> https://xcancel.com/WyzeCam/status/1917662183036706849
They’re getting attacked in the replies.
They’re getting attacked in the replies.
There are a lot of comments asking why they don’t move manufacturing to Seattle. This theme is common among people who don’t understand how manufacturing works right now: They don’t realize that a product like this has many different parts from different places, down to the dozens of little SMT capacitors. You can’t just move the factory and avoid tariffs because the parts still come from other places.
Trump has already started blinking on the China tariffs. It would be madness to move operations in the midst of this chaos—you’d immediately be undercut by cheaper competition.
A company moving their production anywhere based on what the policy is right now would be foolish because the policy could change in the next 5 mins, but will almost certainly change within minutes if there are empty shelves.
Board fab though, not so much. I don't think we have a PCB fab left in the area after losing Prototron. I'd be more sad about that, except that I don't think I ever had a single order with Prototron that actually went smoothly and came back correctly.
People simply don't understand the scale and complexity of modern supply chains. By one estimate, it will take $40T to move all of China's existing manufacturing capacity and supply chains to the US, and it will take 20+ years if you're really motivated.
People still think that order goes in and a factory makes the finished goods. In reality, individual parts can move across borders dozens of times before they're ready to be placed into a bigger product.
Heck, I remember reading that Ford cars built in Canada cross the Canada-US border 11 times before they're finished
Which also simply cannot happen because even if the US don't want stuff manufactured in "China", the rest of the world does. So the US, with higher local costs, cannot reclaim the economy of scale that went into the current chinese supply chain. Seems to me, at best the US can split it: a high cost chain in the US, a low cost chain in the rest of the world. What the US MIGHT achieve (on a long time frame) is move most of the chinese part to other low cost countries. That was already well under way.
The US also don't have the available population to run these factories.
The US is 9th in GDP per capita and has a historically low unemployment rate. I really don't understand what problem they're trying to fix here.
This argument doesn't make a lot of sense.
Suppose your company only does final assembly. Then whatever the value add of final assembly is, that's how much of the tariffs you can avoid by moving your own factory. You can eliminate as much as comes from your own contribution to the cost of the product. Meanwhile the company that makes the capacitors can avoid the tariffs on their value add by moving the factory that makes the capacitors. The fact that these are two separate companies doesn't really change much. Each one can move the part that they do.
In fact, it actually helps. Suppose the capacitor company can't move for some reason, but the final assembly can. Well, then at least you can avoid the tariffs on final assembly instead of neither if they were both made by some conglomerate that refused to move either one. Not only that, suppose other companies make the capacitors in Japan as well as China, and then the company can do the final assembly in the US and avoid the tariffs on capacitors from China by buying the ones from Japan.
I think the original argument makes a lot of sense, and yours does not. "Just move two hundred factories on a different continent" might as well be "just invent a time machine".
This is ignoring two things. First, for the earlier components in the supply chain, it isn't a reduction from 145% to 135%. It's a reduction to 0%, because the inputs are fungible commodity raw materials made in dozens of different countries, so moving the factory removes the entire tariff for the company selling that input to some other company. Which is what the manufacturer (i.e. the component seller) cares about, and they're the one who would be moving the factory.
And second, the later stages of the supply chain tend to contribute the most value. Suppose you haven't moved the factory that makes the capacitors, but you move the factory that makes the phones. The phone costs $500 retail, how much of the contribution was the wholesale price of the capacitors? A dollar? 145% of <1% is tiny.
So you both have a large incentive to move the early stages, because the tariff you avoid is on ~100% of the selling price from the perspective of the company making it, and a large incentive to move the later stages, because the later stages are the largest share of the final price.
> "Just move two hundred factories on a different continent" might as well be "just invent a time machine".
Why is moving 200 factories harder than moving one factory, when there are also 200 companies and they each only have to move one factory?
Who are these people?