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Comment by tw04 | Hacker News Reader

I find this thread fascinating. Everyone acknowledges we need solid manufacturing jobs to return to the US to help create more middle-class jobs. Peloton makes this announcement and it's nothing but sarcasm and snark. I can't tell if it's just responses from people that are all in Silcon Valley and completely oblivious to the plight of Midwest Americans, or people that are just being mean for the sake of being mean.

So I'll say: kudos to you Peloton. Subsidy or not, providing some much-needed jobs to the Midwest. They could have just as easily setup the factory in Mexico to reduce labor costs, but didn't.

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The contrarian dynamic strikes again! https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor....

You're not wrong about the thread, or rather the initial time sequence of the thread—but it's important to understand that that is not representative of the community. It is only the self-selected first-to-comment. Unfortunately the comments with the fastest TTP (time to post) tend to be produced by reflexive reactions, and—also unfortunately—most reflexive reactions are negative ones.

I think it's worse than that. Social media sites suffer from their own popularity as they attract new younger audiences.

I think HN is suffering from its own success with a notable drop is comment / post quality.

The first rule of HN is you don't talk about HN. ... also, if you've found a new forum, please let me know!

The attempt to avoid or at least stave off the traditional decline curve of internet forums is kind of the original idea behind HN:

https://news.ycombinator.com/newswelcome.html.

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

I don't think this particular issue is related to new younger audiences, because—by inspection at least—the initial wave of objections isn't noticeably coming from newer users. I haven't specifically analyzed that though.

Complaints about "notable" drops in quality go back all the way to the beginning of HN. Of course it's possible that they're all true, but that would be a lot of notable drops. Or maybe some are true and some aren't, in which case we're fluctuating within a range... or maybe they didn't use to be true but now they are true? That's of course what the person perceiving the "notable drop" always feels—but there are also other explanations for this feeling, such as sample bias and nostalgia bias (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...). It's pretty hard to establish anything objective about it. If I randomly look at past frontpages and past comments, they don't seem consistently better or worse (but see the previous sentence).

When they left that reply there was a tiny number of `cynical' replies. Replies that most people would just skim right past and look for substance, though there really isn't a lot to discuss about "company announces manufacturing plant" beyond things like tax incentives (which would be a cynical comment). Maybe people could talk about automation if there were details and it was further along, but it isn't. It's just an announcement.

Any assumption that a site frequented by people around the globe should be euphoric about a US manufacturing plant seems flawed.

I don't intend this comment to argue with them or with the assessment, but I've lurked on HN long enough to see the growing tide of early onset pearl clutchers who hit a quiet thread with a trite "Well I've never!" moral righteousness, then enjoying waves and waves of adulation while the target of their disdain are pummeled. What is the dynamic behind that? Shouldn't it have a name, because it is a negative, increasingly common tactic that sidetracks many threads.

Sorry, but I'm not really following you. Certainly there's no assumption that anyone should be euphoric about anything.

You should write a book on moderation.

We're lucky in a sense to have a double-contrarian dynamic here.

On Reddit there's only a single-contrarian dynamic, where the contrarian post remains at the top, and is less liable to be questioned than the original article. Sometimes the top-voted, contrarian post has evidently not actually read the article.

Of course in older days of forums there was an infinite-contrarian dynamic, where the arguing back and forth continued forever.

I always hesitate to praise new plants in the US. They added a Sketchers distribution center in my home town and they just closed the other locations laying off a ton of workers. It was so automated it replaced a couple other plants with less than half the workers that were laid off. With the tax breaks it was given, it was a net negative for the city even accounting for the jobs it "Made".

How can a tax break be a net negative for the city if it creates new jobs in the city (assuming the other location layoffs were in different cities).

Without the tax break, none of the new jobs would have been made in the city at all.

In an ideal situation, that would absolutely be the case. The trouble comes when neighbouring suburban "cities" start competing against each other for the potential for a business like OP referenced.

Oftentimes these are just incorporated industrial areas with minimal housing and little/no incentive to invest in public services. The businesses in this city/township are certainly running the show, and the few people living within those borders have little to no incentive or ability to organize and work for change. Afterall - people with surplus money/time would choose to live elsewhere.

