Working Conditions in China...

[Raymond Fries]

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1


Hard to believe this is true...
I cannot believe a company that makes sooooo much money pays sooooo little for its labor.

America is truely blessed!!!

Since I have read this, every time I pick up my iPhone, I have a different perspective.

Be GLAD we are in America...

[Joel Goodman]

Only when we demand a fairer playing field...........

[Rod Sheridan]

Only when we demand a fairer playing field...........

Joel, I think the correct sentence is "only when we're willing to pay for a fairer playing field".

In December I was commissioning a large UPS at one of our earth stations. It's a model we own a few of and it was made in different countries as follows

- original made in France

- next generation made in China

- next generation made in India

Why? Apparently the Chinese factory wage had risen to the equivalent of $1.00 per hour, India was $0.50 per hour.

South America may be next if India becomes too expensive.

Regards, Rod.

[Brian Effinger]

Ahhh.... global economics at its best. We don't want to pay, and they want to make as much money as possible off of us before we're bled dry.

[Greg Peterson]

Mike Daisy was recently given an entire episode on This American Life. Highly recommend giving that episode a listen if you get the chance.

This video is provides an insight (http://www.cbsnews.com/8301-3445_162-57367950/the-dark-side-of-shiny-apple-products/?tag=contentBody;cbsCarousel) into Foxconn, the factory that makes the iPhone and quite a fair bit of most every electronic device.

[Bryan Morgan]

Don't forget about the EPA and miles of red tape that has to be cut through to run a business in the USA and be profitable these days.

[Jim Koepke]

Is there a city in America with 400,000 people willing to work in a plant such as Foxconn?

If they didn't have EPA regulations to follow, the cleaners would likely end up in our drinking water.

Heck, even with regulations some still ends up in some of our drinking water.

jtk

[Greg Peterson]

"Is there a city in America with 400,000 people willing to work in a plant such as Foxconn?"

Nevermind that. How would you like your boss coming in to your dorm room (filled with 13 other bunks - just enough room to slide into your bunk, no sitting up) in the middle of the night and send you down to the assembly line for a twelve hour shift on top of the other seventy two hours they work in a week?

NY Times: (http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&pagewanted=all)
"A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

That last sentence says it all. They are making a toy. A toy! Would you tolerate being woken up in the middle of the night to go build a toy for twelve hours? Talk about a race to the bottom.

As for the EPA, when did air and water fit for human consumption become negotiable? It's either clean or it isn't. Who are you going to trust to set and enforce safe levels, science, Dow Chemical or BP?

[Joel Goodman]

Joel, I think the correct sentence is "only when we're willing to pay for a fairer playing field".



IMHO one way to make a fairer playing field is to charge import tariffs that are proportional to the savings from not having enforced environmental regulations, not having a decent wage, having child labor. In that way we might pay more for our iPhones but more Americans would be working so we all might benefit from the overall improvement to our economy. And perhaps a few less children might be on the factory floor around the globe. Naive aren't I? Rant over.

[Rich Engelhardt]

Is there a city in America with 400,000 people willing to work
There - I fixed that for you.

Sadly, I'm only half kidding. As long as people can get by on nanny state gimmes and free health care, they have no incentive to work.
Matter of fact, actually going out and working will cut into their Netflix and/or texting time.

[Steve Griffin]

As poor as conditions are for Chinese workers, not a single one is forced to work there. That is because the alternative--no jobs from Apple--is far worse for each of these workers.

It's a win/win relationship, and we are blessed to live in a country which has already gone through the growing pains of industrialization. We are also blessed to have many successful major companies--start forcing them to operate as the central planner utopians would like, and we'll see what it's like to have a country without these companies....

[Dan Friedrichs]

As poor as conditions are for Chinese workers, not a single one is forced to work there. That is because the alternative--no jobs from Apple--is far worse for each of these workers.


+1. People choose this because the alternative (rice paddy farming) is even more grueling and even less profitable.

[Phil Thien]

What many people don't get, is that we're at the very beginning of this process.

Urbanization in the People's Republic of China increased in speed following the initiation of the reform and opening (http://www.sawmillcreek.org/wiki/Reform_and_opening) policy. By the end of 2010, the mainland of the People's Republic of China (http://www.sawmillcreek.org/wiki/People%27s_Republic_of_China) had a total urban population of 665.57 million or 49.68 percent of the total population, rising from 26% in 1990.[1] (http://www.sawmillcreek.org/#cite_note-0)


In the long term, China faces increasing urbanization (http://www.sawmillcreek.org/wiki/Urbanization); according to predictions, nearly 70% of the population will live in urban areas by 2035.[citation needed (http://www.sawmillcreek.org/wiki/Wikipedia:Citation_needed)] Over the next two decades China will build 20,000 to 50,000 new skyscrapers and more than 170 cities will require mass transit (http://www.sawmillcreek.org/wiki/Mass_transit) systems by 2025.



India:

Urban expansion in India will happen at a speed quite unlike anything the country or the world has seen before. It took nearly 40 years (from 1971 to 2008) for India’s urban population to rise by nearly 230 million; it will take only half that time to add the next 250 million. This expansion will affect almost every state. For the first time in India’s history, five of its largest states will have more of their population living in cities than in villages. This interactive graphic offers a map of urbanization by state and notes which cities are poised to surpass the 4-million mark in population.



So we have a coulpe of decades (at least) of integration coming.

The last two point five decades have been a walk in the park, compared to what is coming.

[Brian Ashton]

Ya when you read it, it doesn't sound much better than slave labour... Apple certainly likes to pat themselves on the back for their "outstanding" ethics.

[Brian Ashton]

Joel,
South America may be next if India becomes too expensive.

Regards, Rod.

Nup - Africa. China is buying it up at an alarming rate. Human right in south america are considered exceptional compared to africa.

[Mike Archambeau]

How is it that we can't produce handheld electronic devices in the USA? Is this not the same country that went to the moon, is currently exploring deep space, builds the most sophisticated weapons in the world, builds the majority of the jets that wisk us around our little globe, built the capacity to fight and win two world wars, etc? But we can't figure out how to produce those dainty little itoys? I think some engineers and executives are trying to pull the wool over your eyes. If a military conflict erupted with China, and it escalated to the point where the Foxconn factory could no longer make itoys, Apple would amaze you with how fast they could restore production. So are they just taking advantage of the easiest path right now?

[Dan Hintz]

How is it that we can't produce handheld electronic devices in the USA? Is this not the same country that went to the moon, is currently exploring deep space, builds the most sophisticated weapons in the world, builds the majority of the jets that wisk us around our little globe, built the capacity to fight and win two world wars, etc? But we can't figure out how to produce those dainty little itoys? I think some engineers and executives are trying to pull the wool over your eyes. If a military conflict erupted with China, and it escalated to the point where the Foxconn factory could no longer make itoys, Apple would amaze you with how fast they could restore production. So are they just taking advantage of the easiest path right now?
It's not that we can't do it here... it's that we can't do it here as inexpensively. If an iPad was manufactured in the US, I expect the cost would go up by 10-15%, easily.

[David Weaver]

At least 10-15%. Apple's investors would demand some additional return for that extra amount of cash tied up in production, too.

And it would only take one quarter for the investors and analysts (or internal folks) to focus on the production cost of the devices, which would probably be double+ in the US vs. China, despite automation (not to mention all of the other barriers here) and say "why aren't we making them in china?"

Apple's legal obligation is to their shareholders, and not to production in the US.

The made in the US surcharge would only hold water in the US, and only for a % of buyers (i'd suspect that if you put a US made version next to a foreign version for $50-$100 more, which you'd be very lucky to get as the incremental difference - most people in the US would buy the cheap one. That's how we got here in the first place).

And Apple wouldn't probably be wanting to have separate production facilities to supply and support when the final item is easy and cheap to ship.

[Brian Elfert]

We could produce the items in the USA, but the costs would be far higher. It would take a fairly large investment of time and money to build the semiconductor fab plants to make the parts for consumer electronics.

What I usually hear is the cost of doing business in the USA other than wages is a huge driver to produce stuff overseas. Businesses in the USA that do stuff like metal finishing have to spend a ton of money on licenses and keeping paperwork to make the government happy. Our sue happy society doesn't help with costs either. There are some products where more money goes to insurance and legal costs than the product costs to make.

[Greg Peterson]

Apple's legal obligation is to their shareholders, and not to production in the US.


Apple has a fiduciary responsibility to its investors. This is not to be confused with a legal obligation. Clearly you do not know the difference.

Apple has no legal obligations to their investors beyond the regulatory infrastructure all publicly traded companies must operate within. What were you saying about actuary tables?

[David Weaver]

If you'd like to talk about actuarial tables, go ahead and tell me what they have to do with whatever you involved them in. Casualty insurance?

Fiduciary responsibility to shareholders isn't a legal obligation? I'll be interested in seeing what your definition of a fiduciary responsibility is (fiduciary - one who acts legally on behalf and in the best interests of another {lawyers.com})? What would shareholders do if apple came out tomorrow and said they were going to dabble in social experiments regardless of profitability (and to the detriment of share price)?

[Stephen Cherry]

If anyone thinks that Apple is exploiting people, read up on the East India Company. They were a biritish company. They had the athority to fight wars, conquer forein territory (India), etc.

At their best, if I remember correctly, they imported tea from china. THe problem was that China only wanted payment in silver, which the East India company did not like because silver has some value. So they fought the opium wars to allow payment with opium from India. So they won the war, started paying for tea with opium, which destroyed countless lives in China. So apple making people work putting together ipods is historically, not really all that bad.

[Chuck Wintle]

How is it that we can't produce handheld electronic devices in the USA? Is this not the same country that went to the moon, is currently exploring deep space, builds the most sophisticated weapons in the world, builds the majority of the jets that wisk us around our little globe, built the capacity to fight and win two world wars, etc? But we can't figure out how to produce those dainty little itoys? I think some engineers and executives are trying to pull the wool over your eyes. If a military conflict erupted with China, and it escalated to the point where the Foxconn factory could no longer make itoys, Apple would amaze you with how fast they could restore production. So are they just taking advantage of the easiest path right now?
yes apple is pursuing the least cost path to producing products though its is not true the US could not manufacture an apple product. It would only cost slightly more which the consumer would willingly pay.

[Brian Tymchak]

....
South America may be next if India becomes too expensive.



Watch out for Vietnam and Poland. Before I was downsized from my previous (IT) employer, we sent work to China, where the cost was 3 workers for 1 American worker. (We ended up bringing some work back when it took > 3x workers to do the job). About the same time we sent work to India, where it was about 5 to 1, but the rates rose to where it was only 3 to 1. I was still holding my own at that point, more-or-less. But when we sent work to Vietnam and Poland, the ratio was 14 to 1. ...And out I went, along with hundreds of others...

....I just can't outwork 14 at a time, even if they were less efficient and less skilled on an individual basis...

[John Shuk]

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1


Hard to believe this is true...
I cannot believe a company that makes sooooo much money pays sooooo little for its labor.

America is truely blessed!!!

Since I have read this, every time I pick up my iPhone, I have a different perspective.

Be GLAD we are in America...

We insist that our workplaces be safe and non-hostile places where dignity is not an unreachable goal. In the end our insistence in regards to quality of life is why we have no real manufacturing in our country. So sad that others around the world cope with such despair that they haven't the luxury of that same insistence.

[David Weaver]

If anyone thinks that Apple is exploiting people, read up on the East India Company.

It's certainly a relative issue, isn't it?

I would suppose that what we consider exploitation here may not be considered exploitation in another country. We egotistically apply first world principles pretty often to third world places where the third would love just to have a chance to work toward becoming first world.

I think that the Chinese can probably fight for themselves, and they don't need trying to shut down factories there any more than we need them to shut them down here. I understand that the situation for workers in china (in terms of rights and wages) has made significant progress in the last 10 years. Maybe not in every industry or every geographic, but rome wasn't built in a day here (or anywhere else), either.

[Brian Elfert]

The costs of doing business in China have gone up with all the manufacturing that has moved there. There are companies who plan to leave China due to the increased costs. In a few cases they are actually coming back to the USA and in most cases they are looking to move to a lower cost country.

Most of the stuff coming back to the USA is small manufacturing runs that require quick turnaround. There are companies in the USA that excel at small jobs with quick turnarounds.

[Greg Portland]

Here's an interesting article on the Foxconn plant: http://www.wired.com/magazine/2011/02/ff_joelinchina/all/1
(IMO, the suicide thing is sensationalism when you compare it to the average suicide rate). It should be noted that Foxconn jobs are highly desirable for the average Chinese citizen.

[Scott Donley]

An interesting video on jobs coming back to the US.http://www.msnbc.msn.com/id/21134540/vp=46198559&#46198559

[Mike Kelsey]

The line "a race to the bottom" caught my eye. Talking with a relative recently who does realistic architectural (& more) renderings, submitted a proposal which called for something like 40 computerized renderings. She figured her time and then cut her going rate in half so she might have a "shot at it". She didn't even come close to the winning bid. Since this is the virtual world, bids were coming in from around the globe. She calculated what the hourly rate of the "winner" was. She knows her business quite well, has worked for architects & engineering firms, so she said determining how long the work would take isn't that difficult. The winning bid came in at $2.50 per hour & to top it off the winner was here in the states.

She truly believes it is a race to the bottom. That 99% will drop out quickly with only the best left standing. I never got to ask her if those left would achieve a "living wage".

It's hard to believe that in the digital world, for one, that people will pay decently for a person's abilities as time goes on....

[Eric DeSilva]

I usually rail against Apple, since I'm not a huge fan of closed architectures. But, for the sake of fairness, this might be worth adding to the debate--http://www.webpronews.com/apple-fla-2012-01

Short version is Apple, in response to recent criticisms, has listed its suppliers and joined the Fair Labor Association. It is a step in the right direction.

[Greg Peterson]

Fiduciary responsibility to shareholders isn't a legal obligation?

A fiduciary responsibility resides above and beyond any legal obligation. As I said, Apple has no legal obligations above and beyond that imposed on them or any other publicly traded company. Fiduciary responsibility assume the party is already acting with the framework of the existing legal requirements.

Fiduciary responsibility requires the party to act in the other party's best interests and to avoid any conflict of interest. It is entirely possible for a company to engage in a conflict of interest with their investors yet not break any laws in the process. Fiduciary responsibility holds the company to a higher standard than the law and enforces trust between the partys.

Wikipedia:
A fiduciary will be liable to account if proven to have acquired a profit, benefit or gain from the relationship by one of three means:[2] (http://en.wikipedia.org/wiki/Fiduciary#endnote_chan2)

In circumstances of conflict of duty and interest
In circumstances of conflict of duty to one person and duty to another person
By taking advantage of the fiduciary position.
Therefore, it is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and not to profit from his fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest (http://en.wikipedia.org/wiki/Conflict_of_interest).

Your definition- "fiduciary - one who acts legally on behalf and in the best interests of another". Obviously an accountant (CPA) or publicly traded company has legal standards they must adhere to. An executor of an estate, typically someone with little or no legal training, has a fiduciary responsibility to all interested partys, above and beyond what their legal requirements are.

