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Comment by legitster | Hacker News Reader

A lot of people wonder why large companies can't just stay in the US and compete on quality, and here is a great case for why. It doesn't matter how great your workers are, you can't sell a product for $3,000 when others are selling it for $600. Especially when it's a technology still in development.

And I know we pay extra for the warm and fuzzies knowing that something is made in the states, but I'm sure the home tinkerer in Indianapolis doesn't get super warm and fuzzy thinking of paying an extra $2000 just to support some exorbitant Brooklyn rent.

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I often wonder if costs could be lowered for many of these companies if they would stop locating in some of the country's most expensive places to operate and for their employees to live. I know the arguments about workforce availability and all that, but I've never seen a proper look into it.

It still wouldn't help. It's cheaper to manufacture electronics in China even if the labor costs are the same. The logistics are vastly better over there. If you need PCBs or components, you can have them direct from the factory on the same day. If you have a production problem, you can get a specialist engineer the same day. If you need a new production line with 200 extra staff, you can have it up and running in two weeks.

An established EMS company like Jabil has huge economies of scale and tremendous in-house resources. They have long relationships with suppliers and consultants. A startup can't possibly compete with that.

Yea I've spent tons of time in China, and worked with a number of these ODM type companies and smaller factories, and the kinds of things they can get done in short times for small amounts of money is pretty amazing.. Basically why its so hard not to manufacture in china is because of the "factory engineering plus" kind of model. Basically you get low cost engineering work done by the factory to modify your plastic tool, tweak your PCB design, build test fixtures, setup test station software, etc.. Basically one person who knows what they are doing can essentially give a detailed list of instructions to a factory in china and they will just "make it happen" for a really good price.. Since there are so few factories in the US anymore, there are no engineers that work for the factories, so there are very few companies that offer engineering work for low cost, whereas in China the actual factory work pays for the salaries of the engineers. So, its hard to compete with that..

This is what Andy Grove was warning about in 2010 http://www.bloomberg.com/news/articles/2010-07-01/andy-grove...

In other news, the driverless truck is going to automate a few million people jobs:

https://news.ycombinator.com/item?id=11568699

Perhaps it's worth the effort to have some manufacturing and expertise in the US?

The US manufacturing sector is huge, however it's concentrated in high value industrial goods that are generally invisible to the consumer.

So what you're proposing, yeah pretty much doing that.

https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St...

Makerbot Studio is in Industry City, where rent isn't exactly "expensive".[0]

Rent (for employees) is also very accessible in the nearby area, nothing close to Manhattan or some swanky neighborhood in BK. (I live nearby)

In my opinion, especially in technology, its just hard to operate at scale and not produce products in China. Not only is their labor force less expensive but the parts that you require are manufactured there as well.

[0] : https://commercialobserver.com/2015/09/brooklyns-sunset-park...

I was about to post this but you beat me to it, for context when people picture "brooklyn rent" they think williamsburg which according to trulia has a $3525 avg rent (http://www.trulia.com/real_estate/Williamsburg-Brooklyn/5274...) as opposed to sunset park (the neighborhood which industry city lies) which it has at $1700, less than half. (http://www.trulia.com/real_estate/Sunset_Park-Brooklyn/5246/)

Average rental price of $1700 is still pretty high compared to most of the US.

I saw a posh house in Florida a few months ago for $700 a month. The whole house and yard space. 20 minutes from Miami. Weeks later I saw a one for $550 in North Carolina.

My rent in Shanghai, China is more than triple this (2 bed apartment)

Well if you living in the expat areas yes. Hong Kong would be more expensive than Manhattan and central London combined if you want to live in the western areas also.

Yeah. MakerBot could easily move to Indianapolis, after all. Or even less expensive locations elsewhere in Indiana, for that matter. Brooklyn is one of the most expensive markets in the United States, yet Indiana has just as many qualified technical people. Perhaps more, to be honest. Purdue is a pretty fantastic engineering school.

Probably could make the same case for Detroit, get access to UofM students, plenty of large warehouse space, long history of manufacturing, dirt cheap houses, and of course... exiles that were priced out of Brooklyn.

Ooh, yeah, hadn't thought of Detroit - I'm from Indiana myself and the GP mentioned Indy, and away I went.

Point being you could find much better locations than Brooklyn without going straight to China (while keeping your own self in Coolsville).

The challenge is still that you can build ANYTHING in China and if you can get the same quality and lower prices significantly, why would you choose a middle of the road solution in the US? I think the cost differential still overrides any sort of boost you might have from having a Made in the USA stamp on the machine.

Well, why aren't they moving their corporate offices to India or Thailand instead of Brooklyn? I mean, cost is the only metric, right?

