gone or have any solution for fixing it. But as for why people aren't manufacturing in the US, that I can answer with confidence.

--scott

thank NAFTA

watch this - recorded in 1994:

Maybe in some industries, but in the industrial electronics world the competition is from China and not Mexico or Canada. If anything, NAFTA has been a good thing for us since we export there.

Production in Mexico is kind of an interesting thing because the border towns are close enough that you can keep an eye on production. But unless you are doing something very labour-intensive or unless your primary goal is to avoid EPA regulations against polluting, the savings is not great. Recent security issues in Mexico have made it much less appealing. Shure does dynamic microphone element production at their own factory in Mexico since there's a lot of hand work involved.

Production in Canada is sometimes more expensive than in the US although for wooden products there is a lot of infrastructure up there to do precision wood fabrication cheaply and well. A lot of folks I know have loudspeaker cabinets made up there, and as I said I have PC board fab work done in Alberta because they do better quality work than I can get from most US or Chinese houses.

--scott

a friend of mine does electronics prototyping. his designs usually end up getting fabbed in china. and the chinese are playing a very artful but dirty game to be players in that business.

1. they essentially give the work away at prices so low, it's hard to believe they're even covering materials costs, let alone labor, energy, shipping, etc. but,
2. when you fab there, you can't just provide the gerbers, you have to provide the schematics, full bills of materials, programming and function statements as well.

so, the real cost of having stuff made in china is not monetary, it's intellectual - you've just given away all your intellectual property in return for a cheap[er] circuit board.

now, i'd like to hope that some m.b.a. has done a cost/benefit analysis for this kind of decision fork before deciding that this was a worthwhile trade, but based on the conversations i've had with many harvard/stanford m.b.a's over the years, i've yet to see any evidence of it.

all the guys on the ground get it though - but nobody listens to them.

A decade ago, people were surprised by this kind of thing. The guys at Kenwood contracted with a factory in China to make a walkie-talkie, and within a year or so their product was showing up all over the place with a Chinese name on it.

But these days people expect this to happen, so smart folks contracting work out to China do equally underhanded things. They ship a product out to be made, but ship them with an FPGA that can only be used for testing... the product must be returned to the US to be programmed and used. They take a design, split it apart and have a dozen different factories each make a piece of it. They have a factory make an assembly, then when the assembly is returned to the US they discard part of it and replace it with something else.

I have friends who have a lot of PC board fab work done in China, but they send over Gerber files without component numbers or types or any silkscreen information. So the guys making the board basically cannot do any real reverse-engineering on them.

PC board work is the one thing that the Chinese really can do properly to very high tolerances. The big problems are the intellectual property issues combined with the fact that they will try and cheat you if they think they can get away with it, so every board needs careful acceptance testing on arrival (and that includes things like checking the thickness of platings). I don't have time or money for that kind of stuff, so I pay between three and five times as much to send to Canada in most cases.

Oh, they do now, but it took a long, long time for anyone to start doing it, and there are still plenty of stupid people out there.

--scott

Depends on what you call high tolerances - and how much that matters in the scheme of keeping people working. All I know is that just about every "big ticket" item I buy is made outside the U.S. Computers, TV's, washers, dryers, refrigerators, furniture, blah, blah. Then you add up all the "small stuff." It's real simple to see where your money is going. Sometimes I have a choice, mostly not. And sometimes when I do, I'll buy Chinese because it's 1/3 the cost. I'm not going to be a sucker unless everybody else is too. I ain't rich and I don't live in a dream world. That's why I said you need a government industrial policy to address it. That's what just about every other country does, and it's the only way it will change. That's all a political problem. Same with automation. Is it better to have something fully automated and pay welfare money to people so they can buy drugs and do crime, get fat and burden the health industry, or lessen the automation, and keep those people working. This stuff is complicated, and I don't claim to have the answers. But I've been around a long time, seen a lot, and have my views.

Productivity (in the context of money) has always been misunderstood. It has nothing to do with inefficient workers. Productivity is the function of capital investment.

For example, take 20 efficient workers and one underachiever, and assign them to dig 2 large identical holes. 20 workers are tasked to dig one hole, and the one bozo is tasked to dig the other identical hole. The bozo has the same productivity as the

Why? Because of capital investment. The 20 workers used 15 shovels, 3 picks, 2 wheel barrels, and a bunch of wooden planks, to dig their hole and the bozo used a $90,000 back-hoe to dig his hole. The bozo also had taken a course (and passed) in back-hoe operation, paid by his employer. A non-bozo would not materially be faster than the 20 men because the 2 tasks would be calculated to achieve the identical holes being dug in the same time. This was an example, the 20 to 1 ratio might be 30 to 1, or some other ratio.

