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Timf
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The problem with Taiwan is their labor rate is too high to make sense of the cross ocean transport costs. With Vietnam they have already been raising rates over the past several years so this is short term also.

The interesting thing is the automation discussion. Will manufacturing come back to the US without adding any significant jobs? Will lights out factories be the norm?

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Timf
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sanjy009
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This article on the core front page a few weeks ago also shows the secondary and tertiary benefits of manufacturing locally, the money recirculates in the local economy:

http://www.core77.com/blog/business/what_can_one_product_do_for_our_economy_a_quick_cupdate_from_aaron_panone_23872.asp

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A local 'chamber of commerce' style TV ad from a few years ago followed a 2$ coin, showing how if it is spent here, the local economy benefits: you buy something from the shop down the road, he then buys a coffee from a neighbouring shop, the coffee shop then buys supplies from the factory you work at etc.

I found this study that puts a dollar value to buying locally, which I expect correlates a lot to manufacturing locally:
http://andersonvillestudy.com/

”In a study comparing the economic impact of ten Andersonville businesses and their chain competitors, it was found that:

Locally-owned businesses generate a substantial Local Premium in enhanced economic impact.

For every $100 in consumer spending with a local firm, $68 remains in the Chicago economy.

For every $100 in consumer spending with a chain firm, $43 remains in the Chicago economy.

For every square foot occupied by a local firm, local economic impact is $179.

For every square foot occupied by a chain firm, local economic impact is $105.”

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slippyfish
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If final assembly and all packaging is currently done overseas, and the majority of the customers are in North America, it certainly makes logistic and shipping cost sense to do final assembly here. The smaller components will still be made overseas but larger unwieldy parts like the curved stand for iMacs and displays can be made in the USA near the final assembly location. Should allow for a better JIT assembly line, less standing inventory (not that Apple has a problem with that), and the opportunity to ship less air overseas. With the tighter packaging on iPads, the laptops, and phones it makes less sense.

So, I'd imagine the iMacs and whatever the next gen Mac Pro might be (if they continue) would be good candidates for US fabrication and assembly.

Do they build the factory near the UPS or FedEx shipping centers?


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I think it's also about curbing the loss of institutional knowledge...or the recognition that separating the designing and the making is often a bad idea if you want to continue to know how to make things. This is a good story about the GE Appliance Park that hit on this point:

http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/?single_page=true

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slippyfish
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Fantastic article wiley. Thanks.

This part:

Even then, changes in the global economy were coming into focus that made this more than just an exercise—changes that have continued to this day.

Oil prices are three times what they were in 2000, making cargo-ship fuel much more expensive now than it was then.
The natural-gas boom in the U.S. has dramatically lowered the cost for running something as energy-intensive as a factory here at home. (Natural gas now costs four times as much in Asia as it does in the U.S.)
In dollars, wages in China are some five times what they were in 2000—and they are expected to keep rising 18 percent a year.
American unions are changing their priorities. Appliance Park’s union was so fractious in the ’70s and ’80s that the place was known as “Strike City.” That same union agreed to a two-tier wage scale in 2005—and today, 70 percent of the jobs there are on the lower tier, which starts at just over $13.50 an hour, almost $8 less than what the starting wage used to be.
U.S. labor productivity has continued its long march upward, meaning that labor costs have become a smaller and smaller proportion of the total cost of finished goods. You simply can’t save much money chasing wages anymore.

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Wiley, the single most important article I have read this year. Thanks.

Like you noted, this section sums up a lot.

Charles Fishman in The Atlantic wrote: For years, too many American companies have treated the actual manufacturing of their products as incidental—a generic, interchangeable, relatively low-value part of their business. If you spec’d the item closely enough—if you created a good design, and your drawings had precision; if you hired a cheap factory and inspected for quality—who cared what language the factory workers spoke?

This sounded good in theory. In practice, it was like writing a cookbook without ever cooking.

Lou Lenzi now heads design for all GE appliances, with a team of 25. But for years he worked for Thomson Consumer Electronics, which made small appliances—TVs, DVD players, telephones—with the GE logo on them. Thomson was an outsource shop. It designed stuff, then hired factories to make much of that stuff. Price was what mattered.

