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Comment by ChrisBland | Hacker News Reader

Some might ask; well if this is the case, can we move production (back) to the US? The answer (imo) is no. The Chinese have done an amazing job building the supply chain. Need a part, go right down the street and meet the vendors, need packaging, its just down the other street. The infrastructure built to bring products to market is their real advantage here. Try sourcing a new chip in the states and then try over there. This is true not just for electronics, but also with textile production.

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The answer is not 'no'. The answer is, 'It will take some investment'. There is a big difference between those two answers.

People who say it is impossible to move production from one country to another don't understand what the word 'impossible' means.

> The answer is not 'no'. The answer is, 'It will take some investment'.

That's also the answer to 'can we move production under the sea?'

Not really "some investment" is not equal to "extraordinary investment". One is possible with little change and costs, the other would require lots of change and waste.

Which one is which?

the difference is that there are lots of parties that stand to profit by moving the production back to the u.s.. if a u.s. packaging company is able to be price competitive with a chinese counterpart, it will certainly emerge... over time, the whole supply chain can reemerge.

This feels an overly technical objection? Very little of our problems are actually "impossible" if by "impossible" you mean something like "inverting a one-way function".

What I think most people mean is that moving production is impractical, e.g., that there is no realistic incentive that justifies making the investment and so for that reason nobody will make the investment, and production will not move, etc.

It would be more effective to argue that the required investment is smaller than expected, and some particular entity does have an incentive to make the investment after all, etc.

Yes, it's only 'impossible' if you hold a bunch of economic variables constant.

Precisely. It's much easier to move supply chains when you don't have to move the labor (people) with it.

Also it is not limited to electronics - as others have pointed out, Addidas moved automation back to Germany.

>Some might ask; well if this is the case, can we move production (back) to the US? The answer is no.

Says who? Addidas is moving its robot factory into Germany and the US. The perceive benefit you see from China doesn't exist once we have proper automation.

http://fortune.com/2016/05/25/adidas-robot-speedfactories/

http://www.theguardian.com/world/2016/may/25/adidas-to-sell-...

>Try sourcing a new chip in the states and then try over there.

Fabs are different because western nations have strict environmental laws. China's big benefit with fabs is its willingness to pollute its lands and poison its people for us. This is a negative all around and the sooner we get fabs out of China and into environmentally responsible countries and using environmentally responsible methods the better.

Does China actually have that many fabs? I used to work in the semi industry and I never heard of anyone going to China for customer support, even for older tech. Taiwan and Korea led the industry.

http://trendwave.com/asia/global-industry-4.0-will-lead-to-d...

There are those that are seriously concerned about China's ability to compete, including the Chinese Government.

Doing a quick search for "American manufacturing output graph" shows that we are producing more output than ever before, relative to our past.

The solution going forward is specialization. We handed manufacturing to China while our service sector exploded. Let each country produce those goods it does best and then trade with one another. Why bring production back to the US? Only if it makes sense to do so.

I thought textile production had long since shifted to another location, multiple times. Isn't textiles what is generally used to bootstrap the rest of manufacturing, but the margins get too thin as you increase your national standard of living through competition in the local market, so textiles moves to the next country that's trying to bootstrap their poor economy?

Before I did IT, I used to work in that industry. Most of the high labor stuff has moved cheaper, vietnam, sri lanka, cambodia. Things like embellishments, excess decorations, that all left china. However if you are doing run of the mill stuff, china is still great to work in. The wash plants were next to the mills which were down the street from where I sourced packaging. It may have changed in the last 8-10 years, but pretty much if I needed anything done it was only 15 minutes away from whatever fty I was in at the time.

The source of most of my info on this is the Planet Money T-Shirt project[1]. On this topic specifically, I believe the episode "'Our Industry Follows Poverty': Success Threatens A T-Shirt Business"[2] was the one that covered this (but the whole series, and the podcast in general, is great)

1: http://www.npr.org/series/248799434/planet-moneys-t-shirt-pr...

2: http://www.npr.org/sections/money/2013/12/04/247360787/our-i...

The recent move of Adidas back to Germany seems to contradict your assertion: http://www.theguardian.com/world/2016/may/25/adidas-to-sell-...

Adidas doesn't need tons of customized and specially produced screws, fasteners, metal cases, and other such things that smartphones and laptops and other consumer electronics do.

The supply chain to support making shoes seems like it would be MUCH smaller.

There is a huge supply chain in the US for very complicated goods due to defense procurement. It is not cost optimized (even close...) but it exists. It is a falsehood that "we don't make that stuff here anymore" for virtually any value of "stuff".

It would take a relatively small tweak to import duties to make most types of outsourcing uneconomical.

Yet you can build those supply chains easily in Germany – all the factories to produce the parts you need are already there.

Germany, in fact, is in the business of producing the machinery that is then used in other countries to produce your phones, tanks, ice cream cones.