Capital investment for 20 men, approximately $675. Capital investment for the bozo, approximately $91,000. This does not include the cost of beer, because beer is a consumable cost, not a capital cost.

that argument makes as much sense as the romans outsourcing the emperor's personal security to the visigoths. sure, it was very "productive" with regard to resources of the roman aristocracy [or any other roman citizens come to that] that didn't care for the drudgery of military service, and arguably their loyalty was a bought commodity and therefore "more reliable" than that of a discontented local populace. but we all know how that failure to account for the big picture ended up. and failure to account for the financial big picture, that of intellectual property destruction, and military security destruction, makes mockery of ANY "capital efficiency" argument.

but that underlines the utter retardation of the whole situation. if they just made it here, they wouldn't have to do that stuff. or if they had it made in vietnam, malaysia, philippines, or even turkey...

that may be - i don't personally know - but that doesn't accord with what my friend tells me. and he's a guy that designs boards, and coordinates their production through to receiving working product stateside. he says that to get something made, assembled, and certified RoHS compliant, you have to supply the whole shebang, including the software for any programmables.

the discard part makes no sense.

who do they use? my friend clearly needs to know!

which i think is the point - if you take /all/ the costs into account, including in your case testing that you can't easily do, and put it into the context of intellectual property protection, chinese fab makes little or no sense. not enough to justify the evasion or the risk.

read the financial press - they're simply not switched on to it at all. at best, you can say it would be loss of face to admit mistake. at worst, well, let's just say that i find it hard to believe that we're a nation of lemmings that are really /that/ stupid.

here's my intellectual test for stupid. would they still do that "stupid" thing if there was a gun against their head? if yes, then they are indeed stupid. if not, then you have a whole different issue on your hands. my experience of some of these m.b.a. folk is the latter.

Some factories are like that. If you absolutely _have_ to do final assembly in China, doing things like supplying fake software and added fake hardware bits can help.

You include a module whose only purpose is for testing, or you include a module whose purpose is deliberately misleading and will cause the product to fail. Then when the product is shipped to the US, there is some minor rework done before it is shipped to the customer. This way when (not if) your design is stolen at the factory, they steal something that is broken and incomplete.

They use whoever gives the cheapest bid this week. I am inundated with spam email from PCB fab houses in China... it's bad to get into a long term relationship with any one of them. The game is to play them against one another constantly.

Well, in a lot of cases there isn't a gun against their head, because they are evaluated entirely based on their ability to bring short-term profits into the company. There might be a gun against the company's head but that's not their problem, they'll be working for the competition next year anyway.

--scott

i get that, but it's counter-intuitive to the whole concept of going to the cheap production house in the first place!

i get that too. but the point is that if they make one decision when they don't care about the consequences, and another when they do, you know there's a serious problem with real vs. stated objectives.

exactly. when you watch someone like elop, the current ceo of nokia, and former micro$oft director, sell nokia down the river and straight into bed with his former employer, i don't think it takes an hercule poirot to ask the question about where is loyalties lie. nokia's market cap was significant before elop. it's, ahem, much more "affordable" today. but why even /bother/ buying nokia when you can effectively control it for free?

it is my contention that in every case where you see the hollowing out of the industrial capacity of "usa inc", each and every one of these decision makers would "fail" the gun test. and when someone on wall st calls a ceo and tells them they have to move production to china or they're going to trash their stock, "oh, and by the way, we'll put you in touch with the right people over there that can help", that is truly faustian. what a deal - get rid of the unions by shipping their members' jobs overseas, consolidate the national power base away from industry and into the hands of wall st, and create a nation of impotent debt slaves all at the same time. it's nothing short of treason in my opinion.

But it's not an argument.... it's a law of economics! Look it up! Productivity is the function of capital investment.

Another example;

Capital investment, $0.75... package of sewing needless

Capital investment, $750.00... industrial strength sewing machine

The operator of the sewing machine produces more per hour!

In message , Scott Dorsey writes

They tried pulling that trick over here, until someone told the press that they were selling tap water for 1UKP a can, the sales went through the floor and the scam had to be withdrawn.

um, i hate to break it to you, but economics is not a science, so "laws" are something of a fanciful misnomer.

in your previous "example", you were arguing about the efficiency of capital investment for the guys using shovels, presumably because you were trying to justify *not* making capital investment in domestic automated production as opposed to labor intensive production overseas. but in this post, you're trying to argue that the capital investment in the sewing machine is a better than the labor intensive needle.

i don't know if this contradiction is deliberate or you're just another example of why economists are simply the kids that weren't very good at math, but either way, you're still completely failing to understand the big picture. your sewing machine is useless if someone has cut off the power. and your off-shoring savings to cheap foreign labor get annihilated if there's a trade dispute disrupting shipping. not acknowledging the big picture and the parallel to rome's downfall being due to their outsourcing their military functions to foreigners is either because you don't understand it, or because you're not honest enough to admit its relevance.