Aside from breaking laws, Arthur Anderson abandoned their fiduciary responsibilities while at Enron. They could have likely survived the fines and penalties of that situation, but the systemic manner in which they broke from their fiduciary responsibility made it virtually impossible for any responsible company to trust them.

Fiduciary is an obligation to transparency and serving interests without bias. Fiduciary responsibility is to finance what the Hippocratic oath is to doctors.


What would shareholders do if apple came out tomorrow and said they were going to dabble in social experiments regardless of profitability (and to the detriment of share price)?

Well, first thing the smart ones would do is move their money out of Apple. What law says Apple could not do something like this? What legal obligation does Apple have to not shutter their operations if that is what the majority share holders want? If the controlling interest at Apple decides they want to take the company in a different direction what are the minority share holders going to do about it other than cash out. Regardless of what Apple does, they have a fiduciary responsibility to keep their investors informed of matters and act in the 'majority' of shareholders best interests.

[David Weaver]

You went out of your way because of another thread, to try to describe something that is at the very least a legal obligation as some other definition full of unidentifiable puffery - but that is still at the very least a legal obligation.

http://www.litigationandtrial.com/2010/09/articles/series/special-comment/ebay-v-newmark-al-franken-was-right-corporations-are-legally-required-to-maximize-profits/

[Eric DeSilva]

I think I have to agree with David here. Directors and officers get sued for breaching their fiduciary duties, so I'm hard pressed to see how you don't call that a legal obligation.

[Sam Murdoch]

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1


Hard to believe this is true...
I cannot believe a company that makes sooooo much money pays sooooo little for its labor.

America is truely blessed!!!

Since I have read this, every time I pick up my iPhone, I have a different perspective.

Be GLAD we are in America...


Here watch this for even more perspective http://www.cbsnews.com/video/watch/?id=7396762n&tag=contentMain;contentBody

[Pat Barry]

Several years ago it was Nike and the complaint was child labor somewhere in Asia (doesn't matter where). Now its Apple and other "American" companies. This is all about pure greed on the part of companies like Apple. They go after maximum profit margin which means keep the price as high as possible and the costs low. As someone pointed out, the cost might rise a bit if produced in the USA, lets say 10-15% like the poster noted. So, for your stupid Iphone that you drooled over and couldn't wait to have, maybe you even camped out overnight outside Best Buy or the joke Apple store to get. What if you had to pay the 10% - fact is, you wouldn't even know it was an extra 10% (of course now you do). The point is, you STILL would have bought it. But Apple knows that - they also know how to squeeze even more out of the sale. Are we upset? Why? If you believe in USA then don't buy the stupid Iphone. Make these "American" companies do business in America where they belong. In my opinion, and I suspect you can guess what that is already, they are UnAmerican. But we (the media that is), glorify Steve Jobs for the 'innovation'. They should do the opposite and show Apple for what it truely is - antiAmerican, greed based, 'world economy' devotees.

[John Coloccia]

If you think the cost differential between China and the US is 10%, I'm afraid you're mistaken. By the time you're done with environmental regulation, OSHA, unions, taxes and everything else, you're looking at quite a bit more.

As far as Apple being Un-American, they are as American as can be, operating within our laws. We're a nation of laws. I'm a bit sick and tired of people and companies being called un-American for doing nothing other than following our laws. If YOU don't want to buy from China, you don't have to. I've been on an anti-China crusade for a while now, and I'm doing quite well. I actually had to buy some toe-nail clippers recently because my mother-in-law (who was with us from Finland for about a month) hid my old ones on me. I bought Chinese ones because it's all I could find. They are absolute garbage. Recently, I found the ones I actually like, stuck in a random drawer somewhere. Much sturdier. Made in Korea. LOL. If I ever loose them again, I will search long and high and find SOMETHING else as my Chinese ones are absolutely WORTHLESS, even though they were the "best" ones I could buy. I guess there's no money in making nail clippers? Surely, someone must make some decent ones?

I was willing to pay for quality clippers, but a casual search turned up nothing and that's what I went with. But whatever, because that's the last thing I can remember buying from China in at least a couple of months.

How many that are angry and indignant can honestly say that? I pay more for everything. The places I shop don't take coupons from everyone else on the planet. Since I left my lucrative engineering job to pursue my life's passion I can honestly say that every purchase hurts a bit (just try to make a living selling guitars....ROFLMAO....someone's got to do it!). I will gladly pay a bit more, though, to get a quality product from a company that doesn't abuse it's workers. There's a lot of stuff that I'd love to have but I simply can't afford anymore if I purchase from a reputable source. Oh well. So be it. I guess I'll just have to suffer compared to my peers.

Instead of complaining about companies, how about putting the blame squarely on the consumers that...well....consume? I guess we're the innocent bystanders? I don't buy that. Stop blaming companies that operate within our laws, and put the blame where it belongs. It belongs with the people who vote and the people that consume. Everything else is nothing more than posturing and bravado. Put your money where your mouth is. If enough people do that, THEN it will change. Everyone complains about it, and everyone is mad about it, but I wouldn't bank on anything changing because no one actually does anything about it. Are we waiting for some law to be passed or for some economic pressure to transpire? That's not how it works.

Just my worthless $.02....for what it's worth.

[Bryan Morgan]

Several years ago it was Nike and the complaint was child labor somewhere in Asia (doesn't matter where). Now its Apple and other "American" companies. This is all about pure greed on the part of companies like Apple. They go after maximum profit margin which means keep the price as high as possible and the costs low.

Why is this wrong? Companies are not charities. They exist to make profit. Pure and simple. Who is anyone to say what amount of profit they should strive for? What amount of profit is "acceptable" vs. "greedy"? You search for deals right? Why? To maximize the use of your earned money. A company does the same. Why would I pay some turd with an inflated sense of entitlement $10 an hour (plus all the insurance and everything else I'd have to pay to hire him) when I can pay some guy in China $1 an hour who works twice as hard? I don't see how any of this is un-American. Un-American is stealing from companies through over taxation and making it increasingly difficult for a company to make profit so they are forced to move their operations overseas. I'd love work to come back to the states but the more I see all these occupy people and whatnot, the more I support China.

I work for a public company and see it every day about how they are all about profit at the expense of everything else. I don't like it because I see how it actually kills the company... but then, its their company they can do what they want. I understand they are all about profit, not to provide people with jobs. They are too stupid to realize that happy customers bring them more profit and when they cut corners everywhere the quality goes way down and so does the profit. Thats fine, everyone is entitled to mistakes. When it folds I will go work somewhere else. There are times I feel I'm treated unfairly but nobody holds me there. I've walked out several times but apparently my work is worth something because they pay me more or give me what I want to keep me there.

[Kevin W Johnson]

Is there a city in America with 400,000 people willing to work in a plant such as Foxconn?

If they didn't have EPA regulations to follow, the cleaners would likely end up in our drinking water.

Heck, even with regulations some still ends up in some of our drinking water.

jtk

No one is suggesting we do away with all the EPA regs. What is being suggested is that the rest of the world be held to the same standards. Everytime I hear some one throw out the "we have to compete in a global economy" phrase, I wanna slap'em. (not directed toward you, btw.) We simply cannot effectively compete when the rules and regulations are so different.

[Jim Falsetti]

What does "Made in America" really mean?

I too have been trying to buy "Made in america" stuff. But lately I have been wondering... are the products labelled "Made in America" really made in other places? Is it possible to buy offshore US from places where there is no country of origin so the products could be labeled as MIA?

Jim

[Larry Edgerton]

No one is suggesting we do away with all the EPA regs. .

Well, although I agree with the idea of rules, I have to disagree here. I have shrunk my business, and one of the biggest reasons is that it is harder and harder to make a profit playing by the rules.

The government makes absolutely stupid rules with no thought whatsoever to the concequences to business because they don't have to. They just go to the public well and take another dip if they need more funds. Much of the stuff coming down is nothing more than a money grab.

Take the regs passed down by the EPA on lead in old houses. The stupidity is amazing! What it adds to a job means that the jobs are just not going to get done by a legitimate contractor. but.....

The EPA made it so that every contractor, even all subs have to be licenced. So there is an estimated 1 million plus licences, and I don't remember for sure what it costs, but lets say $200. Thats 200 million dollars right off the top with the potential to harass working stiffs and fine them for another income stream.

Government is out of control and staffed with illogocal thinkers, and that is what is stopping business here. Choking it would be a better discription.

I agree with John C, and have been doing the same. I vote with my dollar. No Apples for me......

Larry

[David Weaver]

.. lets say 10-15% like the poster noted...

Apple will see this differently, though. The 10-15% has an opportunity cost, and that 10-15% may very well be as much as the entire cost of production in china plus shipping to here. So they will see it as the loss of opportunity to use the 10-15% of capital for the entire time it's tied up in the product from start until they get paid for it.

So, it will become more than 10-15% more to the end user by the time it hits retail. And it may become more than 10-15% more all the way along, though you'd expect if the 10-15% was loaded by apple, just the proportional price increases would go through the chain to the retailers.

If it costs twice as much, Apple will see that as the cost of production being twice as much, and not 15% more than the retail price. And they'll do a study to find out how many people will buy the device if it's made in the US vs. china and find a negligible difference in the number of people (hypotheticals here), and the production will immediately go somewhere that it's less expensive, as long as the less expensive place doesn't come along with quality problems, etc.

It's just awfully difficult to entice someone to spend more to get the same thing, especially when they have already unitized and quantified everything that they do, and they have the scrutiny of analysts and shareholders who expect earnings growth. Once you've saturated the market, the earnings growth comes from the same place it does with every other seller who has the market saturated - more margin (in % or dollars) per item.

Fortunately, the worse that proposition gets, the better the chance you have of someone else coming in and realizing they can make a lot of money and start lower on the expectations ladder with earnings.

At the retail level, it certainly seems to be the case (and this is my opinion - and a bit simplified). Decades ago, HD and Lowes and other places such as that were filled with good quality tools and with really good prices. These days, the prices aren't very good, and there isn't much to be had there in quality. They've saturated the market and the only way for earnings to increase is to get more profit out of each location. Sales or margin have to increase. One is easier than the other in the short term.

Circuit City and BB being other examples - CC's gone, but they basically become "old" companies in a world where they don't do anything more than bring something in one door and push it out the other. They're expendable when the next growth oriented chain with no legacy costs comes along.

Apple isn't quite that expendable, though, given the number of fans they have - blindly brand loyal folks who will at this point pay a lot more for something made in china by apple than they will for something made in china by HP. My BIL mentioned to me a couple of months ago that he figures that any time he sees someone who is using an electronic device that isn't apple (computer, ipad/tablet, phone, ..) that he figures they're either totally out of it or not very intelligent. Perhaps he just said that because I was using an HP computer at the time. I see it differently - my phone is free (i don't get to choose what it is, but I could pay to get it changed to an iphone - no thanks), my laptop computer was $600, and it's almost 5 years old now, and I'd see spending twice as much for a mac book or whatever, and several hundred dollars on an iphone to basically get the same thing as I have with a little different wrapper.

[David Weaver]

Speaking of brand loyal, there was a guy who lived next door to me in college who was on the edge of his seat 365 days of the year following when the next new nike sneakers would come out. He apparently had magazines that were focused on shoes (i dont' remember what they were) and collected press release literature about the next upcoming shoe designs (I'm dumbfounded by this...still).

Of course, the whole process was consummated by purchasing the shoes when they did come out. The $3-$4 shoes or whatever they cost to make shoes, that are introduced at $150. Despite the fact he needed no shoes, and was by no means rich. It was a curiosity that only became annoying when he tried to convince the rest of us - one at a time, and over and over - that we needed to see the light about why each pair was special.

And when I got an off campus job, much to my surprise, one of the owners of the place that I worked (who was otherwise an adult male) also had the nike disease - he "needed" to have the new shoes that came out, the more expensive and ridiculous they were, the better.

Either one of those guys probably buys 10 times as many pairs of shoes as I do... or more. But they don't care at all where they come from.

I personally am mourning over the fact that I can no longer go to the clark's outlet near home and find Bostonian shoes made in italy in the clearance racks. My pairs of shoes that were made in italy (i still have one pair left) have each lasted several years (like four) of daily wear, and the two pairs together cost about $75, I think. Everything there now originates in china, and the soles are harder/stiffer/lower quality, the leather is not as nice, the seams are not as strong, and the shoes weigh about half as much. I'd pay $100 any day of the week for another pair of italian made casual dress shoes, but there are none. There are definitely makers of italian shoes still, but not in volume for the commoner in my town, and the prices are more like $300-$500. I'm not ready to go there for one pair of shoes, but I am really disappointed in most of the china origin shoes that I've gotten.

If the china shoes were as good as the previous bostonians that were made in italy, I wouldn't care. But somewhere the decision was made to change the origin of the shoes despite the quality of construction. That's too bad.

[Jim Matthews]

Don't forget about the EPA and miles of red tape that has to be cut through to run a business in the USA and be profitable these days.

Go to Shenzhen and take a deep breath, then drink out of a public water fountain.
If an industrial concern isn't dealing with toxic waste (http://news.xinhuanet.com/english2010/china/2011-09/01/c_131092172.htm), the true cost of a product is handed to the next generation in the form of illness, poisoned water and tailings.
Meanwhile, those that profit from dumping same have moved to a locale that enforces clean air and water standards.

Love Canal is an infamous place, and not what you're sitting on.

[Jim Falsetti]

Allen Edmonds are still almost all made in America. They added employees this year. Initial cost seems high but lifecycle ownership cost is low. I have had several pairs for well over ten years. You can send them back for recrafting if they get really worn. Sometimes thay are on the clearance racks at Marshall's.

How about Redwing work boots? Used to made in USA, I have had one pair since 2003 - still great boots. Started looking for replacements but they were all made in China.

Jim

[Jim Matthews]

There - I fixed that for you.

Sadly, I'm only half kidding. As long as people can get by on nanny state gimmes and free health care, they have no incentive to work.
Matter of fact, actually going out and working will cut into their Netflix and/or texting time.

You mean, Health care shouldn't be free? Entire modern countries (some next door) have cradle to grave health care coverage.
People still working in former industrial hubs are turning on each other instead of pressuring their leadership to lead the jobs back.

If you're driving on tires from Korea, you're illustrating the real problem.

[David Weaver]

Thanks for the heads up, Jim. I have a very good shoe guy near my office. I just have never been in position before to get him to resole or rework shoes, but it looks like the direction that I will probably be going as the mid-quality and mid-price shoes disappear.

Not opposed to sending shoes back to them to be reworked, either.

You are right about boots - it's difficult to find moderately-priced boots of any style made in the US. Last time I tried at a place other than a speciality retailer was about 5 years ago at a sportsman's store here. They had about 200 different boots, work and hunting, ... one pair at that time was made in the US. They were danner, I think. they went out of business - I wouldn't know where to look now.

It is a shame that manufacturers who have spent gobs of time and energy to figure out how to make a really high quality good for a moderate price and in volume are disappearing.