Its a vicious cycle to the bottom, since these types of cities/townships compete against the main city proper (in the case of large urban areas) or other nearby cities and towns that are actually trying to provide for their citizens.

>> How can a tax break be a net negative for the city if it creates new jobs in the city

Any time the costs to the city outweigh the benefit of getting those jobs. Industrial pollution can be a greater detriment than a handful jobs. Or the city can turn over land that would otherwise be put to other uses. Or the jobs might all be people who don't actually live in the city, saddling the city with resulting traffic/pollution issues but with no practical job benefits. I don't know or think that Peloton is going to do such things, but it is very possible for downsides to be greater than the benefit of creating jobs.

A classic example might be a distribution warehouse (not amazon, oldschool warehouse). Maybe there are five or ten people who work at the facility, but the city has to deal with a constant flow of trucks in and out. The downside of those trucks will probably be greater than the handful of jobs a warehouse may generate.

Where do people keep seeing "industrial pollution" in very basic, not material intensive light industry?

There are very few things in the light industry today making pollution. PCB etchants, dyes, solvents — all being actively reclaimed for decades.

Trucks burn diesel and pump exhaust into the air.

Trucks burning diesel stand in no rank whatsoever with steel mills, or concrete kilns.

Things like Abattoirs, Textiles, and Paper Making are all considered light industry. If you've ever driven by one of these you may understand industrial pollution.

I would be very surprised if US textile mills don't reclaim their dyes when even Bangladeshi ones do.

A few things:

* It sets a precedent for other companies to leverage the same tax breaks.

* Facilities still use public roads and infrastructure. A road with 50 more trucks per day deteriorates more quickly, but the facility isn't paying for that directly.

Cities typically don't collect income tax, so their ability to derive revenue from 'job creation' is limited. Especially if the people working those jobs are living/shopping in the next town over.

If the cost of the tax break is more than the salaries of the employees then it would be cheaper to just hand out the money.

But that would create the moral hazard of paying people not to work and the entire economy would grind to a halt! Just like how restaurant owners have to start paying closer to a living wage now.

Don't you mean restaurant customers now have to pay higher prices.

Sure. Wages are just one cost component. An example restaurant spends 32% of revenue on staff, 32% on food, 32% on overhead. The owner takes a 4% profit. Industry wages inflate by N%. There's not a one to one relationship between wages for dishwashers and hosts and the menu prices. The owner is free to make their own trade offs between holding the line on wage increases, passing through the cost, automating/reducing labor intensity, taking less profit, trying to negotiate no price increase from their vendors, etc.

The trucks tore the heck out of the roads and there were a lot of infrastructure upgrades like stop lights.

Assuming they're tax breaks on property taxes (since other than sales taxes, those are the most viable avenues for a city to tax), they would lose tax revenue on whatever property the factory is on (it is not the case that they wouldn't have been able to collect taxes on the business anyway, because the land they use is land they would have taxed had it been owned by someone else). So they may have to tax other businesses more to make up for it, which could drive those businesses away, or make them less competitive. Other businesses in the area can also be hurt by the presence of an employer who can offer higher compensation than they otherwise would be able to. And while hurting existing local businesses to bring in another could be worth it in the short run, in the long run pandering to a single company at the detriment of others could make you entirely dependent on that company and its fortunes.

>Without the tax break, none of the new jobs would have been made in the city at all.

Are you sure? Those jobs would exist even if no city gives tax breaks, tax breaks didn't create them, therefore you cannot make this calculation.

That’s still better than a plant opened in Mexico that results in 0 US jobs overall.

I would prefer dependence on Mexico over dependence on China.

Unless there were ridiculously excessive tax breaks, I fail to see the issue. Where as they previously had a greater number of workers doing the same thing, they now have fewer workers who are more productive. More productive workers could receive higher wages as their work ultimately generates more value.

>With the tax breaks it was given

I'm confused. If you give tax breaks then you take a loss. That's what tax breaks are. Tax breaks usually exist to buy reputation for the local politician with tax payer money. They never made sense economically because the overall tax burden for non subsidized companies goes up. If your tax rates are not competitive then you just change your tax rate for everyone.

