Originally Posted By RoadTrip <<Supply and demand and all that....>> That ALWAYS determines who wins and who loses. And WalMart supplying goods made in China has clearly won.
Originally Posted By mrkthompsn Sorry for my lack of attention or lack of immediate responses. I was busy working late. Updated tidbits: I have allowed several potential manufacturers to bid. Many of them are disqualified due to technical incapability due to the custom features of the part and other reasons (not disclosing too much info here). Quotes have gone to four USA companies, two China companies, two India companies, and one Italian company. Michigan and China rose to the top because of capability, quality controls in place, payment terms and lead time commitments. Strangely, China's lead time is quoted shorter than Michigan's quote. Even stranger, Michigan is going to make their tool ~in China~, and tailor it for their particular machinery when it arrives in the USA to make cast parts - but what makes them worth $100k+ more? The decision is bubbling around our office, and the social/political factor is being considered. But does the decision of $100k+ have value? To Michigan and US society? yes... but does that help our little company pull the trigger? President Obama stated "the economy will be raised by the middle class". Well, here we are. Is this our duty call? If we go Michigan, it will be harder to raise cash for my salary. If we go China, my salary is covered, and our next project can start earlier. If we chose Michigan, our company could afford it. But doing so causes us to delay the development of our next product for a year and a half (this isn't the only part we have to tool for) ... and the micro-economy slows. Our customers will have to deal with their expensive solutions until ours is ready for them to buy. Why did I put this on the board? The question enters the political arena, because several thousand companies in the US constantly cross the same issue. With that, what hope does this country have long term?
Originally Posted By mrkthompsn The truth is: Michigan's quote is higher because Americans choose to live an unafforable lifestyle. They have for a long time. Two new cars, fishing boats, big screen TVs, Disney vacations, high-speed internet, music/game download services, gym memberships, going out to eat, security systems, cell phone data plans, transit/suburban living... it was all a cool, progressive idea decades ago, but our spoiled lives have caught up with us. I'd go Michigan if they were $70,000. But the truth is, I'd be paying for their employees' Xbox Live memberships. This is why I say "When in doubt, the Amish probably have it right." To stay American, consumers themselves will eventually have to commit to buying things at much higher prices, and not bark against it.
Originally Posted By SuperDry Well said, mrkthompsn. It reminds me of what has happened in countless small towns across the country, where the economy might be supported by rural activity (farming, ranching, etc.) plus one manufacturing plant that came to down decades ago. The small town center existed in more or less a state of equilibrium, with a grocery, hardware store, clothing store, etc. Then WalMart comes to down. Even though the majority of shoppers are from families of blue-collar workers at the plant, they flock to WalMart because of the Always Low Prices. Predictably, the old town core dies off, along with the locally-owned small businesses that can't compete with WalMart. All is good in this small town for the most part (except for the previous small business owners). The standard of living has actually gone up for most, as they now have access to a wider variety of goods at lower prices. That is, until the plant closes because whatever it makes is no longer competitive with Chinese imports. Then, everyone's out of a job, and nobody can afford anything, even at WalMart prices. The screaming starts with "Buy American!" and "Can't these companies realize that if they send all our jobs to China, there won't be anyone left to buy their products?" while carefully ignoring their own individual behavior to switch from local merchants selling American products to big box retailers selling imports. To answer the original question, I guess part of it has to come down to the ownership of the company. As an employee, it's not your money you're talking about sending to Michigan, but the owners' money. This is true whether it's a large publicly-traded company, or a smaller family-owned business. Are the owners okay with you making such a decision? Do you have the authority to do so, or are you talking about making the decision based on the political reasons you mentioned without disclosing this to the people that will have to pay for it? That aside, it is a fascinating problem. Globalization affects not only imports, but all parts of the supply chain. You may find yourself in a situation where whomever you sell your finished parts to has an alternative supplier, and the only way to be close to their price is to buy your parts from China. Instead of switching to China and pocketing the money, you may choose to share the cost reduction with your customer: by passing half of the savings on to your customer, you may delay or prevent them from looking elsewhere, and/or you may prevent someone else from starting a competitive business because they see the fat margins you're making. Then there's also the export market: your parts may not have one, but many things Made in America are exported. If the manufacturers don't source their parts from China, they may not be able to sell their finished product at a price where anyone from another country would buy it. It's all very complicated. And I think that globalization is here to stay. The observation you made about Americans being able to live high on the hog based on previous economic situations that are now gone rings true. As developing countries' standard of living goes up, ours is bound to go down. At least it is for workers that expect to be able to do the same work their fathers and grandfathers did.