> if you can get the same quality

That's a pretty big if. But truth be told, most things don't need to be ultra-high-quality with ultra-tight tolerances.

I'm pretty convinced that you can get any quality you're willing to specify, pay for, and inspect for in China.

Where's your iPhone made?

China gets a bad rap for the lowest, barely passable spec crap that gets made and sold by vendors seeking the lowest possible COGS. It's not that China can't make iPhones; it's that they get asked to make cheap shit in a lot of cases. And they can happily do that, too...

Sure, but there's the rub - how many iphones get made in a year? Your volume has to be stupid big to make high quality chinese manufacturing make sense.

Honestly I dont see why and how Americans can do lot of those jobs. (de facto) Minimum wage in USA is around $10. You can hire an Indian or Chinese for an entire day for that amount and he will thank you.

The fact is that average productivity of an average American is so high today that it does not make sense anymore for most Americans to do a lot of those jobs.

This makes life difficult for some people at the bottom who have no skill and I think as a society we need to solve that problem. But I see government regulation and unreasonably high taxation as primary barriers to do anything.

Probably. But then there is shipping. If I may stray a bit. The price to ship a small package from Adafruit to a place less than 10 miles cost me around $10.00 - 4 days tops. I can make a similar purchase for a Chinese spoofed version and have it in 7 days, free shipping. I don't know how the heck the shipping from China is so cheap. While to ship anything inside the us is frigging expensive...to ship outside the us is worse. And we invented modern day shipping.

It's because the USPS is subsidizing the cost of that shipment.

"The Postal Service is losing millions a year to help you buy cheap stuff from China" https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...

Slightly off-topic, but that's the real problem. How the hell are we (West) going to compete with China if shipping a small item in the same city, for example where I live now, cost 2-3 €, meanwhile the same item from China cost less and shipping fee to my door is 0! Ordering inside EU is even worse, it's common that shipping costs more than the item itself. Sure, it takes a while for order to arrive from China, but if I'm not in a rush, I don't mind that. I order a lot of mundane things from eBay/Aliexpress just because: a) no/small shipping fee b) it's faster and easier than to look for alternatives in physical shops. Postal system is what really needs an overhaul imho.

Locate somewhere near the population centroid, like, say, Oklahoma City and your avg shipping costs probably go down.

Yep, ePacket is amazing.

You don't have to locate in some of the country's most expensive places to operate, but you'll still be located in one of the world's most expensive countries to operate.

That's crazy talk. You must be located in Silicon Valley or Shenzen, nowhere inbetween. /s

I've always been off-put by American Apparel's "Made in Downtown Los Angeles". Like I'm supposed to be impressed by it. For Middle America, it might as well say "Made in Downtown Dubai".

I'm reminded of the old Pace Picante Sauce ads, in which the crowd of homespun rustics would all cry out at once, "New York CITy?!?!"

Coastals might feign confusion, but that spoke to lots of folks.

I think that was a calculated move. The dirt farmers aren't supposed to like American Apparel.

There's no argument here for not relocating to an even less expensive geography than the one you've mentioned here.

There's a great amount of manufacturing in the US. In fact, the US is the world's second largest manfacturer.

The reality is you can't open a manufacturing shop in a hip and gentrified urban neighborhood for "cool points" and expect to keep costs down. You want factories in poorer rural areas, not a place where the media home sale price is close to $700,000.

The China or bust mentality serves big business, but the reality is that you can do domestic manufacturing at a decent cost if you desired it.

Houston seems to be one place its pretty easy to get setup in.

Houston's not as cheap as it used to be. Right now if you want to get parts made it's totally doable. But two years ago when oil was at $100/bbl? I couldn't get anyone to return a call, ever! The company I worked for had to start its own machine shop to get anything done.

Housing was cheap in '09 but the average apartment rent was $1700 in November '15. That's over a year since the oil price crashed.

If oil prices continue to stay low for another year or two Houston might get more affordable as people leave looking for work elsewhere. But that's a big "if" and it's barely started.

I'm pretty sure the Indianapolis tinkerer might be happy to pay $~1000 for a 3D printer made in Goshen, Indiana though.

I know it's harder to find talent in small-towns, but in today's economy, you can do a lot with just a small group of people and a workshop in the middle of the country.

I think this is the inflection point when the 3D printers went from "local" maker fare to corporate without regard for their users. It's like having a local grass fed product suddenly strike a deal with Whole Foods and expands productions all over the place and are no longer local --they move production to increase capacity but may lose on the localness.

At least it feels that way. It's not the same feeling as if production of cheap sunglasses gets off-shored.

Well said!

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