“What we had wrong was the idea that anybody can screw together a dishwasher,” says Lenzi. “We thought, ‘We’ll do the engineering, we’ll do the marketing, and the manufacturing becomes a black box.’ But there is an inherent understanding that moves out when you move the manufacturing out. And you never get it back.”

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TaylorWelden
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slippyfish wrote:Do they build the factory near the UPS or FedEx shipping centers?


With Apple's pull, I bet UPS and FedEx will build their shipping centers around the Apple *factory.

*I'm sure they'll reinvent the factory as we know it too. Probably name it something like "Dreams+Materials Center of Realization".

In all seriousness... actually, yes, I'm being serious.
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Mr-914
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That same union agreed to a two-tier wage scale in 2005—and today, 70 percent of the jobs there are on the lower tier, which starts at just over $13.50 an hour, almost $8 less than what the starting wage used to be.


That's only $28k a year before tax. Ugh. The article made me feel sad. Mind you, that's what a lot of unionized plants in Canada are paying (or less actually).
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I've been searching for an article I read a few months ago that gave the reasons why the iPhone would never be manufactured in the US. The bulk of the thinking was that since nearly everyone who has a mutual fund is in some way an Apple shareholder, they would never allow Apples costs to rise to the point where they weren't pulling in tens of billions in profits each I quarter. Therefore, they would have to maintain their ever cheaper manufacturing off shore.

At the time, that article really resonated with me. Wall Street would continue to call the shots, and things would go on as they have. Now I'm starting to see that there's no way Apple can continue the way they build things. And it's not just Apple, of course.
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Scott Bennett
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Read the print version last night. Inspiring.


engio
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TaylorWelden wrote:*I'm sure they'll reinvent the factory as we know it too. Probably name it something like "Dreams+Materials Center of Realization".

In all seriousness... actually, yes, I'm being serious.

Well, NeXT did it 20 years ago so you may not be wrong
http://money.cnn.com/magazines/fortune/ ... /index.htm


iab
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Timf wrote:The interesting thing is the automation discussion. Will manufacturing come back to the US without adding any significant jobs? Will lights out factories be the norm?


With my current employment, I have what I consider about 500,000 square feet of "lights out" factory. And while we do not employ thousands to fill that space, we do employ hundreds. There are plenty of techs to maintain the autmated equipment and workers who perform the final pack out. Its not that we need them for the packing, but it is a final QC check.

And while the US has been bleeding manufacturing jobs since the 80s, there is only so many jobs you can eliminate through automation. It could be that we have bottomed out. But only time will tell.

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iab
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nxakt wrote:Wiley, the single most important article I have read this year. Thanks.

Like you noted, this section sums up a lot.

Charles Fishman in The Atlantic wrote: For years, too many American companies have treated the actual manufacturing of their products as incidental—a generic, interchangeable, relatively low-value part of their business. If you spec’d the item closely enough—if you created a good design, and your drawings had precision; if you hired a cheap factory and inspected for quality—who cared what language the factory workers spoke?

This sounded good in theory. In practice, it was like writing a cookbook without ever cooking.

Lou Lenzi now heads design for all GE appliances, with a team of 25. But for years he worked for Thomson Consumer Electronics, which made small appliances—TVs, DVD players, telephones—with the GE logo on them. Thomson was an outsource shop. It designed stuff, then hired factories to make much of that stuff. Price was what mattered.

“What we had wrong was the idea that anybody can screw together a dishwasher,” says Lenzi. “We thought, ‘We’ll do the engineering, we’ll do the marketing, and the manufacturing becomes a black box.’ But there is an inherent understanding that moves out when you move the manufacturing out. And you never get it back.”



I couldn't agree more. The manufacturing we have on site is an invaluable tool.


iab
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NURB wrote:I've been searching for an article I read a few months ago that gave the reasons why the iPhone would never be manufactured in the US. The bulk of the thinking was that since nearly everyone who has a mutual fund is in some way an Apple shareholder, they would never allow Apples costs to rise to the point where they weren't pulling in tens of billions in profits each I quarter. Therefore, they would have to maintain their ever cheaper manufacturing off shore.

At the time, that article really resonated with me. Wall Street would continue to call the shots, and things would go on as they have. Now I'm starting to see that there's no way Apple can continue the way they build things. And it's not just Apple, of course.



http://www.nytimes.com/2012/01/22/busin ... wanted=all

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