[Phil Thien]

Taken individually, it makes financial sense for manufacturers to off-shore production.

Taken as a whole, moving manufacturing off-shore will destroy the greatest consumer market the world has ever seen.

I do think businesses are beginning to feel resistance to Chinese-made products.

And that scares the you-know-what out of them.

I think I mentioned before when I was in a Home Depot and they have someone from a survey outfit asking a guy back in the electrical department why he selected a Klein tool. "Made in U.S.A." was one of the multiple choices, and he did pick that (among familiarity with the product).

So they are not immune.

It scares them almost as much as that happened with SOPA and PIPA.

I think it terrifies them that there could be a coordinated effort to stop buying Chinese, similar to the SOPA/PIPA effort. For some, even a seven of fourteen day boycott would be devastating.

[John Coloccia]

I personally am mourning over the fact that I can no longer go to the clark's outlet near home and find Bostonian shoes made in italy in the clearance racks.

I love my Bostonians. What a great shoe. I haven't worn one out yet.

[David Weaver]

I think it terrifies them that there could be a coordinated effort to stop buying Chinese, similar to the SOPA/PIPA effort. For some, even a seven of fourteen day boycott would be devastating.

I think what terrifies them the most is that they have gotten used to a model where the original goods they sold were priced at X and it cost 0.6X - 0.8X (or whatever) to acquire them, maybe most of that from the manufacturer. And with chinese goods, somewhere along the supply chain, they've been able to continue to charge X and the cost of manufacturing the items is more like 0.1X.

I think a lot of retailers have become totally drunk with the ability to have a huge inventory with little tied up in it, and they aren't looking to tie up capital with high value inventory when a lot of consumers don't know the difference.

Plus, they can screw around with all of these stupid coupons - 20% off of this or that, or buy one get one half off, because there is little in the cost of the item to begin with.

It is demoralizing a lot of the time if you want to get something decent quality without being an expert about the good and what makes it great vs. good vs. poor. Especially when great is something that someone who uses a good several hundred times needs, and good and poor are almost the same price, despite "good" being good enough for homeowner longevity and "poor" being equated with getting the good out of the closet in a year and finding that it no longer works despite little use.

[Ben Hatcher]

Did any of you actually read the articles cited here? There is a very important point regarding why things are made in China that has nothing to do with cost and that is flexibility and adaptability. There is no way that any plant in the US would be able to switch gears and ramp up product on the scale that is required for a global roll out of a new, high demand product. 400,000 workers at that Foxcomm plant, guys. 400,000 who are willing to work long hours for days on end because that is a better option than their alternatives. 400,000 people willing to be woken up at night and told "time to go to work, we've got to make more gadgets so you're working overtime." You could probably find pockets of folks here willing to do that, and we all certainly know farmers, ranchers, or small business owners who work 16 hour days for months on end. But to be able to assemble nearly half a million of that kind of worker in one place is something that can only be done in a country with a billion candidates who are willing to relocate. The logistics advantage and the reduced time to market that this kind of arrangement allows should not be underestimated. I don't understand why we all seem to lament the fact that making some things elsewhere just makes more sense. I don't do drywall anymore because other people can do it better and faster than me. I'm happy doing things that I am better at, that I enjoy more, and that are more profitable in the first place.

[Jim Matthews]

There are some services that can't be "farmed out".
Farming, for one.

Plumbing, for another. I forsee a resurgence in guilds, to challenge the primacy of capital.

[Dan Hintz]

There is a very important point regarding why things are made in China that has nothing to do with cost and that is flexibility and adaptability.

There is no way that any plant in the US would be able to switch gears and ramp up product on the scale that is required for a global roll out of a new, high demand product. 400,000 workers at that Foxcomm plant, guys. 400,000 who are willing to work long hours for days on end because that is a better option than their alternatives. 400,000 people willing to be woken up at night and told "time to go to work, we've got to make more gadgets so you're working overtime."
I split those two pieces of your quote up... on one hand, you say it has nothing to do with cost, yet on the other hand you say these companies have 400k workers ready to go at a moments notice.

Do you think those 400k workers could be recreated in the US at the same cost? Sure, flexibility is great, but it's a (albeit major) side benefit to having dirt cheap labor. If we had three times as many workers in the US, all willing to work a standard 8 hour workday, but willing to accept 1/3rd the pay of a Chinese worker, we could recreate the same flexible scenario.

[Bryan Morgan]

Apparently the working conditions aren't bad enough to stop them from lining up for any available jobs:

http://news.yahoo.com/many-chinese-workers-want-those-jobs-foxconn-190754170.html

[Bryan Morgan]

What does "Made in America" really mean?

Less and less it seems...

I just threw away a Made in USA bicycle pump that was a piece of junk. I replaced it with a superior and cheaper made in Taiwan pump.

[Brian Elfert]

Plus, they can screw around with all of these stupid coupons - 20% off of this or that, or buy one get one half off, because there is little in the cost of the item to begin with.


JC Penny is doing away with the constant sales and switching to consistent lower prices across the board effective today. Macy's tried this and they went back to a smaller number of sales after a period of time. I can only hope JC Penny is not cutting back on advertising.

[Moses Yoder]

http://blogs.hbr.org/haque/2009/07/a_fair_labor_ipod_what_would_i.html

Above is a simple article with a guesstimate of what a fair labor Ipod would cost. 23% more, or $58 more. I have to ask myself, if people are going 10 miles down the road to buy gas for a penny per gallon less, what would they do if an American made and Chinese made Ipod lay side by side? The American made Ipod is $58 more; which would they buy? I'm guessing over 80% would buy the chinese version, based on my wife's experience as a cashier in a department store.

That is only half the problem. As the original posted article states, there are no longer enough middle level workers in the US to produce the quantity of goods that are consumed. Everybody has a college degree and thinks they should earn $2 billion per month.

[David Weaver]

JC Penny is doing away with the constant sales and switching to consistent lower prices across the board effective today. Macy's tried this and they went back to a smaller number of sales after a period of time. I can only hope JC Penny is not cutting back on advertising.

I think the couponing works, if the person clipping the coupons doesn't do a time analysis and an analysis of what the real price of the item they're getting is (i.e., the price at a place that does not run sales).

I'd imagine that JC Penney will go back to the coupons after they find out what Macy's found out - that people will use coupons without thinking believing that they are getting a great deal, when the coupon makes the deal average or maybe a little better than average.

My wife and I talk about this fairly frequently because I don't have any interest in going to get a $30 pair of (cheap imported soon-to-be throwaway) pants from a place that prices them at $50 and claims you're getting 40% off from coupons to sell them to you for $30. Too much screwing around, and not enough quality goods to apply those coupons to.

[Kevin W Johnson]

Well, although I agree with the idea of rules, I have to disagree here. I have shrunk my business, and one of the biggest reasons is that it is harder and harder to make a profit playing by the rules.

The government makes absolutely stupid rules with no thought whatsoever to the concequences to business because they don't have to. They just go to the public well and take another dip if they need more funds. Much of the stuff coming down is nothing more than a money grab.

Take the regs passed down by the EPA on lead in old houses. The stupidity is amazing! What it adds to a job means that the jobs are just not going to get done by a legitimate contractor. but.....

The EPA made it so that every contractor, even all subs have to be licenced. So there is an estimated 1 million plus licences, and I don't remember for sure what it costs, but lets say $200. Thats 200 million dollars right off the top with the potential to harass working stiffs and fine them for another income stream.

Government is out of control and staffed with illogocal thinkers, and that is what is stopping business here. Choking it would be a better discription.

I agree with John C, and have been doing the same. I vote with my dollar. No Apples for me......

Larry

Notice I said ALL. I agree the lead thing is a sham. We certainly don't want to dump ALL the EPA regs. Clean air and water are nice, aren't they? China shutting down factories in an attempt to clear the air for the olympics ring a bell?

There's a lot that could and should go. But we still need some of it.

[Ben Hatcher]

I split those two pieces of your quote up... on one hand, you say it has nothing to do with cost, yet on the other hand you say these companies have 400k workers ready to go at a moments notice.

Do you think those 400k workers could be recreated in the US at the same cost? Sure, flexibility is great, but it's a (albeit major) side benefit to having dirt cheap labor. If we had three times as many workers in the US, all willing to work a standard 8 hour workday, but willing to accept 1/3rd the pay of a Chinese worker, we could recreate the same flexible scenario.

The nature of consumer products is high variability, a short lifecycle, and extremely volitile demand. Human workers are best suited to tackle this kind of thing, but the work is tedious and generally doesn't pay well. It takes a certain set of circumstances for a person to be willing and/or able to do it. To get enough of them, you need a big pool, or much higher wages, consessions, etc. which all limit flexibility. They have a big pool. A VERY big pool. And unless we start having 20+ kids per family, they'll continue to have a much bigger pool than we will for a very long time.

[Mike Archambeau]

Did any of you actually read the articles cited here? There is a very important point regarding why things are made in China that has nothing to do with cost and that is flexibility and adaptability. There is no way that any plant in the US would be able to switch gears and ramp up product on the scale that is required for a global roll out of a new, high demand product. 400,000 workers at that Foxcomm plant, guys. 400,000 who are willing to work long hours for days on end because that is a better option than their alternatives. 400,000 people willing to be woken up at night and told "time to go to work, we've got to make more gadgets so you're working overtime." You could probably find pockets of folks here willing to do that, and we all certainly know farmers, ranchers, or small business owners who work 16 hour days for months on end. But to be able to assemble nearly half a million of that kind of worker in one place is something that can only be done in a country with a billion candidates who are willing to relocate. The logistics advantage and the reduced time to market that this kind of arrangement allows should not be underestimated. I don't understand why we all seem to lament the fact that making some things elsewhere just makes more sense. I don't do drywall anymore because other people can do it better and faster than me. I'm happy doing things that I am better at, that I enjoy more, and that are more profitable in the first place.
Gee sounds like life in the US Military. Sailors sleep in bunks in rooms with many other sailors. They can be roused in the night for duty. They work for room and board and a modest paycheck. And believe it or not they are very flexible and adaptable which is why you don't want to mess with them or they will kick your butt. So how is it that when it comes to snapping and screwing together some circuit boards and some plastic parts, that the US companies think that a 13 year old child in China is better suited for the challenge. Jeez I really must be missing something here........................sigh.

[Mike Archambeau]

http://blogs.hbr.org/haque/2009/07/a_fair_labor_ipod_what_would_i.html

Above is a simple article with a guesstimate of what a fair labor Ipod would cost. 23% more, or $58 more. I have to ask myself, if people are going 10 miles down the road to buy gas for a penny per gallon less, what would they do if an American made and Chinese made Ipod lay side by side? The American made Ipod is $58 more; which would they buy? I'm guessing over 80% would buy the chinese version, based on my wife's experience as a cashier in a department store.

That is only half the problem. As the original posted article states, there are no longer enough middle level workers in the US to produce the quantity of goods that are consumed. Everybody has a college degree and thinks they should earn $2 billion per month.

In a few years when the cost of labor in China rises, as it surely will, and the cost of oil rises, which it surely will, the cost of assembling and shipping from China and then selling into the USA will rise to the point where it will no longer be a working proposition. In the meantime I think I can make due with my current phone and computer. But my finger is getting sore spinning that rotary dial, so could you hurry it up a bit......

[Ben Hatcher]

Gee sounds like life in the US Military. Sailors sleep in bunks in rooms with many other sailors. They can be roused in the night for duty. They work for room and board and a modest paycheck. And believe it or not they are very flexible and adaptable which is why you don't want to mess with them or they will kick your butt. So how is it that when it comes to snapping and screwing together some circuit boards and some plastic parts, that the US companies think that a 13 year old child in China is better suited for the challenge. Jeez I really must be missing something here........................sigh.
It isn't a matter of capability to do the job. There's a huge speed and flexibilty advantage in having your entire supply chain under one roof or at least in close proximity. Doing that requires a huge labor force. Only a small percentage of the labor force is willing and/or able to do that kind of work. The 400k at Foxcomm is only part of the 22 million in Shenzhen...a city that was didn't exist 20 years ago. What I'm saying is that China and other hugely populated countries are uniquely positioned because they posess the sheer number of people willing to not only do the job but to relocate so that there is a sufficient concentration of the right kind of laborers needed to staff that kind of factory.

[Mike Archambeau]

So I have this car that was built waaaaay back in 1995. It is a German car, has served me well for the past 16 years and 150,000 miles. Lately I have been fixing a few things that need attention. Every part that I have taken off the car says "Made in Germany". Since I am very interested in keeping the car original, I always go with OEM parts. Every new part that I have purchased says "Made in Germany". The purely mechanical parts such as fuel pressure regulator, or electrical parts such as fuel pump all were made in Germany. So I looked close to see when the parts were made, and would you believe that they were made very recently......in Germany of all places. So how is it that the Germans figured out how to make all these wonderful parts (and cars for that matter), without resorting to slave labor in China? Then I sratched my head and wondered if that is why so much of Europe is turning to Germany right now to help them with this European debt crisis. Is it possible that the reason the country of Germany has it's fiscal house in order, is the result of keeping full employement by continuing to manufacture in their own country, resulting in full employment, resulting in more citizens paying income taxes, so that the wealth of the German nation is strong? So while some European nations let their jobs be sent to China, then feasted on cheaps imports, their governments borrowed the money they needed to operate becuase they no longer collected income taxes from workers whose jobs evaporated and magically appeared in China. Then one day the country can no longer pay their bills so they look to a strong Germany. And guess what.....Germany is just doing what they always did. Come to think of it that is what the USA always did as well.....until we sent those silly little jobs overseas. Twenty years ago Ross Perrot said "That giant sucking sound you hear is your job being sent overseas" Guess we should have paid more attention to what he was saying.......or we could just take a close look at what Germany is still doing. Sigh......


Next time I get ready to buy a new car I car am going to get real friendly with the best sales guy at the dealership. Then the two of us will go visit the parts counter at the dealership. We will have the parts guy pull a few parts, like a fuel pump, an alternator, or a water pump. If the parts say made in PRC or China etc, I will thank the salesman for his trouble and move on. So like JC from CT says....time to vote with our dollars............

[David Weaver]

As a person who also owns a german car, and also buys those german parts....they are extremely expensive.

Germans have no stomach for parts made in china, they are willing to pay the additional cost to have them made in the country. In the US, that's not the case. Thus the situation.

[Ben Hatcher]

Germany is actually a very good case study for what I think we should look to do in the US. They had huge unemployment problems when reunification happened. Their government worked closely with business to disuade companies from moving jobs overseas through tax codes and education reform in order to supply the industries with the training and labor force they needed to compete. They're also not making consumer electronics, but focus on highly specialized and high margin products.

[Joel Goodman]

Has anyone read this article in the Atlantic Monthly?

http://www.theatlantic.com/magazine/archive/2012/01/why-john-j-mearsheimer-is-right-about-some-things/8839/

It's about a political science prof at University of Chicago and why he believes our biggest threat in the future is China -- food for thought!

[Joe Angrisani]

There are some services that can't be "farmed out".
Farming, for one......