Supply chains for simple products such as a yoghurt can actually be quite complex.

https://erdbeerjoghurt150g.files.wordpress.com/2008/06/joghu...

You are correct to point out that moving large scale physical manufacturing is a massive undertaking. Building a factory in a new location is the least of your worries; available skilled workers, supply chains, transportation networks, various legal hurdles all have to be overcome. But it's doable - after all, it has happened in China's direction over the past fifty years. What you said was true of the United States once (and still is, in many industries).

If the cost of labor is gone, another cost comes into focus - cost of transportation, including the time it takes to ship.

Example: Zara produces in Spain as high fashion items have a very short shelf life, whereas a container with skirts takes a bit to come from China to Europe.

If I gain an advantage by producing closer to my buyer, I'll do it.

Just-In-Time production becomes even tighter. That Amazon Prime 24h delivery item could come hot of the press.

Zara (or more generally Inditex) does quality control in Spain, but a small part of the products are manufactured in Spain.

Their Bangladesh suppliers have ~300,000 workers vs. ~6,000 in Spain [0]. To counter your point, it seems that a piece of clothing manufactured in China will be shipped to Spain, quality controlled, tagged, fitted with RF-ID and then sent back to China for selling [1]. So it doesn't seem to follow the model you suggest where proximity matters.

[0] http://www.elespanol.com/economia/20160222/104239851_0.html [1] http://economia.elpais.com/economia/2015/03/17/actualidad/14...

Zara has a very unique marketing/manufacturing/logistic model.

I wonder if times are changing again. It just seems that meeting vendors or walking down the street for resistor strips is no longer necessary.

Rationale: you now just need to bulk order the raw materials / components and "feed the machine".

We aren't there yet, but jeez we seem to be racing there quick?

The real problem is latency in modifications of advanced IC design. To quickly iterate a design, it's not enough to have the 'standard' components available. Many breaking technologies rely on designs utilizing the latest versions (or custom made) ICs, which are simply not available at the same time in the US/EU compared with China.

for long-gone and 'dirty' industries like the textile industry you're probably right. on the flip side - as the prices of the robotic setup go down exponentially lowering the barrier of entry for smaller manufacturers I can totally see them contemplating producing locally instead of outsourcing.

once that happens it's a 'snowball', if the price is right the supply chain will catch up.

PS: see the link posted in another comment: http://www.theguardian.com/world/2016/may/25/adidas-to-sell-...

If you don't need much of a workforce the main thing is to avoid taxes and regulation. These "guaranteed income" people want to steal your profits. The robot factories will be in Somalia or similar. Pay off the local lords at a reasonable rate, rather than deal with the EU or American federal government.

Energy costs also become increasingly relevant as labor costs drop to a smaller fraction. Why not set up in iceland where geothermal electricity is free.

So... Better to have highly automated high tech factories producing in third world countries, with their poor roads, patchy electricity supply, unreliable access to raw materials, difficulty sourcing the educated labour you will need to run it locally & difficult to get people to move there to run it, patchy access to international transport, risk of internal conflict impacting on physical infrastructure, rather than paying taxes?

I guess you could always pay off the local warlord, then pay for your own roads, and all the rest... But perhaps better to have a government take care of it for you?

What you describe is how big pieces of the mining and oil industry work already. It's not as daunting as you think to move things around and buy security in the poorer parts of the world.

Getting smart people to come on contract to live in luxury and service your robots won't be hard. Why on earth would you live in a dingy NYC or San Francisco apartment if you could go somewhere and as merely an engineer be waited on hand and foot in a luxury condo while saving up bank. Go golfing after work every day for free.

> Why on earth...

1. Security

2. Friends

3. Family

4. Security

Those are all great reasons. It isn't for everyone. I made the move at 30 when I had few commitments and have been here 4 years.

I've lived overseas in Cambodia and Taiwan. The lower cost of living, warm weather, and challenges of living in a different culture can make life pretty enjoyable.

I chose both places carefully and visited before deciding to move. I still visit the US once a year and my vacations now take me to places I would never go if I lived in the US. A weekend trip to the Philippines, Vietnam, South Korea, China, or Japan is feasible from Taiwan. From Cambodia, you're right next to Vietnam, Thailand, and Laos, all safe places if you read up on what to watch out for.

Cambodia may be developing but most people wouldn't grade Taiwan on the same scale, and both are a long way from paying a warlord 'protection money' in Somalia

Absolutely. I don't mean to equate them, except in the ways I mentioned, which is that they're warmer and cheaper than the US. I mention them together because I've lived in both.

Taiwan is much more developed than Cambodia, and yes, are nothing like Somalia. That's not a place I would choose to live, myself.

You probably have a warped view of a lot of these countries. A big part of Harare is a much nicer version of Beverly Hills, it just costs less than a tenth for that lifestyle.

Why not make Detroit, for example, that city with the streets?

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