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Comment by gnat | Hacker News Reader

As the article says, premium wrenches are already made in America. Consumers pay for comparatively-expensive American labour in comparatively-expensive premium products.

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.

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"a low-price tools brand"

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.

> 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.

What really happened is that Eddie Lampert engineered a financial bust out of both Sears and Kmart. Extracted billions and left the carcass of formerly great companies.

This is accurate.

Just read about him on Wikipedia. It mentions:

> 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?

It's accurate that Lampert did engineer a bust, but it happened after Sears had missed the ecommerce boat. I don't think Lampert could have done the deal if Sears hand adopted the internet. The Lampert purchase happened in 2005. Sears shuttered the catalog business in 1993, and Amazon launched in 1994. Amazon started expanding into non-book product in 1998, and it was clear to the Sears universe that they had completely and utterly messed up.

>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.

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 point is that they don't break or wear down. Have you ever held an old craftsman tool?

They do when people (ab)use their tools, like use screwdrivers as chisels, chisels as screwdrivers, and anything metal as a hammer or mallet.

Harbor Freight offers the same warranty now on their hand tools, and Home Depot on Husky's (Home Depot even did a promotion around the time Sears ended their warranty where they'd replace a craftsman tool with a husky for free).

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).

But no one looking to seriously buy tools goes to Harbor Freight, expecting to pass that tool to their child or grandchildren. They go there to buy the crappy chinesium grade tool that gets a job done. If they find that they need the tool often enough, then they buy the heirloom grade one.

I'm impressed that the Craftsman brand, without any manufacturing capability since it was all outsourced, and its reputation falling due to lower quality tools and its association with dying Sears, still sold for nearly a billion dollars.

Even now it's probably one of the more recognizable brand names among "the general public" even if tradesmen and those in the know wouldn't touch it with a 10 foot pole.

So the memetic inertia, by itself, with nothing to back it up, is worth $1B? That's frightening.

You can troll bankruptcies to see what the brand goes for sometimes, I know someone bought the ToysRus brand and stuck them inside Macy's for some reason.

The only problem with the argument is that it’s completely false (not you, the company).

> 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...

“Productivity” is a very hand wavey idea.

I’m not really sure how that’s possible - when I’ve gotten quotes for short run highly automated manufacturing (the stuff the US should be comparatively good at!), the overseas numbers are usually about half those of the US on a per part basis. IIRC can try this for yourself on Xometry by changing the manufacturing location.

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.

The ability for contract manufacturers to simply source things from neighboring companies is a very real thing - and usually the quality is pretty good. Somehow, working between companies is a quick and fast thing, where here making a new business relationship is seemingly mired in problems.

> There’s so much manufacturing capability concentrated in a small number of places that every process option is on the table

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.

Try it for short run PCB or PCBA and you’ll see the difference is 3-20x rather than merely 2x. (And the one that’s on the low end of the scale isn’t as flexible as the Chinese suppliers; most are in the 8-20x range.)

Running a PCB line in the US generally requires that you comply with a whole host of regulations about toxic emissions that China simply ignores.

PCB lines are nasty and noxious.

> the argument is that it’s completely false

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?

No you are totally right in that point.

>>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.

This isn't true though.

That's not interesting, it is the utterly predictable result of not making anything. Of course the only ones getting better at it and making machines for it are those doing the manufacturing.

That’s not true in chip making for example

True in chip _making_, not yet true in chip design.

Although not american, ASML is not chinese / taiwanese either where most of chips are made.

ASML doesnt make chips.

I’m aware. I think you should reread original comment I was replying to

So then clickbait title should be modified to say "low-price wrench"?

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.

> by low-cost Chinese labour.

Why are Chinese willing to do labor for low-cost while Americans are "unwilling/uninterested" in such labor?

Because the country has lower standards of living and a government that busts independent unions while deliberately manipulating their currency to make sure workers do not end up with too much buying power.

Probably because the American couldn’t even pay for housing on wage the Chinese worker can.

Different places have different costs of living.

Unfortunately, higher cost of living doesn’t automatically raise wages though.

While true in the abstract, that's not germane here.

Cost of living is somewhere between 40% to 70% less in China.

That is a bit circular. The economy isn't like weather where some places just have less rain. China's cost of living is 40-70% lower because the people doing the work are willing to charge less.

In some cases, because we make it illegal for Americans to act on it even they were willing/interested. That’s not the majority of the story, but it’s part of it.

Why are American workers not willing to be packed into a 8 people dormitory and works 12 hours a day for $1000 a month?

Because Americans have more options and opportunities. The job market is better, simple as that. This is a big reason why people emigrate.

The automation heavy factory that they couldn’t get to work is an old story.

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