Really???

(As I munch on my New Zealand apple, Mexican blackberries and Chilean blueberries. And recall a recent trip to Florida where the orange juice box said 'Product of Brazil' [in FLORIDA, for crying out loud!!])

[Hilel Salomon]

First of all, the idea that we don't manufacture anything in this country is simply not true. We make some and assemble others in the automotive industry. We make motorcycles and assemble chainsaws, guns, and a host of other items. Some people want to blame the government entirely for our current state of affairs, but it is in a communist country (China) where the government simply creates industrial towns and draws upon a population still struggling with hunger and a host of other problems. I don't blame Americans for refusing to work for less than $30/a day, 12 hour shifts, under deplorable conditions. What we have in this country is corporate greed gone amok. Corporate CEO's make more in the US than in any other industrialized nation. Not just a little more, but obscenely more and this is whether or not their company does well. The CEO to worker income ratio in this country is ridiculous.
Another factor, which the article didn't cover is the fact that these corporate heads make deals with China, knowing full well that the Chinese demand to have access to the technology (which we have developed). Sooner or later, the Chinese and/or Indians can cut off the American corporation and make their own stuff. By that time, the people who have-essentially-sold out their own companies will have retired as mega-millionaires. It's not just America and its people that these greedy types don't care about. They really aren't concerned with the long term interests of their own companies. Tricklye down economies simply don't work for anyone but the ultra-wealthy.
If companies want to go overseas in order to avoid paying social security taxes, health care costs and retirements, their goods need to be taxed at a higher rate than those companies which have some national conscience.

[David Cramer]

[QUOTE=Phil Thien;1864215]Taken individually, it makes financial sense for manufacturers to off-shore production.


I think I mentioned before when I was in a Home Depot and they have someone from a survey outfit asking a guy back in the electrical department why he selected a Klein tool. "Made in U.S.A." was one of the multiple choices, and he did pick that (among familiarity with the product).

So they are not immune.

I just had a choice last week to buy some cheap overseas nut drivers, or 7 high quality Klein nut drivers for $49.99. I chose the Klein and have not regretted it. To me it was a smart purchase that I will have for a long, long time...no repurchasing a new set in 5 years. I always look at the label and do the best I can.

David

[Pat Barry]

Truely American companies they would invest in America, not invest in China at the expense of America's future.

[Pat Barry]

I agree with a lot of what you say here. Everyone wants the cheapest price for everything they want to buy. But America cannot sustain a viable future by outsourcing everything. At least for a while our fast food will be produced here and then there all those retail sales jobs s to pick from. I think American companies, like Apple, need to hold themselves to a high standard and use their ingenuity to make made in America a viable concept again. Most consumers don't see it that way. They don't see the erosion of the job market apparently. They think of themselves as victims. How do you get America at large to be upset about this and demand change?

[Pat Barry]

Blame the consumer - really? Do you blame the squirrel you run over on your way to the store? T

[Kevin W Johnson]

It isn't a matter of capability to do the job. There's a huge speed and flexibilty advantage in having your entire supply chain under one roof or at least in close proximity. Doing that requires a huge labor force. Only a small percentage of the labor force is willing and/or able to do that kind of work. The 400k at Foxcomm is only part of the 22 million in Shenzhen...a city that was didn't exist 20 years ago. What I'm saying is that China and other hugely populated countries are uniquely positioned because they posess the sheer number of people willing to not only do the job but to relocate so that there is a sufficient concentration of the right kind of laborers needed to staff that kind of factory.

So, Foxconn is a minority example of needing a very large and concentrated workforce. Most manufacturing doesn't require this, and can be handled here, at home. What we need as a country, is a level playing field with the rest of the world (asia, particularly) and an atmosphere that is business friendly with less taxes, less red tape, and sensible regulation.

Furthermore, if we had less nanny-state here at home, we'd have more people willing, er, having to work lower paid jobs.

[Bill Edwards(2)]

Blame the consumer - really?

Who do you want to blame?

The invading army that's taking out our intrastructure?

The rioting fanatics who killed the czar and his ministers (more's the pity)

We have only to look in the mirror to find America's woes.

[Moses Yoder]

So I have this car that was built waaaaay back in 1995. It is a German car, has served me well for the past 16 years and 150,000 miles. Lately I have been fixing a few things that need attention. Every part that I have taken off the car says "Made in Germany". Since I am very interested in keeping the car original, I always go with OEM parts. Every new part that I have purchased says "Made in Germany". The purely mechanical parts such as fuel pressure regulator, or electrical parts such as fuel pump all were made in Germany. So I looked close to see when the parts were made, and would you believe that they were made very recently......in Germany of all places. So how is it that the Germans figured out how to make all these wonderful parts (and cars for that matter), without resorting to slave labor in China? Then I sratched my head and wondered if that is why so much of Europe is turning to Germany right now to help them with this European debt crisis. Is it possible that the reason the country of Germany has it's fiscal house in order, is the result of keeping full employement by continuing to manufacture in their own country, resulting in full employment, resulting in more citizens paying income taxes, so that the wealth of the German nation is strong? So while some European nations let their jobs be sent to China, then feasted on cheaps imports, their governments borrowed the money they needed to operate becuase they no longer collected income taxes from workers whose jobs evaporated and magically appeared in China. Then one day the country can no longer pay their bills so they look to a strong Germany. And guess what.....Germany is just doing what they always did. Come to think of it that is what the USA always did as well.....until we sent those silly little jobs overseas. Twenty years ago Ross Perrot said "That giant sucking sound you hear is your job being sent overseas" Guess we should have paid more attention to what he was saying.......or we could just take a close look at what Germany is still doing. Sigh......


Next time I get ready to buy a new car I car am going to get real friendly with the best sales guy at the dealership. Then the two of us will go visit the parts counter at the dealership. We will have the parts guy pull a few parts, like a fuel pump, an alternator, or a water pump. If the parts say made in PRC or China etc, I will thank the salesman for his trouble and move on. So like JC from CT says....time to vote with our dollars............

I am not really much of a history buff, but didn't we help finance the rebuild of China and Germany after WW II? Isn't that the main reason those countries were able to beat us in efficiency the next century? Their plants are all new and modern, and ours are a hundred years old? After what Germany did to the Jews in WWII, I would be thinking twice about supporting them.

[John Lanciani]

one pair at that time was made in the US. They were danner, I think. they went out of business - I wouldn't know where to look now.

Just last in line, but Danner is alive and well. http://www.danner.com/

[Rod Sheridan]

As a person who also owns a german car, and also buys those german parts....they are extremely expensive.

Germans have no stomach for parts made in china, they are willing to pay the additional cost to have them made in the country. In the US, that's not the case. Thus the situation.

I don't have a german car, however between Diann and I we have 3 BMW motorcycles and two Hammer wood working machines (Austrian).

The parts for the BMW bikes are more money than for a Honda, however BMW continues to produce parts for my 38 year old BMW bike, try that with Honda.

People lament the loss of made in America machines, yet there are two reasons for the demise of North American wood working machinery

1) NA stuff is all 1950 stuff (Compare a General saw to a Felder/Minmax/Martin etc) No innovation.

2) We've become so fixated on price we no longer understand how to value any other parameter. Germans are willing to pay to keep Germans employed because it's in their best interests to do so.

We only have ourselves to blame, the interesting thing will be to see if we can reverse this once again value something other than price............Regards, Rod.

[David Weaver]

I guess I would consider honda parts expensive, too.

I was thinking foreign vs. domestic parts in general. But domestic parts are probably catching up as the dealers and manufacturers realize the margin in parts vs. manufacturing and sales of entire cars.

Every time I buy something from VW/Audi, it makes me gnash my teeth, though. Especially when a lot of the parts are subpar, despite their german origin. Like their coil over plug assemblies, the coil packs in cars that don't have coil over plug, bosch plug wires that dry and crack systematically about every 4 years, etc (that at least seems to have been corrected). I had three separate parts in one car that were the subject of a class action suit (all were made in germany) because they failed unreasonably often. All three of them had failed on my german car within 4 years, one of them 3 times.

I ditched the car for an ohio-made japanese car, and then started dating a girl who had the same car :(

Needless to say, we don't drive the german car much. I don't buy too much into the "german engineering" thing in cars. Being someone who generally works on their own car now, unless it's something that requires a lift, I think that german car makers just hate the idea of longevity anywhere but the mechanical powertrain - at least for VW/audi. And they seem to hate service people the way they set up some things in their cars - though they no longer have an exclusive stronghond on that.

I don't know anything about the bikes, but I know a lot of folks who love their BMW bikes, so there must be something good about them.

[David Weaver]

Just last in line, but Danner is alive and well. http://www.danner.com/

Sorry, I wasn't clear about that. The store where I was looking went out of business (not Danner). I hate the one day edit limit on this forum - I can't go back and fix that post to clarify that it's the store that went out of business and not danner.

[John Coloccia]

Blame the consumer - really? Do you blame the squirrel you run over on your way to the store? T

I'd like to think I'm more intelligent than a squirrel. It seems to always be the case when someone is asking for more regulation that it's to protect me because I'm too stupid to make my own choices. LOL. It's nice to have so many benefactors looking out for me.

The fact of the matter is that people choose Chinese goods because they don't care, not because they're stupid.

[Eric DeSilva]

The idea of a company having a national conscience seems odd to me when 2/3rds of Apple's sales are non-US. http://www.apple.com/pr/library/2011/10/18Apple-Reports-Fourth-Quarter-Results.html

[Mike Archambeau]

I am not really much of a history buff, but didn't we help finance the rebuild of China and Germany after WW II? Isn't that the main reason those countries were able to beat us in efficiency the next century? Their plants are all new and modern, and ours are a hundred years old? After what Germany did to the Jews in WWII, I would be thinking twice about supporting them.

After WWII the good ole USofA did in fact help Germany and Japan (not China) rebuild their economies. That is not something we should apologize for or be ashamed of. Imagine if the USA crushed their enemies of war during battle, then left their innocent citizens destitiute. Not a pretty pictue. So after defeating the enemy's armed forces,we help the civilians rebuild their lives, and assisst the new governments build democratic societies. The government that perpetrated the attrocities against the jews is no more, they were killed, captured, and prosecuted. The government in Germany today looks nothing like the bad boys of the 1940's.

[Steven Lee, NC]

I've always wondered how the heck a TV can be built in China and still be cheaper than something made in the same coast I live on. The thing had to be transported across a huge country, shipped across the freakin pacific ocean, and then transported all the way across the United states and then still be alot cheaper.

[Mike Archambeau]

Just a humorous little video to enjoy....but with a serious message......it made me laugh, so hopefully you will see the humor in it as well, unless of course you are a purveyor of Chinese made "stuff"..................http://www.backyardbuddy.com/videos/american-pie/

[Greg Portland]

Just last in line, but Danner is alive and well. http://www.danner.com/

White's have been and are still made in the US: http://www.whitesboots.com
This is assuming "moderately priced" = $250 to you (they can get up into the $400+ range). Great boots though...

[Bryan Morgan]

The fact of the matter is that people choose Chinese goods because they don't care, not because they're stupid.

And because we're not a charity. I'd like to be nationalist and say I'd only buy American made goods, but as time goes on I find foreign stuff being made better and better. All things being equal, I'm not paying more for something just because it was made here locally. Obviously quality is not the reason it costs more at that point, and like I said, I'm not a charity.

[Bryan Morgan]

I've always wondered how the heck a TV can be built in China and still be cheaper than something made in the same coast I live on. The thing had to be transported across a huge country, shipped across the freakin pacific ocean, and then transported all the way across the United states and then still be alot cheaper.

Taxation, regulatory compliance, minimum wage, taxation, government interference...

[Jim Matthews]

Taxation, regulatory compliance, minimum wage, taxation, government interference...
The consequence of regulatory oversight is clean air and water. Let's not forget that the Chinese confiscated all property in their revolution and their chief export is what amounts to forced labor.
There is no safety net in China, and the resulting living conditions would make the robber barons of America's gilded age blush. Even the richest Chinese will bug out (http://www.businessweek.com/magazine/chinas-superrich-buy-a-better-life-abroad-11222011.html) at the first opportunity.

We're funding this, and it's unstable.

[Ben Hatcher]

I've always wondered how the heck a TV can be built in China and still be cheaper than something made in the same coast I live on. The thing had to be transported across a huge country, shipped across the freakin pacific ocean, and then transported all the way across the United states and then still be alot cheaper.

Easy, trans-oceanic shipping is cheap. The last time I checked into international shipping rates a tractor trailer size container cost $1600 to ship from China to LA and $2600 to New York. You can get a heck of a lot of iPhones in a tractor trailer.

[Jim Matthews]

I feel this has veered far off the topic, but it bears a few last words.
The Chinese have a difficult task, providing sufficient food for their population.
Most of China is either arid, or has been intensively farmed for millenia - they're not keeping pace with demand.

The populace has largely sought employment in coastal urban centers that manufacture export items.
This concentration of people strains local sanitation systems as water demand for generating electric power competes with potable needs.

These people won't go back to farms that are already failing, as starvation is not unknown even today.
Their labor produces containers that are absolutely dependent on sea travel for delivery.

Their products, and the foodstuffs that supply the factory staff are tied together in price based on the FEO/km cost to ship in a container by sea.

Compute the fuel costs included in the imports you consume. Do you anticipate falling oil prices?

Container shipping is tremendously efficient, but delivery speed and pricing are directly tied to their fuel costs.
This bears directly on the consumer for shipping fresh foods across the Equator (fresh berries in January, for example).

The need for local production will increase in the US as we compete with densely populated countries closer to the food producers.
EG - New Zealand apples will be displaced by Yakima apples as fuel costs rise and Indian/Chinese demand generates higher prices for the Kiwi farmer.

Domestic production will require more hands, both in the fields and enroute to your table.
<http://www.ers.usda.gov/publications/aib775/aib775.pdf>

[David Weaver]

We're funding this, and it's unstable.

What period in history has ever been stable? One of our biggest issues is the idea that history has been kind to people (i'm not saying this is yours, but society in general).

The consequence of no monetary policy after the civil war through the beginning of the great depression was huge. There was the gilded age, but there was also period of horrible depression, and none of us remember them.

What was life like in england for the luddites when mechanization occured?

We've had our go-around when we could really not do anything wrong and were able to borrow and outlive (in terms of standard of living) our production. Things will change. We will all survive, but the last thing we need to do is try to manage outcomes even more to pretend that we can legislate our way around global competition.

[Bryan Morgan]

There is no safety net in China

Why should there be? A person is responsible for their own safety net. Nobody is owed one nor is anyone obligated to provide one for anyone else.

[Jim Matthews]

Why should there be? A person is responsible for their own safety net. Nobody is owed one nor is anyone obligated to provide one for anyone else.
Spare me the Libertarian Theology.

