The real issue is they don't want to pay their workers a proper wage. This is why they offshore or overly rely on automation.
The article is about an attempt to onshore the wrenches for a low-price tools brand. Those wrenches are currently made in a labour-intensive process by low-cost Chinese labour. If they use USA labour they'll have to charge premium tool prices and consumers won't go for it. So they tried to automate. Yes, reducing the need for American labour, but not because they wanted to charge premium prices for the result.
Interestingly, even the machines required to bring manufacturing back to America aren't made in America.
Excuse me, but what? The Craftsman brand historically was a consumer premium brand, priced midway between tradesmen premium brands like Snap-On and consumer "hardware store cheap tools" -- Craftsman was never a low-price brand. Craftsman used to stand for quality, with a lifetime no-questions-asked guarantee wherein, if the tool fails for any reason, it will be replaced. Period. No questions asked, no receipt required. Quality. And men proudly used their father's or grandfather's tools.
I remember well when Craftsman moved hand tool manufacturing from USA to China. Clearly cost of production was lower, but prices didn't change. The company could pocket the difference... and that's just how it went, at least until the consumer wised up and realized what was happening : a quiet substitution of Chinese-made cheap products but keeping yesterday's premium price. Cheap tool at top-dollar price. Tradesmen are not fools -- they know when their tools are not holding up, and they're being cheated. So the consumer rightly felt cheated and abandoned the brand.
Sears broke the contract, and quickly lost the trust. In just a few years, they destroyed one of the most trusted brands which took 100 years to build. The brand was sold off, and now it's just another meaningless string of letters. Today, Sears is dead and gone, for many reasons just like this. Good riddance.
What actually happened: Sears got rolled up with KMart, eventually went out of business. Sears house brands like Craftsman and Kenmore (home appliances) were sold off during the fire sale at the end. Ironically, Sears was the Amazon of the early 1900s but became too invested in big mall stores. When the ecommerce boom hit, Sears had just closed down their catalog division.
> Lampert is a self-proclaimed supporter of free market economics and is a fan of libertarian writer Ayn Rand.
Big surprise there.
From another article:
> As Sears blew through its dwindling cash reserves, Lampert’s hedge fund made loans to the company money that were backed by the company’s assets, including real estate balances on Sears credit cards. That made him Sears’ largest creditor: Sears owes him at least $1.3 billion.
How is this even legal?
This means people bring in 25, or 50 year old worn down tools, and Craftsman replaces them for free. While having to pay modern material and labor costs to replace a tool that was bought 25-50 years before. If that happens too much, it becomes a huge liability on the company. Hopefully the person walking in to replace a damaged or worn hammer or screwdriver decides to buy a set of wrenches while standing there, making it an upsell for Craftsman, but likely it didn't happen enough to keep them viable.
The cost of the replacement is marketing at some point; replacing a obviously abused tool may be a technical loss but you've a customer for life; unless you betray them as Craftsman did (which is why people are still so heated about it twenty years later).
> These days, China's labor costs are only 4% cheaper than those in the U.S. when productivity is factored in, according to Oxford Economics.
https://money.cnn.com/2016/03/17/news/economy/china-cheap-la....
So once you realize the company is using the excuse (lying?) about the labor excuse, then you have to wonder what the real reason is.
Especially after their disaster of a 2022 (which was directly the result of supply chain problems in... Drum roll please... China).
Good opinion piece: https://seekingalpha.com/article/4547012-stanley-black-and-d...
More information: https://www.logisticsmgmt.com/article/global_labor_rates_chi...
But there’s also more than just labor cost. In my experience: when we ask a Chinese manufacturer about something they don’t have the capability to do, they’ll come back with subcontracting options from the factory down the road who can do it. There’s so much manufacturing capability concentrated in a small number of places that every process option is on the table. But in North America, it’s a very different story. Everything is so spread out so your options are dramatically more limited unless you want to be shipping parts across the country.
I’m not saying NA-based manufacturing is bad: the org I work for still does most stuff here for agility, communication, and security reasons. But it’s not cheap.
Opinions are my own.
Which is why the auto industry grew up in the Great Lakes in general and southeastern Michigan in particular: there were so many different machine shops that you could find someone to make almost any imaginable part and just order the quantity needed without having to worry about making something like the River Rouge plant that took in raw materials and spat out cars.
PCB lines are nasty and noxious.
But is it completely false? Or does that 4% statistic also suffer from an over generalization based on very broad averages that can have extreme fluctuations when individual, specific cases are considered?
This isn't true though.
Makes sense that fairly paid labor is going to result in more expensive products that the end consumer will likely pass over if it's lacking in quality. And many consumers don't shop with these issues in mind. If they're on a tight budget and just need to fix something, lowest price may be their only priority. Tough problem to address from all angles.
Why are Chinese willing to do labor for low-cost while Americans are "unwilling/uninterested" in such labor?
That's where the regulators are supposed to step in by setting the rules that both Corporation A and Corporation B are forced to follow, if they want to access the market.
Except, they won't because the elites are perfectly fine with the status quo, and the regular people seem to care more about pronouns and plastic straws, than being able to afford a decent lifestyle.
I don’t want regulators to force rules on lifetime warranty, sales methods, tolerances and material specifications and the like. The latter is where the tool truck brands are often winning for demanding users of tools.
Currently we have draconian emissions rules domestically, and a complete blind eye when it comes to any offshore production.
You can't tell me those couldn't be made in the USA at a premium of $49 per unit. You could literally pay $50/hr, produce only one unit per hour, and still come out even.
The outsourcing arguments are lazy and outdated. Companies screwed up outsourcing it all, and the US is unable to regain its foothold. Labor costs are negligible here, even if US were twice the price.
The easy (and wrong) answer to why this is happening is that capitalism ruins everything. The actual answer is that most people don't need or want tools and will not pay the premium for good new tools.
China can make exceptionally high-quality tools, you just have to design it well and pay for it.
I think just like everything evolves capitalism needs to evolve too. “We need capitalism 2.0”Profit cannot be the sole focus. We need to shift to capitalism with a heavy bent on sustainability. Sustainable profits, sustainable for the community it serves in etc. we live in an evolved society where we curb our raw instincts for the general good. There used to be a time when all humans simply acted on their r as emotion and instincts and from that we evolved on. Same need to happen with how we organize and structure our economies and businesses.