CAPITALISM, CONSUMERISM, CHINA VS. AMERICA!!!!

Design Discussions general design discussion
21

Richard: I agree, but I would say that the process is not linear. Just like the stock market (or any other), it was a lot of up and downs that, in the long term, trend always higher. For example, the 99% revenues have not grown when adjusted for inflation for the last 30 years. However, before that, it had consistently grown for 40 years.

Also, I don’t think there should be a difference in compensation between a brain-dead manufacturing job and a brain-dead service job. However, there clearly is.

22

I don’t expect China or India to be the ones making stuff. Like the UK after the industrial revolution and the US now, they too will move on from it in time. There will always be someplace else where labor is cheaper for the foreseeable future. Already a lot of manufacturing is leaving China and going to places like Bangladesh, Vietnam, etc.

The key is that the economy of industrialization is always moving. In the 50’s the place to get cheap stuff made was Japan. Then it moved to Korea in the 70s. Then Taiwan in the 80s. Then China in the 90s. Then Vietnam in the 00’s. Now it’s moving elsewhere…

And no, not everyone will be a scientist or engineer. That was just hyperbole. But there is more work in all areas of service and business than just making stuff. That was the point.


R

23

Thanks Lew,

as usual you already wrote most things I had on my mind.
The most important one being, that not everyone is inclined to become
a creator as in “engineer” or “designer”.

There are many people who love their down to earth manufacturing or
administrative blue color jobs. Even within the recent german job wonder
we tend to have not enough slots in that bracket any more. And that leads
us to having hundreds of thousands of people in wellfare programs who could
care for themselves if we were able to shift work back here at a faster pace.

Another aspect. I do fear that an up to date manufacturing environment looks
a lot different than what some of you guys have seen in Mexico or China. There
is another way and I am pretty sure the U.S. will see it.

Have a look at the new factory Tesla is building.

Manufacturing doesn’t neccessarily need to be oily, smelly and unhealthy to
be cost efficient. In fact most chimneys that crank out rubber or steel are very
clean not because of the poor working man, but because of the total quality review
of the products and processes.

Third aspect: Where is economic growth supposed to happen in a national economy
if nearly no one actually makes stuff? If you all take stuff from outside and do “trade”
and “service” your economic model relies on creating the next “bubbles” in those markets
you trade in.

That is not sustainable. Go back to the drawing board.

End of rant.

mo-i

24

In 3 years, 2015 when hoverboards finally come on the market.

Lots of Chinese investment in Africa and African manufacturing (lots of Chinese investment everywhere):

Another perspective- industrialisation,wealth and health. I’m a big fan of Hans Rosling (he’s got lots of great TED talks). This is a very positive and optimistic point of view:

25

Richard-

I don’t think the answer is in bringing back the hard, labor-intensive jobs. Those clearly are gone for good, and that is a good thing. You wouldn’t find many people in the US willing to stand in a hot, dusty wood factory manually cutting parts for 12 hours at a time at any wage, let alone at the wage the Chinese or Vietnamese get. But the cost of labor (and materials, and shipping) has gone way up in those countries in even just the last 5 years. It’s not apparent to most people, because we’ve compensated by stripping down the product to hit the same retail price. It might be different in apparel or electronics, but that has definitely been the case in furniture.

Realistically, where is the next cheap labor source? Myanmar? Sub-Saharan Africa? There are plenty of people in the world who might be willing to work cheap, but they tend to live in countries with no natural resources, no infrastructure, rampant corruption, and unstable governments.

What you’re going to see instead, I think, is crappy manual labor being done by machines. This has been the arc of progress for decades, if not centuries. I see the mass manufacturing migration to Asia as a temporary detour. Once you have a fully automated furniture factory sitting in Vietnam, you have to ask yourself why you put it there, thousands of miles away from its source of raw materials and customers. You may as well just put it in the US.

And the jobs necessary to support that factory (engineering, maintenance, QC, packing, design, sales, support) require a wide range of education levels, and for the most part aren’t the sort of back-breaking drudgery that first-worlders increasingly refuse to do.

Ultimately mo-i is right, to have an actual economy, someone has to make stuff, grow stuff, or dig stuff out of the ground at some point.

26

I don’t think the answer is in bringing back the hard, labor-intensive jobs. Those clearly are gone for good, and that is a good thing. You wouldn’t find many people in the US willing to stand in a hot, dusty wood factory manually cutting parts for 12 hours at a time at any wage, let alone at the wage the Chinese or Vietnamese get.

The obvious solution would be investing in CNC controlled mills and saws that crank out hundreds of finished and precise parts and are controlled by 3-5 certified technicians, instead of relying on Vietnam to supply those parts manually finished by young women sitting on their straw floor milling and drilling every part as a single item.