[Marvin Hasenak]

Has anyone thought of employee loyalty? It used to be a person went to work some where and worked there all of their working career, They lived in the same house for most of their adult life. Even their buying habits had brand and store loyalty, if they bought a Ford, they did the same at the same dealer for years, they also dealt with the same salesman. They shopped at the local "Piggly Wiggly" or whatever it was called, every employee knew your name, and that of your kids, parents and the owner would have a weekly or pay day tab for quiet a few people. For most of your life you bought all of your appliances from the same salesman, you used the same plumber, and electrician since the day you bought your house. You had one telephone, it was hooked to a wall, you could go all around town with it.

Fast forward to today, most people I know haven't worked for more than a few years at any given employer. They go from one place to another for their buying purposes, and they buy the cheapest, all they care about is the cheapest price. They shop all over town, stores are just a place to get the best deal, who cares if they are gone tomorrow. Banks, my own, I have been there 42 years, until about 15 years ago I knew every teller, most of their spouses and children, and they knew who I was, today, there are about 3 people I know in the bank that I know and that know me. My car salesman retired when I did 12 years ago, we used him for 20 years, and his dad before him, in the last 12 years we have bought 3 vehicles, not a one of the prior salesman were still there.

Too many people ask for more and want to pay less. They don't care about America, they care about their wallet, even though they are buying junk they don't need. Employers don't care about employees, because the employees don't care about the employer. Look at the stores, every time you shop they have new employees, that don't have a clue as to what they are selling.


So why should Apple or any other company care about the employees? To many employees don't care about the employer. What goes around comes around.

[Brian Kent]

First of all, the idea that we don't manufacture anything in this country is simply not true.

The United States is 2nd in the world for manufacturing. China just moved ahead of us last year.

[Greg Peterson]

So, Foxconn is a minority example of needing a very large and concentrated workforce. Most manufacturing doesn't require this, and can be handled here, at home. What we need as a country, is a level playing field with the rest of the world (asia, particularly) and an atmosphere that is business friendly with less taxes, less red tape, and sensible regulation.

Furthermore, if we had less nanny-state here at home, we'd have more people willing, er, having to work lower paid jobs.

Taxes as a factor of GDP are at or near historic lows. Sure the corporate rate seems high, but the effective tax rate is well below that wage earners.

I agree, we need a level playing field. Why shouldn't other nations value clean air and water as much as most of us here do? I am assuming you are opposed to the EPA.

What is this nanny state I hear mention of so often?

I bought my modest house (1,100 sq. ft) 13 years ago. At that time, and even now, I could not afford it on minimum wage. I suppose if I choose between health insurance or a mortgage I could swing it. I could maybe even pick up a second job to make ends meet. I would not be much of a consumer, outside of paying bills and mortgage, not much left over for discretionary spending. Certainly would not have anything left to sock away towards retirement.

It is unfortunate that your experiences have developed such a low opinion of your fellow citizens.

As for business friendly, the US is still a world class place to operate a business. According the the IMF, the US is ranked fifth overall out of 184 nations. Not bad, IMO. Could be better, but we are a far cry from being anti-business.

If working at Foxconn is a persons best option, what does that say about their alternatives?

[Jim Koepke]

Circuit City and BB being other examples - CC's gone, but they basically become "old" companies in a world where they don't do anything more than bring something in one door and push it out the other. They're expendable when the next growth oriented chain with no legacy costs comes along.

There were quite a few people who stopped shopping at CC because they dumped all of the long term employees due to their wages being too high. That is why I stopped shopping there. I know others who felt the same way about a company rewarding employee loyalty in such a manner.


Apple isn't quite that expendable, though, given the number of fans they have - blindly brand loyal folks who will at this point pay a lot more for something made in china by apple than they will for something made in china by HP. My BIL mentioned to me a couple of months ago that he figures that any time he sees someone who is using an electronic device that isn't apple (computer, ipad/tablet, phone, ..) that he figures they're either totally out of it or not very intelligent. Perhaps he just said that because I was using an HP computer at the time. I see it differently - my phone is free (i don't get to choose what it is, but I could pay to get it changed to an iphone - no thanks), my laptop computer was $600, and it's almost 5 years old now, and I'd see spending twice as much for a mac book or whatever, and several hundred dollars on an iphone to basically get the same thing as I have with a little different wrapper.

The last sentence seems to read wrong.

Did you mean you can't see spending twice as much for something with just a different wrapper? (there is a lot more than just a different wrapper)

Then it comes around full circle to price. When Apple products were mostly made in the U.S. of A. people always said they were too expensive.

And as long as the perception is that one box is the same as the other, many people will pick the lower priced one without any further consideration.

jtk

[Kevin W Johnson]

I agree, we need a level playing field. Why shouldn't other nations value clean air and water as much as most of us here do? I am assuming you are opposed to the EPA.

What is this nanny state I hear mention of so often?

It is unfortunate that your experiences have developed such a low opinion of your fellow citizens.



First, your ASSumption would be wrong. As far as a level playing field, the rest of the world should be held to exact same standards we are, no exceptions. As for the EPA, no I'm not entirely opposed to it. I do think there is a need for changes with in it though.

As for nanny state? You really can't figure that one out?

[Kevin W Johnson]

The United States is 2nd in the world for manufacturing. China just moved ahead of us last year.


In total dollars, but not in terms of number of goods produced. The planes, trains and automobiles make up a majority of the money.

[John Coloccia]

In total dollars, but not in terms of number of goods produced. The planes, trains and automobiles make up a majority of the money.

Also, if you look at it as a percentage of GDP, the difference between the US and China is absolutely stunning. China is 30% or 40% GDP, while the US is somewhere around 10% or 15%. China is going up while the US is going down.

[Dan Hintz]

Has anyone thought of employee loyalty?
Sure, employee loyalty is low... but company loyalty towards employees is just as dismal. I would have loved to continue working at several of the companies that have laid me off in years past, but they saw only a bottom line. They cared not for the skills/experience they were walking out of the door as the long-term goal wasn't within their grasp to view. They saw the financial spreadsheet that said if they get rid of 'X' number of employees they could meet their goal for the quarter, and out we went. Came crunch time months later, they're scrambling to figure out solutions to problems that could have been solved in very short order by the people they just cut loose.

So sorry, my "loyalty" to a company extends only as far as they're willing to give it to me. They'd cut me loose in a heartbeat if it made immediate financial sense, so why should I bet my own money-making ability on their whims?

[Hilel Salomon]

I think that Dan is right on target. The employee movement used to be much more pronounced at the upper management level than at the lower levels. Now, however, firing older employees at all levels is very common. You get rid of the higher salaries, higher benefits and possibly avoid pensions, and you also lose experience and maturity. I have seen countless companies hire an "efficiency expert" to come in an decide that the company could lower costs by firing one third of its employees and having those that remain take on the extra work. Invariably, the employees being fired were the older ones.


Sure, employee loyalty is low... but company loyalty towards employees is just as dismal. I would have loved to continue working at several of the companies that have laid me off in years past, but they saw only a bottom line. They cared not for the skills/experience they were walking out of the door as the long-term goal wasn't within their grasp to view. They saw the financial spreadsheet that said if they get rid of 'X' number of employees they could meet their goal for the quarter, and out we went. Came crunch time months later, they're scrambling to figure out solutions to problems that could have been solved in very short order by the people they just cut loose.

So sorry, my "loyalty" to a company extends only as far as they're willing to give it to me. They'd cut me loose in a heartbeat if it made immediate financial sense, so why should I bet my own money-making ability on their whims?

[David Weaver]

Then it comes around full circle to price. When Apple products were mostly made in the U.S. of A. people always said they were too expensive.

And as long as the perception is that one box is the same as the other, many people will pick the lower priced one without any further consideration.

jtk

Apple products are still too expensive.

i can (or could if I wanted to) get a droid phone that costs half as much as an iphone. It would've cost more than twice as much for me to get a macbook when I got my HP (HP had incentives, allowing me to get an $800 computer for $600. Mac didn't have anything equivalent 5 years ago in speed, memory and ram for even $1200).

Computers are tools. Droids and PC notebooks are well known. There are ardent fans of Macs, but if they spent the same amount of time watering the grass on the PC side of the fence, they'd be just as competent.

Mac wasn't the only company who made PCs in the US. Gateway and Dell did, too, as did several other manufacturers. Since they were making PCs, they didn't have the same level of semi-religious following that Apple has. That allows Apple to separate its customers from more dollars for the same thing than a PC manufacturer who is competing with 10 others making the same thing.

[David Weaver]

I think that Dan is right on target. The employee movement used to be much more pronounced at the upper management level than at the lower levels. Now, however, firing older employees at all levels is very common. You get rid of the higher salaries, higher benefits and possibly avoid pensions, and you also lose experience and maturity. I have seen countless companies hire an "efficiency expert" to come in an decide that the company could lower costs by firing one third of its employees and having those that remain take on the extra work. Invariably, the employees being fired were the older ones.

This isn't a consequence of philosphy leading the business, it's a consequence of global competition forcing the hand of business so that they can't be as inflexible as they were 40 years ago.

If you go back past our expansion age after our great depression, you find that such a period of stability (mostly fueled by borrowing and lack of serious competition from any emerging markets) has not existed before. There is no real evidence that it's practical to try to build a system long-term where everyone can settle into a job and not worry about losing it. The only way to do that is to artificially lower the standard of living for everyone on the front end, or be lucky enough to have a few decades of expansion (leveraged or not) where it appears that's a sustainable thing.

If you read old obituaries or old stories, there are educated and skilled folks who appeared to do the same thing all their lives, but a lot of those stories are colored by such people going through chicken and feathers periods. They (the population as a whole) certainly didn't have large pensions, predictable inflation, no competition and an inflation + merit salary increase like clockwork every year. They also didn't buy homes at an average of 7x their annual salary or leverage themselves with debt against depreciating assets.

We dug this hole. If China and India would've gotten organized economically and politically 50 years earlier, we just would've gotten into the same hole earlier on.

[Phil Thien]

I have seen countless companies hire an "efficiency expert" to come in an decide that the company could lower costs by firing one third of its employees and having those that remain take on the extra work. Invariably, the employees being fired were the older ones.

Well, I was sitting in a conference room waiting for a meeting one day, working on my notebook, minding my own business, when the new "business consultant" started spouting-off his management concepts to me. They were all age-bias. Apparently he thought we were on the same page, because I was young (he was about mid-fifties, I was low 30's). I don't know. I had a pretty startled look on my face, I'm sure.

I was speechless.

None of it mattered because a month or so later, he died of a massive heart attack. I don't wish that on anyone, but I was happy I didn't have to involve myself in the mess which would have resulted had he lived.

[David Weaver]

I'm assuming that a lot of those *consultants* get paid as a percentage of whatever they "harvest" out of the payroll and benefits costs.

Either that, or they have a canned line that starts with negating the recent achievements of anyone over the age of 51 or 52. Where I worked before, the person in charge of paperwork for reviews called that "building a case".

The same place employed strategic consultants in housein house, and the president of the company literally said to us in an employee meeting "well ___ and ___ (competitors) are sending their work to india, so if you're not happy with the way business is going here, where are you going to go, seriously?"

This guy said this as he was giving a speech as the president of a very large company, wearing gray docksiders and no socks along with suit pants. Apparently, the board had told him he was "dynamic" (that was the word that was used) and that they thought he could make a difference, and he got the idea that he could do and say whatever he wanted.

He took Q&A (because this was our introduction to him) and when someone asked him a question that wasn't positive (the company was making a lot of *very* stupid decisions at the expense of their employees, like 100% of 401k assets must be company stock, and a thirding of the stock value over the period of a month - legal back then), he went back to home base and one way or another had figured out who asked the question about the 401k and had their bonus/job rating decreased for several years years for asking the question.

There's just no way around it, some people are scum, and sometimes they are in charge and sometimes they are given autonomy by those in charge.

[Greg Peterson]

So sorry, my "loyalty" to a company extends only as far as they're willing to give it to me. They'd cut me loose in a heartbeat if it made immediate financial sense, so why should I bet my own money-making ability on their whims?

Pretty much nailed it. We use to have generations of families that worked in the same factory or field. Good paying jobs and dedicated to the company they worked for. I am of the opinion that the middle class, the era between the late 40's through the very early 70's, was an artificial construct. It would never had developed without key corner stones set in place by a forward thinking generation. Left to the whim of the wealthy and connected, the middle class as we knew it to be at one time would be nothing more than a fairy tale.

What is occurring in China today may very well be what will be the norm here in a generation. Much to the smug delight of just enough to allow it to happen no doubt.

Workers are a necessary evil in the corporate world these days, and a surprising number of people most directly affected by this philosophy are cheering on these companies on.

Between Wall Street and ALEC, the game is pretty much over for the average worker. Corporations no longer need to show any kind of patriotic capitalism. They are no longer dependent on the US market so they follow the dollar to the next quarterly report. So much for a steady, conservative, big picture perspective. Anything further down the road than their next bonus is too far to think.

[David Weaver]

Well, I was sitting in a conference room waiting for a meeting one day, working on my notebook, minding my own business, when the new "business consultant" started spouting-off his management concepts to me. They were all age-bias. Apparently he thought we were on the same page, because I was young (he was about mid-fifties, I was low 30's). I don't know. I had a pretty startled look on my face, I'm sure.

I was speechless.

None of it mattered because a month or so later, he died of a massive heart attack. I don't wish that on anyone, but I was happy I didn't have to involve myself in the mess which would have resulted had he lived.

One other comment about this - I think quite often the company itself already knows who they want to chuck as part of an efficiency measure. The consultant in this case may have just been someone who was brought in for two reasons:
* to absorb blame that should otherwise be put on the company itself
* to put together paperwork and opinions that make it appear that a process was followed other than decisions that the company has already made

I have heard more than one person say "I have been telling management this for years, but I'm going to hire a consultant to tell them the same thing, because if I tell them, it's just an internal opinion. If I get an outside consultant to tell them, then they'll act on it".

I'm pretty sure there have been dilbert cartoons satiring the same thing.

[Larry Edgerton]

We as a country were in a unique position for a long time. We got a jump start on the industrial age at the offset, and then with the help of two world wars that never touched our soil were given a further lead that we rode to its inevitable end.

Today circumstances are different, and most likely will never be the same. That blip in world history is gone, and so now we need to think about what we can do personally, and as a nation of laws to keep our citizens in reasonable living conditions. The days of extravagance for the average are over, if they were ever here at all. Many things in my estimation are going to have to change for a majority of the population. Expendable income will become a thing of the past for many, and what it takes to live and be happy will have to be re-examined. What it was in the past was false anyway so I myself do not see this adjustment as a bad thing. We are no longer the manufacturing powerhouse, that is China, and they are not our friends. As China loses its edge, others will pop up to replace it, exploitation of the human condition will go on.

On the subject of nationalism. It is my opinion that we must either pull together as a nation, not by law, but by personal will and by developing a concern for our neighbor, be they in Dekalb, Detroit or Denver and all points in between. No other country is responsable for our prosperity, and in fact many would love to see us fail. I am not for nationalism at a fanatical, governmental level, but I believe that the average American needs to realize that we are no longer the nation that we once were and will never be again, and as such need to protect and preserve some of what we have by demanding products be made here when possible. Your wallet is by far a more powerfull voting tool than your voter registration card.