> it's nothing but sarcasm and snark

The average fella will always want to just drink a beer with friends and badmouth the politicians, their boss, a few celebrities and some rich people. Forums like this one are just the electronic version of it.

It doesn't matter.

That said, look for Peloton having solid business reasons to do this, maybe even tax subsidies and the like. A CEO may have their best intention to help America and create jobs and so on good things. But still ultimately it has to also make business sense, because they answer to a board and the board answers to shareholders.

>because they answer to a board and the board answers to shareholders.

Because customers will purchase alternatives that are 5% cheaper.

That's fine. I wasn't trying to strike a cynical tone.

A business is a business. It has to make choices that make business sense.

I was not either. I just like to point out that people like to blame executives and shareholders and owners, and yet it is the country as a whole knowingly voting with their dollars for cheaper products made with cheaper labor from overseas that enable those businesses to succeed (and consequently the businesses using domestic labor to fail).

So a CEO answers to a board answers to shareholders answers to the collective population of buyers, which is us.

I bought one that does not come with a monthly subscription.

I was referring to people knowingly choosing to purchase products made with cheaper labor from overseas over more expensive products made with domestic labor/environmental regulations.

Plenty of people will spend an extra 5% to buy something Made in the USA.

The lack of manufacturing capability in the US for consumer products shows that either it’s more than a 5% premium and/or “plenty of people” is an insufficient amount for large scale businesses.

It costs too much to manufacture here in part because we don't have a manufacturing infrastructure on par with China, and because it costs money for a business to "move back".

It would be a multi-decade project, but we could (and imo, should) government subsidize our way out of that.

Peloton has a pretty good moat in the form of a huge stable of talented instructors. I personally use a non-Peloton DIY solution, but it is inferior in real ways.

I’ll bite: are the majority of jobs going to support middle class lifestyles. I used to live in a town where there was a decent amount of manufacturing and your basic “machine operator” was probably getting paid less than what retail companies are offering right now.

The comments I see are mocking the product as rich-people toys; completely ignoring the software/services side of the equation.

We wouldn't see the same snark if it was a Razer mouse factory, even though that's also rich-people toys, because it's more line with average HN user's interests.

We should be glad we keep finding ways for the uber rich to spend at least some of all the money they've been hoarding the last 20 years.

That's why I'm glad about NFT's

You are referring to 2 comments both heavily downvoted.

I know the phrase gets overused but that would be a prime example of virtue signaling.

I don't agree with the comments in question but downvoting them to oblivion is a bit harsh and uncalled for. It's like that scene from the high school movie trope where a group of kids tells another kid they can't sit at their lunch table.

That would be more like downvoting an account or a person. Downvoting a comment simply signals that there's something wrong with the comment. If the next comment is fine, it's welcome at the lunch table.

It's true that comments sometimes get downvoted unfairly, but I'm not seeing that in this thread. In such cases, though, the thing to do is give them a corrective upvote: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor....

As of this writing, the majority of root-level comments are some mix of extreme cynicism and knee-jerk reactions. But you're right, at least they're downvoted.

I think the reason is that most of HN is not very knowledgeable of manufacturing generally (one commenter was shocked at spending $400m on a factory), combined with hatred for Peloton (for whatever reason) specifically.

>people that are all in Silcon Valley and completely oblivious to the plight of Midwest Americans

I'm not seeing this attitude here. The (heavily downvoted) comments are all criticizing feasibility. A factory quickly shut down helps nobody. Maybe they're wrong, but not everything needs to immediately devolve into binary identity politics, with the clueless elites vs the struggling Americans.

> Peloton makes this announcement and it's nothing but sarcasm and snark.

Because people expect another Juicer here. There is no way in the world for a bicycle factory to cost $400M.

For such money, I can setup you 400 bicycle factories, and somebody who is an industry insider can probably do even more.

I myself been involved with company trying to start a scooter knockdown kit assembly line, with some parts manufacturing 7 years ago in BC, Canada, and Washington state in USA.

