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Comment by rohansingh | Hacker News Reader

This really reminds me of The Alantic article this month entitled "The Insourcing Boom": http://www.theatlantic.com/magazine/archive/2012/12/the-inso...

The idea being that manufacturing was pushed abroad due to the appeal of cheaper labor, without a deep consideration of hidden costs or the overall context of such a transition.

GE, which is featured extensively in the article, actually managed to reduce manufacturing costs by bringing the fabrication of a water heater and other appliances back to American shores — largely due to the faster loop and better communication between designers, engineers, and laborers who all speak the same language and are in the same factory.

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Also due perhaps to real wages in the US declining to the point where cost/benefit calculations of US based production facilities are finally starting to add up for some manufacturers.

And wages increasing in China

And not to mention 2012 is when there were new minimum wages for Malaysia and other SE Asia countries.

It's made manufacturers seriously consider Africa as a low-wage manufacturer, but unlike some of the Asian countries, they do not have the political stability to enforce contracts.

Manufacturing leaving the US in mass was always a myth. The jobs went away because of automation. In some cases the cheap labor offshore was still cheaper than automation, but like most technology automation continues to get cheaper every year while cost of labor goes up.

As automation gets cheaper I expect more and more manufacturing that really did move to not just come back to the US, but also new manufacturing to set up shop. Shipping costs are expensive and it only makes sense to be as close to your customers as possible. The one exception to this trend will be manufacturing that is inherently 'dirty.' Those will continue to be overseas until countries like China decide that destroying their environment for a short term gain isn't a very good long term strategy.

Shipping an iMac cost nothing -- yes the boats guzzle up fuel like crazy, but 400 20' containers can take a massive load. The cost on an individual computer, shoe or pillow is essentially nothing.

Apple airships pretty much everything. If you settle for transit by boat, you're going to have at least 4 weeks between leaving the factory and being in someones hands. Apple pushes to hold stock less than 1 week.

Shipping times are actually longer now than they were 5 years ago. Right before the financial crisis, shipping companies built up their fleets significantly and built "super ships" with huge capacity only to be met by diminished business just years later. As a result, they've deliberately slowed down their ships to cycle in more of their otherwise-would-be-idle ships.

Apple ship by air at least some of the time - http://www.businessinsider.com/air-freight-rates-from-china-...

I remember years ago, I had a part time job with 3Com, while in school, when they were still around in Santa Clara. I was on one of the lines which mfgd the 10/100 Enet boards. The lines had lots of automation, but not quite enough, as I heard a year or two later, they began shuttering the lines and moving them overseas.

So, as in these articles, sometimes manual labor is cheaper than automation, but we may have reached a point where wages have 'normalized' enough throughout the developing world that the variance is not significant enough to make manual labor economical.

What are the billions of people in developing nations (south Asia, Africa) going to do for a living, if their infrastructure and economies have not matured enough to sustain their own 'homegrown' industries?

I mean, outsourcing was seen as detrimental to our economy, but this phenomenon also had an impact in pulling millions of people in dev nations out from arduous agrarian and other subsistence activities.

Man there is so much insight in these comments. I know so little about manufacturing. I've up-voted all your comments, despite the differing stances.

I liked your last paragraph. I believe too that it was detrimental for the lives of those people who immigrated to cities to find jobs at those factories. Jobs that are detrimental to their health in many ways.

In some cases, yes. But I think on balance people who escape the countryside for the city factory jobs are not leaving a comfortable job for the promise of riches but with health risks. The factory/city job offers a much better alternative. An alternative to being a subsistence farmer or a day laborer, or a maid, or the daughter who has to marry at 16-18 and have no chance at an education. In the countryside it's not unusual for people to barely 'eke out' a 'living'. It could be picking up discarded trash and finding something recyclable, etc. Going from the coutryside to working for a Foxconn is like going from line cook at MickeyD's to being exempt salaried in the US with flex time -it's no contest.

As 'unhealthy' as the city job might be, the alternative in the countryside is, for many people, worse. It's a life of a kind of feudalism.

Why do you put 'unhealthy' in quotes??

Manufacturing leaving the US in mass was always a myth.

Uh, figures?

It is one thing to say the US remained a manufacturer but to say the US didn't offshore a significant portion of its manufacturing capacity would seem to be an extraordinary claim which requires evidence, right?

The proportion of consumer goods I see which are marked "made in China" today approaches something like a hundred percent. Sure, there are other significant USA industries that produce a lot (and naturally have increased their output via automation) but it seems badly-spoken to say claim manufacturing leaving the US is myth. Some industries have left, "in mass", even.

Depends on how you measure it, employment or dollars. If in employment, yes, much left; in dollars, relative to what was produced domestically, not so much.

As to your "make in China" - you'd have to buy many, many t-shirts or DVD players to even approach the magnitude of money going around in making, for example, Caterpillar construction equipment or BMW X5's.