On the subject of CEO bashing. Once agian I have to state, 90% of the business done in the USA is by privately held companys. These CEOs do not behave in the same manner as CEOs of companies on the stock exchange. They, private CEOs are more forward thinking and exibit far more loyalty to their employees.

I have to wonder what the merit of Wall Street is altogether, it just seems that they do more harm than good to me these days. Where does the largest share of the percieved instability come from? The Wall Street/banking complex would be my guess with an out of control [from the peoples perspective] government as a close second.

Anyway, I'm just a carpenter, but those are my thoughts this morning.....

Larry

[Bryan Morgan]

Spare me the Libertarian Theology.

Sorry, I'm just a huge fan of liberty and freedom and not being robbed.

[Bryan Morgan]

Sure, employee loyalty is low... but company loyalty towards employees is just as dismal. I would have loved to continue working at several of the companies that have laid me off in years past, but they saw only a bottom line. They cared not for the skills/experience they were walking out of the door as the long-term goal wasn't within their grasp to view. They saw the financial spreadsheet that said if they get rid of 'X' number of employees they could meet their goal for the quarter, and out we went. Came crunch time months later, they're scrambling to figure out solutions to problems that could have been solved in very short order by the people they just cut loose.

So sorry, my "loyalty" to a company extends only as far as they're willing to give it to me. They'd cut me loose in a heartbeat if it made immediate financial sense, so why should I bet my own money-making ability on their whims?

Thats the way my company does it. Everyone is just a number on a spreadsheet. If your number doesn't calculate correctly, you're out. And like you said, a few months later they scramble trying to figure out how to replace the knowledge or labor of those they let go. They also get offended when they call the ex-employees and ask them how to do something and are blown off. In my own department they laid off over half of us and then get mad when we can't always complete work on time because we've been forced to pick up the work that the laid off people used to do. I don't stress about it anymore though. As long as they keep paying me, I'll do what I can.... though when they cut our pay, I also cut my work load (never quality though). Instead of doing 5 things at once, I've ramped it down to a max of 3. If its not enough, give me my pay back.

Everyone used to be very loyal to the CEO because he was very loyal to the employees. Even going so far as to personally speak to those even in the lowest positions and see what he can do to make their jobs easier or more enjoyable. People slaved away for that guy and were happy to do it, me included. He passed away and the corporate board types took over and it all went down hill from there. One problem with the public company is that there is nobody to hold accountable for anything. Its always a group decision and nobody from the group will ever admit or speak up about anything.

Oh well, Those who sow in flames, in ashes they shall reap.

[Greg Peterson]

I have to wonder what the merit of Wall Street is altogether, it just seems that they do more harm than good to me these days. Where does the largest share of the percieved instability come from? The Wall Street/banking complex would be my guess with an out of control [from the peoples perspective] government as a close second.


I was listening to an interesting story yesterday on NPR, or maybe it was PRI. Hard to tell. Anyway, the reporter was interviewing a financial expert on the Facebook IPO. She asked him how the average person could get in on the IPO and he said flatly that the average person can't get in on the IPO. He explained the way the IPO works is the banks issue the IPO's to institutional investors and their best customers. So the average joe doesn't even stand a chance of getting in on the ground floor with most IPO's. If you are rich and well connected you have privileged access. You, me and all the average folks can buy those shares once they start trading on the exchange, but by then the legs are pretty much gone on those shares.

Not that all IPO's are hits. But by and large the IPO game is not something 99% of us have access to. But that's how the free market works after all.

As a percentage of total corporate revenues, the financial sector has risen to the upper 30% to lower 40% bracket. Historically it has been in the single digit percentile. Much of our economy is based moving money, not goods or services. Health insurance companies are another sector that doesn't really make or do anything. They regulate. And have profited handsomely doing so.

[Joel Goodman]

As a percentage of total corporate revenues, the financial sector has risen to the upper 30% to lower 40% bracket. Historically it has been in the single digit percentile. Much of our economy is based moving money, not goods or services. Health insurance companies are another sector that doesn't really make or do anything. They regulate. And have profited handsomely doing so.

+1 on that. At some point this "service" is essentially a monkey riding on our backs -- "the tail is wagging the dog" -- to mix up a bunch of metaphors.

Another thing to consider is that Henry Ford was passionate about making cars; the private equity and hedge fund guys are only passionate about money. Big difference in point of view.

[Van Huskey]

Gee sounds like life in the US Military. Sailors sleep in bunks in rooms with many other sailors. They can be roused in the night for duty. They work for room and board and a modest paycheck. And believe it or not they are very flexible and adaptable which is why you don't want to mess with them or they will kick your butt. So how is it that when it comes to snapping and screwing together some circuit boards and some plastic parts, that the US companies think that a 13 year old child in China is better suited for the challenge. Jeez I really must be missing something here........................sigh.


Funny enough I thought the same thing when I read it. I have sleeped on jungle floors, woken after 1 hour and went for another 24, humpin' 50+ pounds on my back along with my M16 and Browning Hi-power. I remember one time we deployed on a couple of hours notice and my entire unit ate chicken ala king MREs for 3 weeks due to a mislabling of boxes. 3 meals a day 7 days a week, I can't look chicken ala king in the face even today and I am one that actually liked MREs. Humans will accept amazing amounts of "torture" as long as there is a light at the end of the tunnel, just how bright is the light in China when you consider the devastation to the work forces health along with the devastation to the ecology of the urban areas.

[Mike Archambeau]

Did any of you actually read the articles cited here? There is a very important point regarding why things are made in China that has nothing to do with cost and that is flexibility and adaptability. There is no way that any plant in the US would be able to switch gears and ramp up product on the scale that is required for a global roll out of a new, high demand product. 400,000 workers at that Foxcomm plant, guys. 400,000 who are willing to work long hours for days on end because that is a better option than their alternatives. 400,000 people willing to be woken up at night and told "time to go to work, we've got to make more gadgets so you're working overtime." You could probably find pockets of folks here willing to do that, and we all certainly know farmers, ranchers, or small business owners who work 16 hour days for months on end. But to be able to assemble nearly half a million of that kind of worker in one place is something that can only be done in a country with a billion candidates who are willing to relocate. The logistics advantage and the reduced time to market that this kind of arrangement allows should not be underestimated. I don't understand why we all seem to lament the fact that making some things elsewhere just makes more sense. I don't do drywall anymore because other people can do it better and faster than me. I'm happy doing things that I am better at, that I enjoy more, and that are more profitable in the first place.

Well I once worked for a company that employed 60,000 hard working Americans in one city. Over 20,000,000 square feet of manufacturing space. The main site was 8 miles long and 1 mile wide. They made their own electricity in a coal fired plant, because way back when electricity first became available, the public utility was not reliable. The company was completely vertically integrated. They molded the plastic parts and their toolmakers made the molds. They even made the screws on srew machines. Wound the springs, printed the packaging materials, did final assembly....the works. They even made the chemicals that went into their products. They had their own rail cars to haul the coal to the power plant, and they had a fire department, doctors for medical care on site. In the early 1900's when the company had some trouble with absenteeism, the founder of the company asked his medical team to investigate it, and they reported that people were having dental problems. So the founder asked the docs to set up a dental clinic to help the workers with their teeth, and to make damn sure that the workers family members got a chance to use the clinic too. Eventually he gave the clinic to the local University and turned it into a School of Dentistry.

The founder sponsored sports teams and even built ball fields, bowling allies, rifle range, swimming pools for the workers and their families.

The founder built a world class theater in the city to showcase motion pictures and orchestral music.

The firm was the largest exporter of manufactured goods in New York State, and one of the largest exporters in the USA.

Some say we could not have won WWII without the firm, becuase the arial photos taken by flying over enemy territory allowed the US and it's allies to plan bombing routes. And when the cold war with Russia was unfolding, the arial pictures allowed the USA to sit down with the Russians and show them that we knew all their secrets.

All those early movies you enjoyed were shot on film and distributed on film produced by the company. And those cherished photos in your shoebox came from that same company. The founder of the firm invented the motion picture film to go with the movie camera that Thomas Edison invented. The two men were friends.

The firm built one of the largest research and development laboratories the world has ever known (some of those 60,000 employess worked in these labs).

When the founder died he left all his money, and even his house to a University in his home town. He was one of the richest men in the world, and he paid his workers so well that no union ever was established at the company.

So when somebody thinks that we can't make things in the USA, I think that some of the people making offshoring decisions are just letting somebody else do all the hard work of setting up shop. What it would take in this country are some leaders who care about building great companies and investing in this country....but where are they?

Show me one modern day CEO who can hold a candle to George Eastman...................and yes he built Eastman Kodak into one of the best companies ever and it lasted 135 years!

[Greg Peterson]

So when somebody thinks that we can't make things in the USA, I think that some of the people making offshoring decisions are just letting somebody else do all the hard work of setting up shop. What it would take in this country are some leaders who care about building great companies and investing in this country....but where are they?


We can make anything and everything here except for fast and vast sums of cash.

As for the workers that sleep in the dorms and can be waken at any hour to go to the factory floor, if one were in the armed services this is quite normal. It's part of what serving your country is about. Being an employee calls for an entirely different set of standards, at least in the western world. Has it come to the point were American workers are so reviled that the Foxconn workers as held up as the the model employee?

What standard of living must those Foxconn workers be running from to accept those working conditions?

[Marvin Hasenak]

If there is no loyalty between the employer and employee, you become master and slave. During the last 11 years that I have been retired I have seen place after place get rid of the higher dollar people, and replace them with a new "kid" off the street. The older person was loyal, stuck with the company through the good and the bad, he or she just expected to be treated right with wages and benefits. Their reward was the shaft. That new "kid" off the street, saw what happened to the old guy, where does his loyalty lie? He knows he is on his own, and several have moved on. 3 of the places I talk about are now empty buildings, even the management is without a good job, "They reaped what they sowed". They deserved what they got, and now they know it, but it is too late.

[Jim Falsetti]

Many Redwing Boots still made in USA...David, my earlier post on Red Wings only being made in China was incorrect. The Redwing shoe finder website has Country of Origin as a screening selection. Of their total 254 boots and shoe styles, 127 are made in China, 47 are made in USA with imported materials, 15 are made in USA with imported components, and 65 are made in USA.

It's interesting that the brick and morter stores I visited only had the Chinese versions.

Jim

[Greg Peterson]

If there is no loyalty between the employer and employee, you become master and slave. During the last 11 years that I have been retired I have seen place after place get rid of the higher dollar people, and replace them with a new "kid" off the street. The older person was loyal, stuck with the company through the good and the bad, he or she just expected to be treated right with wages and benefits.

One old adage was that a a companies most valuable asset was it employees. I'm confident most companies still believe this, particularly the overwhelming majority that are mom and pops. The companies that ship their operations overseas and/or setup headquarters in a tax friendly haven are only interested in taking my dollar and pulling it out of the US. And when our last discretionary dollar is gone, they'll move on to the next consumer market (India, China, Russia...).

The free market asks "How low can you bring your air and water quality, how little can you pay your work force, how unsafe can you make your workplace? How much further can you cut costs without regard to people or environment? You don't really want your employees to be able to buy the products they produce, do you?". It's simply a race to the bottom.

There are no perfect answers in a world of 7 billion people and countless cultures. But it seems to me that we should be appalled at the way the Foxconn employees are treated. Is our concern for the working conditions of workers trumped by a shiny gadget, or do we believe the Pacific really separates us?

[Larry Edgerton]

Is our concern for the working conditions of workers trumped by a shiny gadget, or do we believe the Pacific really separates us?

Friday I went looking for a small pocket camera for my wifes birthday. My simple request at each store that I went to was that " I don't care about cost but I want a camera not made in China" Without exception every sales person looked at me as if I was the idiot. So apparently not all have the same concern.

I did finally find a Panasonic with a Leica lens that was made in Japan. It was the most expensive camera in that class, but my wifes last camera lasted her ten years so that is fine. I was hoping to find a small Nikon, but no luck. For them either....

Larry

[David Weaver]

Many Redwing Boots still made in USA...David, my earlier post on Red Wings only being made in China was incorrect. The Redwing shoe finder website has Country of Origin as a screening selection. Of their total 254 boots and shoe styles, 127 are made in China, 47 are made in USA with imported materials, 15 are made in USA with imported components, and 65 are made in USA.

It's interesting that the brick and morter stores I visited only had the Chinese versions.

Jim

I don't know how their brick and mortar stores work, but it might cost a lot less to stock Chinese made boots. Brick and mortar stores are in a pinch now that you can walk into them with a phone and literally scan the tag of something and get an app to tell you the cheapest place to get it. Getting an entirely US made boot for $250 at the store's price to sell for $300 doesn't allow you to make much. Getting a chinese made boot for $30 to sell at $150 makes the whole equation a lot easier. They probably figure their really serious customers (the guys who work for the phone and electric companies, etc), will know where to find the boots that last a long time, even if they're not available locally.

But if you're a guy who wears boots 30 days a year and you just want to go get a decent pair of boots, you're pretty much out of luck, I think. You're either going to get barely passable or you're going top line. My dad's still wearing the same timberland boots he got about 30-35 years ago for about $150. That was a mint back then, and he talks about it like he'll never forget the price. he wanted a warmer pair for hunting a couple of years ago, and went out and bought a cheap pair of boots for $60 at a sporting goods store. Things change, I guess. I was under the impression that a person who is concerned about their feet being warm will find something to put in the boots instead of getting a boot with all of that stuff built in. Then you can have warm boots that will dry.

[David Weaver]

Well, I just popped that theory. I just found a boot store online that has 300 different US made boots, as cheap as $155 for plain toe carolina 8 inch boots. Pleased to see that!

[Mike Archambeau]

Friday I went looking for a small pocket camera for my wifes birthday. My simple request at each store that I went to was that " I don't care about cost but I want a camera not made in China" Without exception every sales person looked at me as if I was the idiot. So apparently not all have the same concern.

I did finally find a Panasonic with a Leica lens that was made in Japan. It was the most expensive camera in that class, but my wifes last camera lasted her ten years so that is fine. I was hoping to find a small Nikon, but no luck. For them either....

Larry

Bravo!!!!!!!!!!! That is voting with your dollars. Leica makes excellent lenses. Do you end up buying that Council Tools double bit axe?

[Kevin W Johnson]

Health insurance companies are another sector that doesn't really make or do anything. They regulate. And have profited handsomely doing so.

So what about car insurance? Life? Homeowners? Liability?

Insert government in place of Health insurance companies and that line is spot on. Otherwise, your line is factually incorrect as many health insurance companies are still non-profit. The main problem isn't with health insurance companies anyway, though they receive all the jeers and blame. The primary problem is the cost of healthcare, which no one seems interested in correcting. Health insurance companies still have to manage the cash flow and can't pay out more than they collect. Ony the government can get away with the amount of money going out exceeding the amount coming in and keep operating for decades on end. As for the rest, they have to maintain better finances than that, or they'll be shut down by said government.

[Brian Kent]

That darn old government doesn't do anything.