It was all around $800k USD, which includes 1 year of operation. It was all a complete disaster though on the manpower, and supplies side, as everybody except for the company owner expected.

The first line worked who did not manage to miswire a colour coded, mechanically keyed harness with just 6 connectors was a MEng graduate who wanted 60 something thousand USD, and was slow as molasses.

And yes, custom fasteners were impossible to procure in North America as such. Fastener companies wouldn't even talk to you if you don't put up n*$100k up front. Same thing in China starts in under $10k.

The 400 $1 million bicycle factories will probably fare just as well as your $800k scooter assembly factory. I think Peloton knows a little bit more about manufacturing their product than you do.

I don't think so

Yeah there's a big difference between a 1 Million square foot factory for a major manufacturer and a couple used tormachs in a garage.

Even just hearing "tormachs" is already telling.

If anybody done serious manufacturing, they know to avoid machining like a curse.

I really feel they (and pretty much everybody else in this "manufacture in USA" bunch) don't really know what they are doing.

I'm a manufacturing engineer. Anyone telling you to avoid machining like a curse has no idea what they are talking about. For small production runs it is almost always the most economical option, and even mass produced parts typically need secondary machining for any applications that require tight tolerance. And even if the things you're actually producing can be made without machining, any self respecting factory should have a machine shop for tooling and fixtures.

I am also dying to know how you made a scooter without any machined components.

> For small production runs it is almost always the most economical option, and even mass produced parts typically need secondary machining for any applications that require tight tolerance.

I haven't said avoid machined parts. I said avoid machining as part of your own manufacturing process.

It looks very odd to have a lone, expensive n-axis CNC sitting on the shop floor just to do few parts.

> any self respecting factory should have a machine shop for tooling and fixtures.

For most of my career by now, it was always faster, and easier to have tooling made by a contractor, than on-site. I can email a solidworks sketch in the morning, and get a perfect mold/die by the evening.

> I am also dying to know how you made a scooter without any machined components.

As said before without machining, not machined parts.

We were buying Yadea kits. Assembly was very straightforward. Slide two parts of a frame with slide locks, and welds. Affix other parts, and panelling. That was all to it, except for local workforce not being able to handle pretty much everything.

Assembling kits other people manufactured is not manufacturing - that's assembly.

If you don't need it to do a lot of work, a cheap used cnc is incredibly cheap. You can easily get a decent one for under 30k and if you can wait for a deal you can probably snag something for under 10. Lathes are even cheaper. They're easily the most accessible machine tools.

I used to work for a tool and die shop. It took us weeks from when we quoted a job to when it would ship and people came to us because of how fast we were. I don't know where in the world you're getting same day molds and dies, but that's not normal at all.

You're right. They have two models built on top of the same frame. Why exactly do they need a $400 million factory?

The manufacturing jobs actually don't matter, it's the investment rate that must go up to match the savings rate.

If you can build factories and nobody has to work in those then you should just keep building factories. It would be even better if those factories produced solar panels or wind turbines.

is manufacturing job middle class? It is a dire job that people should only hold when they have no other choice and should grow into other jobs whenever they can

The inverse is true as well. If there are people who cannot find jobs, then employers wont have an incentive to be productive, they can afford to waste people on bullshit jobs.

Good paying manufacturing jobs are not coming back in any meaningful way, globalization made sure of that.

That doesn't mean manufacturing won't come back, just that it will be highly automated or the jobs won't be high paying.

No disrespect meant, but this sentiment is common among those without any experience with US manufacturing.

Industrial maintenance mechanics make $25-35 an hour depending on skills. Machinists make $30-50/hr. Skilled machine operators earn $22-30+ hourly depending on the type of machine and skill required. Plants like these hoover up industrial, mechanical, electrical, process, mechatronic engineers all at over $100k.

Perhaps you meant that completely unskilled labor is less in demand at manufacturing facilities. Even that isn't really true: the idea that 100% of these roles are automated is often believed by people without exposure to manufacturing; the reality is that you still need a lot of unskilled people making $15-20/hour for the plant to work, even with plenty of automation.