Originally Posted By RoadTrip That is really true. We had become spoiled, and now are having to face reality. Was it REALLY worth $70K+ in salary and benefits to have someone attach bumpers to a Ford F-150? Probably not, and now it is catching up with us.
Originally Posted By mawnck >>Updated tidbits<< Thanks for all this. You've filled in a lot of blanks. And I apologize for jumping to the conclusion that you were indiscriminately tossing talking points at us. You get sort of used to certain things around here, but you aren't the usual perp. I apologize. I still find it baffling that the Michigan company can't come up with a more competitive bid (especially if they're outsourcing the tooling), but that's their choice, not yours. Surely their other customers are also soliciting competitive bids for their projects, so they oughta know better. Not knowing the numbers relative to the project scope here (and not expecting you to disclose that), I can't say which choice I'd make, but I have to say I'm now regrettably leaning toward China, due to the 18 month delay as much as to the price. But first, if I were you I'd lean on Michigan a bit harder to come up with a better bid and a better timeline. I'd say if you give them every opportunity to be competitive, then you've done your duty as good American citizens. >>To stay American, consumers themselves will eventually have to commit to buying things at much higher prices, and not bark against it.<< I can see this happening ... indirectly ... when the protectionism fires up, as it undoubtedly will if things continue as they're going.
Originally Posted By mrkthompsn Thanks guys. Life in reality changes the view of the world. The decision goes all the way to the CFO, but he is dwelling on the subject. We talked last night about it. Of course we're offering the company in Michigan a chance to rebid. They can only lower their quote so far until they can't afford their workers wages, retirement plans, health insurance, EPA fees, etc.
Originally Posted By Kar2oonMan >>But the truth is, I'd be paying for their employees' Xbox Live memberships.<< The other side of the coin is what will your dollars be paying for in China? The workers themselves will see little of it.
Originally Posted By fkurucz >>Was it REALLY worth $70K+ in salary and benefits to have someone attach bumpers to a Ford F-150? Probably not, and now it is catching up with us. << Except that now new hires in the big 3 are now paid $14/hr. Detroit's problem wasn't cost, it was quality and poor, antiquated designs.
Originally Posted By fkurucz And before we get all high and mighty about "overpaying" factory workers, remember that there are college educated people offshore who will do our white collar jobs for less than $1000 USD a month.
Originally Posted By fkurucz >>Otherwise, all citizens, all families, including yours, will eventually end up living in a third world poverty nightmare.<< Exactly, the big loser in the "race to the bottom" is the middle class.
Originally Posted By RoadTrip <<And before we get all high and mighty about "overpaying" factory workers, remember that there are college educated people offshore who will do our white collar jobs for less than $1000 USD a month.>> Everyone knows that. At least anyone who ever called a computer support line does.
Originally Posted By fkurucz >>Everyone knows that. At least anyone who ever called a computer support line does.<< Everybody? I don't think so. A lot of people think that their jobs are "safe" and that they are "indispensable" while they cheer and support the offshoring of their neighbors' jobs.
Originally Posted By RoadTrip You did what you had to do. And before anyone gets all bent out of shape about the decision, they should probably check where their computer, television and cell phone were made...
Originally Posted By fkurucz ^^I do get bent out of shape, because we are committing collective economic suicide.
Originally Posted By mawnck >>Business awarded to China. Our budget just isn't that generous.<< Well, damn. Thanks for the update. No bending out of shape on my part.
Originally Posted By mawnck >>I do get bent out of shape, because we are committing collective economic suicide.<< Yep. But it's not mrkthompsn or his company you should be blaming. They made a very reasonable, good faith attempt to do the right thing. I buy American whenever I can. It's not very often.