Except build highways.
And put out our fires.
And protect us.
And make us keep our air clean enough to breath.
And fill our potholes.
And educate our children.
And keep jets from running into each other.
And prosecute criminals.
And defend us.
Etc.

Not all bad and unproductive. Always needs improvement.

[Kevin W Johnson]

That darn old government doesn't do anything.

Except build highways.
And put out our fires.
And protect us.
And make us keep our air clean enough to breath.
And fill our potholes.
And educate our children.
And keep jets from running into each other.
And prosecute criminals.
And defend us.
Etc.

Not all bad and unproductive. Always needs improvement.

Out of context...

How exactly do they EARN the money they collect? THAT is the context of my statement, and what i was responding too.

[Pat Barry]

I'm sure Larry's wife will be happy to know that he bought her the most expensive camera available. LOL

[Greg Peterson]

Out of context...

How exactly do they EARN the money they collect? THAT is the context of my statement, and what i was responding too.

The government doesn't earn any money. The government collects revenue to provide the services we have decided we want and or need (police, education, infrastructure, FAA, FCC, defense, civil engineering, scientific research and development, food stamps, FDA, EPA, national parks, federal court system...).

How do the insurance companies 'earn' their money? What service do they provide that is worth more than my mortgage? I see my doctor once, maybe twice a year. How is that worth more than my house?

[David Weaver]

How do the insurance companies 'earn' their money? What service do they provide that is worth more than my mortgage? I see my doctor once, maybe twice a year. How is that worth more than my house?

Pooling risk and protecting you from catastrophe that you couldn't do on your own because you don't have the financial depth to do it. That's what they do.

If someone did it better and more efficiently than they do (like not for profit risk collectives) then I would guess we'd see them providing services, sort of like we have credit unions. Maybe the laws aren't favorable for it, I don't know.

But to claim that the trade that you get for your health insurance premiums is several thousand dollars for a couple of routine visits is farce. If you have a catastrophic event, or someone under your coverage does, and it's not unlikely that you will not at some point in your lifetime, remember it at that point.

The purpose of insurance is to pool risk and provide services around it. if you can retain risk, then you don't have to buy their services. If you have a mortgage, then the bank obviously isn't going to trust you to pay them if your house burns. If you live in a high claim area or geographic, then you'll pay for that privilege, despite the fact that you may feel no financial sense of gain for paying. You pay for downside protection, not gain.

If you despise insurance companies, then you really don't understand the service they provide. If you despise "a" single insurance company, then change your insurer.

I don't work for or with insurers, but I sure do understand the value of how they pool risk and deliver their services. I'm glad in the instances where I couldn't afford to retain risk that there is a relatively low margin range of products for me to choose from (my bank doesn't trust me to pay off my mortgage without my intact house as collateral, either, but there is no other way financially that i could back the risk. I sure wouldn't trust the government to keep a solvent insurance fund - it'd be a target for vote buying as soon as it was set up).

What do insurers earn as a percentage of their premiums, anyway? 4%? And another 12% or something like that for administration? I have trouble finding issue with that.

[Larry Edgerton]

Bravo!!!!!!!!!!! That is voting with your dollars. Leica makes excellent lenses. Do you end up buying that Council Tools double bit axe?


Ahh, you must be over on the Forestry Forum!

Yes I did, and in fact bought two, one with a wood and one with a synthetic handle. Have not had a chance to try either yet.

Larry

[Hilel Salomon]

I'm completely with Brian on this. I admit that our government definitely needs improvement, not the least of which would be to make it independent of corporate and wealthy influence. Still, I prefer something that big in which I have some, albeit small, say. The alternative is to put our lives, health and welfare in the hands of corporations which are only responsible to major stockholders and governing boards. No comparison.
HMO's do not contribute anything to our health. They only create a middleman to jack up health costs. With very few exceptions (Kaiser Permanente would be one), they make huge profits, their CEO's make obscene salaries, and they do nothing in the way of research and preventive care studies. American doctors and our medical research are incredibly good, and yet our nation's health care ranks well below those of scores of countries. We have mediocre life expectancy, high infant mortality and a ridiculous percentage of our population can't afford adequate health insurance. The average small business owner or self employed person can't afford health insurance. That's just not right!


That darn old government doesn't do anything.

Except build highways.
And put out our fires.
And protect us.
And make us keep our air clean enough to breath.
And fill our potholes.
And educate our children.
And keep jets from running into each other.
And prosecute criminals.
And defend us.
Etc.

Not all bad and unproductive. Always needs improvement.

[David Weaver]

You need to understand those rankings before you rely on them.

Most of them provide more credit in their ratings for health care delivered by the government than by private sector. And that has nothing to do with medical outcome.

At one point, I worked for a company that had expertise in health care systems around the world. Our CEO (who was from Canada) said "I'd rather have health care in the US if I can pay for it. I'd rather have health care in Canada if I couldn't".

But the ratings you're referring to don't wait on an unbiased results basis, they provide bias for delivery systems regardless of outcome, and don't properly adjust for how different countries account for death statistics (i.e., infant deaths aren't counted against mortality and life expectancy in some countries, but I'm pretty sure they count at a very early age in the US in the average).

As far as health insurers go, there are for-profit insurers and not-for-profit insurers in the united states, as well as many large self-funded corporate medical coverages. I don't know where the high margin profits are (if you're talking only about absolute dollars, and fixating on 4% of a very large number still being a large number, then I don't see your point), because there's not a lot of difference in cost of coverage from for profit and not-for-profit (sometimes the for profits are less because they're more aggressive with sticking to their plan provisions). The only thing I can say is that I'd rather have not-for-profit coverage when it comes time to deal with claims, because they aren't as rigorous about ensuring that they're paying for a covered service. That doesn't mean that I'm getting covered services I didn't pay for, but it does mean there will be fewer incidences of denied legitimate claims that I have to contest as a policyholder. I've had coverage under both types, and I've had HMO, PPO, and High Deductible coverages.

All I can say is that if you don't think having insurance provides any value, then buy a catastrophic major medical coverage and retain the rest of the risk. Or buy nothing at all while you still can.

Having a fairly good understanding of insurance - numerically and mechanically, I don't get the sense that most people have a grasp on what it is they're actually paying for, and that gives people the sense that they're getting nothing in return. But the insurance industry is so highly regulated, all the way down to insurers needing to file rates and rate changes with state insurance commissioners office to receive approval, that there really isn't a magic behind-the-doors game of someone sitting on a huge pile of money that they've gotten by charging 8x payable claims from policyholders. It just doesn't exist.

[Kevin W Johnson]

How do the insurance companies 'earn' their money? What service do they provide that is worth more than my mortgage? I see my doctor once, maybe twice a year. How is that worth more than my house?

If you don't feel as though health insurance is a good deal for you, then your more than welcome to not partciapate in it. Least till the individual mandate kicks in. However, without it I'm sure you'll be one of those crying the blues about your massive hospital bills after a catastrophic event happens.

Spend a week or two in the hospital and I bet you'll see a bill that exceeds your mortgage, and you will then have the answer to your question.

[Brian Elfert]

I just got through an ER visit last month that culminated in staying overnight for observation. Total bill at retail was about $8,500. My health insurance paid about $3,200 and the hospital and doctors had to eat the rest of the bill per the contract with the insurance company.

I would hate to be the person without health insurance who has to pay the whole $8,500 with no discounts.

[Hilel Salomon]

The need for health insurance and what we get for our money in private HMO's are two separate issues. The hospital bills are ludicrously bloated. Look and see what they charge for an aspirin. They are bloated in order to play the game of billing in the industry. If your deductible is 20 percent, that figure is based on what the hospital or doctor's office bills, not what it receives. Several posts have noted the disparity in billing and payment.

As for the statistics, I think that I know what I'm talking about. Both my parents, brother in law were physicians. So too are my eldest son and one of my daughters-in-law. My youngest son is professor of epidemiology at Harvard and has worked for the WHO. I prefaced my remarks by pointing out how good our doctors are. They're the best. If,however, you're not well-to-do, have mediocre or no health insurance, you're out of luck. There is also a considerable disparity in health care available in urban as opposed to rural areas. The infant mortality rate reflects this dilemma. Those who can afford pre-natal and post natal care have excellent results. The overall statistics, however, are shameful. We have infant mortality rates that make us look like China.


If you don't feel as though health insurance is a good deal for you, then your more than welcome to not partciapate in it. Least till the individual mandate kicks in. However, without it I'm sure you'll be one of those crying the blues about your massive hospital bills after a catastrophic event happens.

Spend a week or two in the hospital and I bet you'll see a bill that exceeds your mortgage, and you will then have the answer to your question.

[Brian Elfert]

The need for health insurance and what we get for our money in private HMO's are two separate issues. The hospital bills are ludicrously bloated. Look and see what they charge for an aspirin. They are bloated in order to play the game of billing in the industry. If your deductible is 20 percent, that figure is based on what the hospital or doctor's office bills, not what it receives. Several posts have noted the disparity in billing and payment.


Luckily, my 20% is based on what the insurer actually pays and not the amount billed. My 20% would have been more than double for my hospital stay if it was based on the retail price billed.

[David Weaver]

We have infant mortality rates that make us look like China.

If the data isn't collected on the same basis, you can't even make such a comparison, because you'll have no idea what the results actually mean.

Physicians are not experts on coverage. Ask your physician what's covered the next time you're in the office. There's a very large disconnect between what they will script or suggest to you and whether or not they know you'll pay it. They will often have a good idea of whether or not they'll get paid, but that's it.

I'm not sure you can point to hospital bills as being bloated and put any weight in that. If you've ever worked with hospitals, you'll know that they're often running on a shoestring, even large regional hospitals. Unless a health system (not hospital) is large enough to have most of the doctors in a region, they are usually having a tough time making ends meet in general, and the docs are getting paid well (no docs equals no patient stream), but not many other folks in the hospital are, aside from a very few at the top.

The largest health systems are the exception because they will have everything from PCP to pediatrics and can have doctors outside the hospital directing patients toward the hospitals.

There are few countries where the urban health care isn't much much better than the rural healthcare, and that includes Canada.

You keep pointing at deductibles and other implications that insurance isn't actually paying that much, but the reality is that the loss ratios are probably around 85%, as I pointed out earlier.

I am not in insurance, and not a doctor, but my thought about healthcare is that docs get paid more here than anywhere else in the world, probably without exception. There is also a huge stream of equipment expenses and medical goods sold to individuals that in a lot of cases aren't even available elsewhere. And that doesn't even touch on prescription drugs.

It's my opinion that you could trim an awful lot out if you made it illegal for docs to receive any compensation for anything other than fee for service.

[Joel Goodman]

And that doesn't even touch on prescription drugs.


Why do we pay more for the same prescription drug than do folks in other "first world" countries? Wouldn't it be fair to mandate that if you sell a drug in the US, then the US price must match the lowest of say, Canada, the UK, France and Germany? Third world countries should and do get cheaper rates. But why are we subsidizing Canada? I believe that even Medicare is prohibited from negotiating discounts with Pharma companies.

[Kevin W Johnson]

Why do we pay more for the same prescription drug than do folks in other "first world" countries? Wouldn't it be fair to mandate that if you sell a drug in the US, then the US price must match the lowest of say, Canada, the UK, France and Germany? Third world countries should and do get cheaper rates. But why are we subsidizing Canada? I believe that even Medicare is prohibited from negotiating discounts with Pharma companies.


The answer to that could well be in the rate that drug companies get sued/not sued in other countries. The price we pay is certainly inflated in order to cover potential and inevitable lawsuits on that particular drug.

[Pat Barry]

Did the hospital and doctors eat the difference? I doubt it. I suspect they have figured out that they need to charge more so they get reimbursed. Its really a scam isn't it. They aren't going out of business.

[Joel Goodman]

The answer to that could well be in the rate that drug companies get sued/not sued in other countries. The price we pay is certainly inflated in order to cover potential and inevitable lawsuits on that particular drug.

I believe the "single payer" government agencies in the other first world countries negotiate for better rates.

[Jim Falsetti]

Chna's IMR are 2.65 times higher than US.

The CIA factbook states year 2011 estimated infant mortality rates for China are 16.06 per 1000 live births, and the US is 6.06 per 1000 live births. Did not check other sources. Is there another source that makes the US infant mortality rate statistics look like China?

Jim

[John Coloccia]

Other countries have price controls so drugs are cheaper there. On the other hand, 40% of all pharmaceutical R&D comes from the USA. R&D is expensive. Getting past the FDA is expensive. Other countries simply just do not invest in research the way we do because they can't afford it.

[David Weaver]

Why do we pay more for the same prescription drug than do folks in other "first world" countries? Wouldn't it be fair to mandate that if you sell a drug in the US, then the US price must match the lowest of say, Canada, the UK, France and Germany? Third world countries should and do get cheaper rates. But why are we subsidizing Canada? I believe that even Medicare is prohibited from negotiating discounts with Pharma companies.

I'm not sure lowest is good, but I wouldn't mind average. The question then would be how do you collect data for average?

But I do think we pay for a lot of the cost of benefits other countries get, and it isn't just in drugs. Agribusiness is filled with it, too.

[David Weaver]

Did the hospital and doctors eat the difference? I doubt it. I suspect they have figured out that they need to charge more so they get reimbursed. Its really a scam isn't it. They aren't going out of business.

Who, the hospitals? We've lost several hospitals here in the last year. Nobody says anything until they are out of money, everyone believes they are otherwise never going to run out of money.

They are almost always the small community hospitals who don't have control of doc networks and are the types who provide care to local low-income commuters.

[Joel Goodman]

I'm not sure lowest is good, but I wouldn't mind average. The question then would be how do you collect data for average?


I think it's very easy to gather that data -- the "single payer" government agency has established negotiated rates in each country for each drug they use -- same as a hospital does here -- but the rates cover the whole country. Also the divisions for each country of the Pharma companies have the data -- could easily be required to supply audited information. Hell an internet search will tell you the Canadian price!

[Kevin W Johnson]

I think it's very easy to gather that data -- the "single payer" government agency has established negotiated rates in each country for each drug they use -- same as a hospital does here -- but the rates cover the whole country. Also the divisions for each country of the Pharma companies have the data -- could easily be required to supply audited information. Hell an internet search will tell you the Canadian price!


A simple search will also tell you about the considerable wait times for medical services in Canada's single-payer system as well. NO THANKS.

No government run system is going to work (remain solvent, with more money going in than going out) in this country until such time that the COST of healthcare is contained. Ad to that the large number of people that will be receiving services that will never pay into such system. I can think of the 46% of federal income tax return filers that pay NO federal income taxes as an already large number of those people.

[Kevin W Johnson]

I believe the "single payer" government agencies in the other first world countries negotiate for better rates.


And that negotiated rate will darn sure reflect the "cost" of selling that drug in that country. The cost of drug lawsuits,(about $50 billion on Vioxx alone) which I'm sure vary by country, are going to cause the prices of drugs to vary as well. Should the rest of the world pay more because as a country we're "sue happy"?