There are certainly fewer jobs than before, due to greater efficiencies and automation, but they aren't bad paying.

I'd say $20-25 is the cut off for good paying so really only the well paid people are the skilled ones. Those jobs will continue to exist, but will not be as numerous as unskilled jobs that paid well once were.

Might I bring up the Foxconn factory in WI...

As a midwesterner, I'll believe it when it's built. Otherwise to me it's just another means of washing bribe money somehow.

I remember hearing the governor of WI so proud of "WisconValley" as he dubbed it. And it was all basically an elaborate tax scam by FoxConn which sucked up a bunch of tax money and basically evaporated.

Foxconn didn't get paid cash up front. The tax breaks are on earned income over the next several decades. They didn't earn any income. They didn't get any tax breaks.

Yes, the state of Wisconsin sunk some money into infrastructure in the area, but that just means infrastructure got built in Wisconsin. That's not profit for Foxconn.

Good points. So what did Foxconn gain? Or was it really just a slip-up?

It was a slip up in the sense that Foxconn didn't get to go home with the money, since there was hardly any up front.

Foxconn is known for the, uh, con, so a lot of industry insiders weren't surprised this entire thing played out the way it did.

>but that just means infrastructure got built in Wisconsin.

Quite a bit of the infrastructure goes nowhere -it only benefits a factory built out at that location. As a Chicago resident who sometimes visits Milwaukee, I will personally note that the interstate construction was horrible and ripped up roads that had been completed just a few years prior.

To say nothing of the people that lost their homes to eminent domain.

Yes but someone's domained home or your more miserable ride to Milwaukee isn't profit for Foxconn either.

Foxconn has a long history of doing exactly what they did in Wisconsin - over and over and over again. That's ignoring the fact their initial claim of investing $10 billion was absurd on its face.

Peloton has a very real financial incentive to do this. Treadmills and bikes are HEAVY, and as they called out in the article the demand has outstripped supply and rush shipping from overseas has been extremely expensive for them.

Foxconn's reasoning was essentially: we don't want to be caught up in Trump's trade war so we'll say we're building this factory and get a bunch of tax breaks.

> Might I bring up the Foxconn factory in WI...

You may, but might I mention those are different circumstances? In one case, it's a foreign company and a government leaders making grandiose statements with little action.

In this example, it's a publicly traded US company that's making the move to control their own supply chain that was affected by foreign manufacturing. They stated they intend to break ground this summer. Could you wait a few months to see?

Everyone knew the Foxconn plant was a joke when it happened, and was mainly to get Trump off their backs by giving him a photo op.

I suspect few people actually want to work at manufacturing factories

WTF?

I worked at two, in two countries. Experience not worth reliving

Part of the cynicism is that we've seen announcements like this before get quietly abandoned once the fanfare fades away. Apple was making Mac Pros in Texas... then they stopped and moved production to China. Microsoft was making the Surface Hub in Oregon for a little while... then they stopped and moved production to China. And don't even get me started on the Wisconsin Foxconn fiasco.

Cynicism is a perfectly justified response to announcements like this.

> Apple was making Mac Pros in Texas... then they stopped and moved production to China.

Quote:

“It was an experiment to prove that the U.S. supply chain could work as good as China’s, and it failed miserably,” a former senior manager is quoted as saying.

No one opens a whole factory just for the PR. They tried, and the experiment didn't work. The US has objective problems in supporting mass manufacturing and assembly. Guilting companies into it won't work.

The problem that the US has supporting mass manufacturing and assembly is that companies like Apple stopped making things there, and once that happened all the expertise and supply chains to support that manufacturing was lost, meaning that now it's not possible to make stuff in the US anymore and those companies are totally dependent on China which didn't make this mistake. Part of the problem Apple had was that they couldn't get items as basic as screws in the quantities needed from US suppliers, and why would they be able to when there's no US manufacturers which need those items in those quantities?

There's a chicken egg problem, but let's not blame Apple for this trend. Apple's original move to China in the 90s was ALSO prompted by the need to scale. This wouldn't make sense if we interpret things the way you do.

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