The OP said industries leaving the US was a myth.

That is wrong no matter how you measure US manufacturing output.

It is a myth. America is still the top manufacturer in the world.

The difference is that China makes tons of duplicate copies of cheap goods, while America makes high value, lower run, complicated goods.

Which is why if you look only at consumer good you get the mistaken assumption that manufacturing is leaving the US. Try sourcing $100,000 machines and all of them are made in the US.

What on earth are you talking about? China makes more actual things, Germany makes more money making things. In what way is the US "top"?

GDP from the manufacturing sector has increased fourfold since 1950. All the while, jobs have decreased eightfold.

-Not exact figures.

So what are you saying then? That the US is "top" in growth of GDP from the manufacturing sector? Because I suspect that's not true either.

I'm not sure if top in growth, but the US manufacturing sector is at the forefront of GDP growth.

http://seekingalpha.com/article/602691-u-s-manufacturing-lea...

> Germany makes more money making things.

Per capita. But not even close on an absolute basis - the US makes more than twice as much as Germany.

http://www.ourfuture.org/blog-entry/2009104319/g20-manufactu...

I couldn't find more recent numbers.

Jeesh, Could read my post?

The "myth" claimed by the OP was that manufacturers have left the US. That is not a myth despite the US remaining a top manufacturing country - because, as you say, what remained specialized, high-value items (planes, chemicals).

A large number of particular manufacturers left the US.

Some links:

http://seekingalpha.com/article/602691-u-s-manufacturing-lea...

From 2011:

http://www.newsday.com/news/nation/u-s-still-leads-world-in-...

Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations. The story of American factories essentially boils down to this: They've managed to make more goods with fewer workers.

As I said, the point isn't that the US remains a manufacturer.

The point is that many US manufacturing industries have left.

The two points are different, especially for the workers who previously worked in those industries.

IE, the OP points that industries haven't left the US in mass. That the remaining industries are very productive is a different, etc.

Then point to numbers showing they have left in mass. If such a large part of manufacturing has left then how does the US (according the 2009 report linked) still lead the world in manufacturing output? Are productivity increases enough to make up for manufacturing leaving at the levels many people like think? I certainly don't think so.

Pointing to manufacturing jobs going away is an invalid metric to start. Manufacturing jobs are gone and going, but it's not something that can be stopped. Some jobs were moved overseas, but many have simply been automated away. Over time even the ones overseas will be automated away.

Go to rural North Carolina and look at the 1000s of closed Textile plants and tell me it's a myth.

Industries change ALL THE TIME. I don't know what it takes to make a t-shirt, but I have to imagine it is becoming automated to the point where not as many factories are needed. There's also shifts in consumer buying that happen.

I'm sure when cars were invented there were closed down stables all over the place. Progress happened. Rural textile plants have left in favor of luxury car makes like BMW opening plants. Don't confuse a particular industry changing to manufacturing as a whole. The value of products produces simply doesn't show manufacturing leaving. In fact, the high dollar products are moving to the US.

Wages have not declined.

http://research.stlouisfed.org/fred2/series/ECIWAG

That graph is awful. I'm not even sure that your conclusion is a valid one. Whoever made that graph should be beaten to death with the collected works of Edward Tufte.

What's bad about it? It has a fairly low "information density" (because it's a boring time series) but there's no other real sins I can think of. It's the authors of pretty (but useless) infographics who generally need to be beaten to death with the collected works of Edward Tufte.

The data show <2% growth per year but the axes make it look rather dramatic.

That doesn't make it a bad graph. In fact, putting lots of white space at the top and bottom to make 2% look small would make it a bad (misleading) graph and obfuscate any detail in the line. It's a graph representative of the data. Could have done with a better colourscheme, perhpas.

Which would put it at about inflation, so no growth.

real wages... meaning adjusted for inflation.

I measure inflation using the price of startup-friendly ramen, which has tripled over the last decade.

Which inflation number? The government one where anything that has gone up is removed or some other made up random number we like to call 'inflation?' :)

Real manufacturing wages in the U.S. have grown at 0.72% annually over the past 10 years through July 2002.

[1] http://research.stlouisfed.org/fred2/series/COMPRMS

also the wages of skilled worker in China, India, Vietnam, .etc skyrockets during the last 2 years.

The same greed that sent jobs overseas is now bringing them back. The difference is now the US companies will run a huge PR campaign saying they doing this because care about America, blah, blah, blah.

HN discussion on that article: http://news.ycombinator.com/item?id=4873542

There's also this piece from Wired, from their March 2011 issue:

http://www.wired.com/magazine/2011/02/ff_madeinamerica/

Made in America: Small Businesses Buck the Offshoring Trend

It's also about sustainability. It cost money/resources to ship product assembled in China. Lots of money.

Especially when you're Apple and you ship everything by plane.

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