[Mike Kelsey]

Below is a quote from former congressman, Bob Dole & a link to the whole article. It seems to say that government can function in the health care field. Any vets care to comment on what Mr Dole his to say?


"VA is now considered 10 years to 15 years ahead of the private health care system when it comes to technology. Its success has largely been because of its commitment to innovation. This model for government action is possible because of its unique purpose, as well as its successful public-private collaboration. These efficiencies are significant for patients and taxpayers."

Read more: http://www.politico.com/news/stories/0411/52443_Page2.html#ixzz1ljMbtOZx

[Joel Goodman]

And that negotiated rate will darn sure reflect the "cost" of selling that drug in that country. The cost of drug lawsuits,(about $50 billion on Vioxx alone) which I'm sure vary by country, are going to cause the prices of drugs to vary as well. Should the rest of the world pay more because as a country we're "sue happy"?

Maybe the ads for prescription drugs on TV to convince us all that we have "_____" (insert acid reflux, or whatever here) add to the costs! Then we go to our docs complaining that we need a prescription, and to keep us happy and get us out the door, they often oblige us. More costs. We'd rather take Lipitor than eat better and exercise -- more costs. It's kinda like Pogo said "the enemy is us".

BTW much of the R&D that's done is to make new drugs that are no more effective than existing ones, but are "in patent" so that generic options are not available.

[Justin Green]

In a few years when the cost of labor in China rises, as it surely will, and the cost of oil rises, which it surely will, the cost of assembling and shipping from China and then selling into the USA will rise to the point where it will no longer be a working proposition. In the meantime I think I can make due with my current phone and computer. But my finger is getting sore spinning that rotary dial, so could you hurry it up a bit......

Lots of good posts in this thread, and it is something that as a father and CPA, I think about quite a bit. Will my son have the same quality of living as I have been blessed with.

You are right, the price of labor in China will only increase. Eventually, the Chinese themselves will consume many times more goods and services than they are now. This is partly the result of the $1 per hour jobs they have now, which gives many of them $1 an hour more than they would have had a generation ago. As they consume more, and have more purchasing power, they will demand a higher quality of living, too. History is replete with examples of companies chasing less expensive labor, going back thousands of years. Only the pace has quickened, the cycles a bit shorter.

I don't fault companies for acting in their shareholders' interests. In fact, Apple's choice of labor makes my 401k just a little bit more valuable.

At the same time, we should pressure them and prod them along toward the same standards that we enjoy here.

[Greg Peterson]

I can think of the 46% of federal income tax return filers that pay NO federal income taxes as an already large number of those people.

This is an incredibly misleading stat, but then I guess that is the point of it. Normally we encourage each other to take every tax break available, so I am not sure why this stat keeps getting rolled out as proof that the other half are free loaders.

The 46% are:


23.3 percent are either young people or destitute people
10.2 percent are the elderly
4.5 percent receive tax breaks that benefit the wealthy more than the poor and middle class
8.4 percent are (for the most part) working class people and people with kids that are trying to improve their lot in life

Anyone that receives a paycheck certainly pays SSI, Medicare and unemployment taxes. And with rare exception, everyone pays state taxes.

45% of the total federal revenue comes from personal income taxes. This does represent the single largest tax base, but it still does not even account for half the revenue. So less than half of the filers, that don't make enough to pay federal taxes in the first place - high paying jobs like in China, account for less than half of the federal revenue acquired from personal income taxes. Whew.

Whenever I see or hear someone say 46% of filers don't pay federal income tax I ask them if they know why these people don't pay. Those that know the truth behind the numbers stop using this argument.

[Jake Helmboldt]

I think I have to agree with David here. Directors and officers get sued for breaching their fiduciary duties, so I'm hard pressed to see how you don't call that a legal obligation.

I call baloney and agree with Greg. If Apple acted recklessly it would be one thing, but this notion that corporations are legally obliged to maximize profit at the expense of everything else is exactly what is wrong with the corporatization of America. The assumption is that the only value in a company is determined by their profit margins. Plenty of companies, including some corporations, make it clear that their business model encompasses certain values that eschew the race to the bottom.

[Jake Helmboldt]

Maybe the ads for prescription drugs on TV to convince us all that we have "_____" (insert acid reflux, or whatever here) add to the costs! Then we go to our docs complaining that we need a prescription, and to keep us happy and get us out the door, they often oblige us. More costs. We'd rather take Lipitor than eat better and exercise -- more costs. It's kinda like Pogo said "the enemy is us".

BTW much of the R&D that's done is to make new drugs that are no more effective than existing ones, but are "in patent" so that generic options are not available.

Not only that, but R&D costs are dwarfed by the advertising spent by big pharma. And your point of R&D for patent protection is spot on. The little purple pill (I can't even tell you what it is, or what its for, but by God I can recall the tag line) is a prime case in point. The patent was about to expire so Astra Zeneca (I believe that is who makes it) developed a modified formula which was virtually the same but with an extra ingredient that turns out to not have any effect on the drugs efficacy. But a scrip costs many times more than the price for the now OTC version.

[Kevin W Johnson]

This is an incredibly misleading stat, but then I guess that is the point of it. Normally we encourage each other to take every tax break available, so I am not sure why this stat keeps getting rolled out as proof that the other half are free loaders.

The 46% are:


23.3 percent are either young people or destitute people
10.2 percent are the elderly
4.5 percent receive tax breaks that benefit the wealthy more than the poor and middle class
8.4 percent are (for the most part) working class people and people with kids that are trying to improve their lot in life

Anyone that receives a paycheck certainly pays SSI, Medicare and unemployment taxes. And with rare exception, everyone pays state taxes.

45% of the total federal revenue comes from personal income taxes. This does represent the single largest tax base, but it still does not even account for half the revenue. So less than half of the filers, that don't make enough to pay federal taxes in the first place - high paying jobs like in China, account for less than half of the federal revenue acquired from personal income taxes. Whew.

Whenever I see or hear someone say 46% of filers don't pay federal income tax I ask them if they know why these people don't pay. Those that know the truth behind the numbers stop using this argument.

The reasons they don't pay are irregardless of the fact that we as a nation have far too many people taking from the system that they themselves do not contribute too (or very little). Very few if any of the programs aimed at helping people in this segment promote self-reliance or do anything to elevate their level of education or income. In fact, they do just the opposite.

I'm done with this, and surprised this isn't locked already.

[Jake Helmboldt]

From the NYT article: When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The article also points out that labor is actually a relatively small percentage of the total cost. Governtment subsidies, heavy emphasis on technology, etc are a key issue. The whole Solyndra fiasco was based in large part on the fact that the Chinese govt is heavily subsidizing solar technology development and PV production, and our companies can't compete with that, just like with this situation. China however is experiencing a bubble which will burst at some point.

[John Coloccia]

Not only that, but R&D costs are dwarfed by the advertising spent by big pharma. And your point of R&D for patent protection is spot on. The little purple pill (I can't even tell you what it is, or what its for, but by God I can recall the tag line) is a prime case in point. The patent was about to expire so Astra Zeneca (I believe that is who makes it) developed a modified formula which was virtually the same but with an extra ingredient that turns out to not have any effect on the drugs efficacy. But a scrip costs many times more than the price for the now OTC version.

First off, Astra Zeneca is an English company with R&D mainly centered in Sweden. It's hard to make a case that somehow the US health care system is responsible for their behavior. Regardless, what you listed is NOT what they did.

They patented Omeprazole (i.e. Prilosec). When the patent was close to running out, they next patented Esomeprazole. The controversy is that Omeprazole and Esomeprazole both become the same active drug when they hit the acid in your stomach. Astra Zeneca claimed that omeprazole was not as effective as esomeprazole. Studies have not born this out but they haven't contradicted it either.

As I suffer from GERD, and have been on various medications to control it (I'm now on pantropazole, i.e. generic protonix), I can tell you that I did very well on Nexium (i.e. esomeprazole), very poorly on Prilosec (omeprazole) and best on pantropazole. I had to take a mega dose of omeprazole to get the same relief I get on 1/4 the dose of either esomeprazole or pantropazole.

Anyhow, blame the Brits and the Swedes but I'm happy because I'd be suffering or worse without these drugs. If you have a doctor with half a brain, you will be put on whatever drug you do best on. They are NOT all the same.

This is a good example of what gives me chills when I think about the future. It makes me extremely uncomfortable to think that we are getting to the point that people will be made to suffer, as a matter of law, in some quest to make someone else's care cheaper. No one is forcing you to purchase a certain drug. No one is even forcing you to purchase ANY drug. You can simply ignore all the R&D, sip on chicken soup, chew on roots and suck illness out of your chest with candles and leaches. I don't see how anyone can complain about all the options that are available, and I'm starting to think that some of us would prefer these options not exist at all in the interest of somehow leveling the playing field.

[Jim Matthews]

So what about car insurance? Life? Homeowners? Liability?

Insert government in place of Health insurance companies and that line is spot on. Otherwise, your line is factually incorrect as many health insurance companies are still non-profit. The main problem isn't with health insurance companies anyway, though they receive all the jeers and blame. The primary problem is the cost of healthcare...

Name two that are non-profit, and pay their execs less than six figures in salary. Shareholders or operators - they're parasites that provide nothing toward patient care.
If you think the cost of healthcare is too high, have a look at the entry cost to providing services. It's another example of "Public servants make too much money."

That's defines the race to the bottom mentality - not wanting to pay fair wages for professional services.
This line of thinking is pure BOSH - and pertains how, exactly, to the original question?

Spare us the Libertarian Theology.

[Eric DeSilva]

Not to beat a dead horse, but it looks like Apple is responding to critics by asking the Fair Labor Association, an int'l watchdog, to investigate its Chinese suppliers, including Foxconn:

"As part of its independent assessment, the FLA will interview thousands of employees about working and living conditions including health and safety, compensation, working hours and communication with management. The FLA's team will inspect manufacturing areas, dormitories and other facilities, and will conduct an extensive review of documents related to procedures at all stages of employment."

http://www.apple.com/pr/library/2012/02/13Fair-Labor-Association-Begins-Inspections-of-Foxconn.html

[David Weaver]

I call baloney and agree with Greg.

The question was a legal question, not an opinion or feeling question. If a company changes stance in the middle of the game, their shareholders could probably sue successfully.

As the guy I linked noted, it's not something that happens often because you don't usually need to tell companies to maximize their profit, they generally do that regardless of their legal obligations to shareholders.

[David Weaver]

Not to beat a dead horse, but it looks like Apple is responding to critics by asking the Fair Labor Association, an int'l watchdog, to investigate its Chinese suppliers, including Foxconn:

"As part of its independent assessment, the FLA will interview thousands of employees about working and living conditions including health and safety, compensation, working hours and communication with management. The FLA's team will inspect manufacturing areas, dormitories and other facilities, and will conduct an extensive review of documents related to procedures at all stages of employment."

http://www.apple.com/pr/library/2012/02/13Fair-Labor-Association-Begins-Inspections-of-Foxconn.html

I wonder who will choose the interview candidates, and whether or not they'll notify manufacturing facilities that they're coming. If they do, then it's pretty much a waste - same as being a food inspector and telling a restaurant well in advance what date you'll be inspecting (BTDT in an earlier life in working in a very busy and messy restaurant).

It will give Apple something they can write down on paper, though.

All of that said, ask the people what they'd rather have, their life before Foxconn or after Foxconn, and what do you think they'll say?

[Joel Goodman]

you don't usually need to tell companies to maximize their profit, they generally do that regardless of their legal obligations to shareholders.

I know I'm taking this out of context but I think there are many examples of executives maximizing profits in the short run in order to preserve their bonus pay, salaries, and their very jobs without a lot of concern for long term profits or the viability of the company. I am not claiming this is an Apple issue -- but I question the quoted statement as a general axiom.

[David Weaver]

Right, long term or short term, whatever the focus may be, they're maximizing their profits.

Shareholders generally don't mind a trade off in short term or long term as long as nobody is hiding something from them.

What isn't too common is someone ditching a bunch of profit in the short term for no long-term payoff or ditching a bunch in the long term for no short term payoff.

I would imagine a lot of that has to do with how boards structure executive compensation, or compensation for decision-makers within the company at any level.

[Kevin W Johnson]

Name two that are non-profit, and pay their execs less than six figures in salary. Shareholders or operators - they're parasites that provide nothing toward patient care.
If you think the cost of healthcare is too high, have a look at the entry cost to providing services. It's another example of "Public servants make too much money."

That's defines the race to the bottom mentality - not wanting to pay fair wages for professional services.
This line of thinking is pure BOSH - and pertains how, exactly, to the original question?

Spare us the Libertarian Theology.

Who said anything about not paying fair wages for professional services? The cost of healthcare goes far beyond mere wages.

Oh, and no Libertarian Theology here, I would suggest you stop making POLITICAL ASSumptions about people you DON'T know!

[Joel Goodman]

Right, long term or short term, whatever the focus may be, they're maximizing their profits.


No to beat this dead horse too much but I was talking about short term profits vs long term health and profitability. The current financial crisis is filled with examples. Too much debt, risky leverage, tricky accounting, too little investment in the future, etc. all to pump up the short term profit (or the appearance there of). One of the reforms proposed for investment banks was not to base compensation on short term profit, as it encouraged reckless behavior.
Another example of this is that it's easy to increase short term profits by firing staff -- but long term (if done recklessly) you destroy the value of the company. No investment in the future sometimes translates into no future.
My local paper was purchased mainly with debt and although profitable, is unable to service the debt, even with massive firing of reporters. It in Chapter 11 and is a shadow of it's former self.

[Eric DeSilva]

I call baloney and agree with Greg.

You would be wrong, plain and simple, but that is because I didn't say that the fiduciary obligation was to "maximize profit at the expense of everything else." Fiduciary obligations include things like self-dealing, usurpation of corporate opportunities--they don't have anything to do with this whole slash-and-burn-profits-above-all-else concept you are bringing into the picture.

Management teams have the ability to articulate and put into action management strategies that they believe are appropriate. Pointedly, there are non-profits and corporations where the corporate purpose includes advancing some social value proposition. But, even in the normal context of profit-maximizing behavior, I can easily see justifying a social value proposition as a benefit to a corporation because there is a perception consumers will support that forward-minded thinking. Patagonia, for example, buys more expensive raw goods because it is attempting to create a supply chain that inculcates certain values. They believe it is the right thing to do and that there is a market for doing so, and their profits tend to indicate they are right.

The point is that if a management adopts a particular business strategy that proves to be poorly thought out, usually the appropriate way to redress grievances with that strategy is for the Board to replace management. Or, failing that, for the shareholders to elect new directors, who then replace the management. It does not, in most cases, follow that poor business decisions = lawsuit; 20/20 hindsight is good at revealing poor business choices, but that doesn't mean those decisions were objectively bad at the time they were made. The area that gets uglier is where the decisions were objectively bad when they were made. Or where things like "tricky accounting" were used. There, people can get sued.

[Dennis Peacock]

Well, the horse is finally dead, dried up, and gone away.

This is one of those threads that could be never ending and it's everywhere but on a specific topic.
Thread is now closed.