But investing 400k in hardware takes some balls and long term commitment. Sourcing the parts cheaply at alibaba doesn’t.
It is obviously a mental problem for the inhabitants of western civilisation who got used to being offered the simple solution on a silver tablet. China is going the other way and we will see were it leads them and us.

mo-i

P.S.: wood milling factories tend to be neither particularly hot or filled with dust due to the risk of spontanious combustions.

27

Spot the difference:

28

In Vietnam they sure are! Not explosively dusty, but definitely hot and humid. I can’t take more than about an hour on the floor, and that’s just standing around looking at stuff.

29

Not everything can be made by robots or machines. Footwear for example needs the dexterity of people and labor would have to significantly get more expensive for it to worth making the 100s of different robots needed for all the steps in the mfg process. Not to mention it wouldn’t be very efficient to reprogram for each order of a different shoe/color, etc.

I’d imagine the assembly of things like an iPhone are also very labor intensive and you know if Apple could have made a robot to build it they would. They certainly have the cash to develop it and you know they like new mfg processes.

I don’t think fty labor is going away in at last the next 100 years, it’s just going to move to different countries as labor in low cost countries gets more expensive. The upside of course is that once you run out of cheap labor countries, you effectively are at a point where all the countries in the world are at first world levels of economic prosperity. What happens then?.. dunno.

R

30

http://news.xinhuanet.com/english2010/china/2011-07/30/c_131018764.htm

In short: Foxconn will replace 1 Million of its 1,2 Million employees with robots within the next 3 years!

Apple could have done the same. They could have built the works in Mexico, Texas, wherever.

IF they understood and were able to controll the production process.

Scary, scary stuff.

mo-i

31

Correct.
In the immortal words of Judge Smails:

“Well, the world needs ditch diggers, too.”

32

Apple has no desire to be limited by current production. They are interested in the thing, not the thing that builds the thing. To invest in and build a robotic line to build version 4 would place constraints on version 5. That kind of thinking is 100% contrary to what makes Apple work. The production is someone elses problem, pushing requirements, methods, and defining new market demands is the domain of Apple.

33

Good point, Shaw. But, could Apple partner with a manufacturer to do that robotic line in the US?

34

10 years ago, robots were able to compete with the work of men if it had cost less than $ 50 / hour. Today we are at $ 2 dollar, which is less than the cost of labor in China. The factories in China will then go away and be repatriated as close to consumption centers. TV, cars, mobile phones, will be (maybe) produced is the US or in Europe soon, but the unemployment (23% Spain, 17% USA, 10% EU) could be problem is nobody can pay for these products.

35

The way I have experienced Taiwanese manufacturers methods is that they will build in anticipation of the demand and the clients growth, gambling and risking huge amounts. This is generally done without a contract, obligation, or commitment to long production runs or technologies from the client. Naturally companies like Apple or Walmart eat this beneficial relationship up and come to think of it as an entitlement and a prerequisite for being a qualified supplier.

I don’t see (or culturally expect) any US manufacturer accepting such a risk. To put it more bluntly, Americans are not going to bend over for Apple the way it has come to expect a good manufacturer is supposed to.

36

Wow… And they certainly shouldn’t. Culture plays a huge role in this discussion, too.

37

I’ve pointed it out before, but I will again. Value has moved one up the chain. 100 years ago, there was a lot of value in farming. 40% of Americans were involved in agriculture. Now 3%. Same thing is happening to manufacturing. 50 years ago, 30-35% of Americans were in manufacturing, now 12% (from memory that figure) and falling.

GM and GE stopped manufacturing and went into banking. IBM stopped manufacturing and went into business consulting. Apple stopped manufacturing and double downed on software and marketing.

There is still value in manufacturing, but it’s not critical. Everyone manufactures now. You have to differentiate somewhere else in the value chain.

I think Yves is spot on. Manufacturing is now innovating itself with further robotisation and rapid custom processing (3D printing, CNC milling, whatever someone comes up with next). He’s is also spot on with the unemployment problem. If society says that you need to be employed to live, it’s going to be very hard to find productive meaningful jobs for people in the emerging economy.

38

Quick responses:

The “chain” represents the full value to be had. Less of the chain is less of the value. The top of the chain is dependent on each lower link, and each link upward is thinner than the lower links, like a pyramid, more risk, less stability. Project things ten years down the line, history shows Foxconn is the winner.

Rapid is BS. When “rapid” equals one part falling into a bin every 30 seconds with a Class A finish, we can have a conversation. If and until then, rapid manufacturing is a buzzword. There is no rapid manufacturing, it is just a hope that is going “to save everything”.

GM and GE are moving down the list, and no one even talks about IBM anymore. All historical companies.

39

nxakt: I love your comments man, but “No one talks about IBM anymore”. Really? No one in design. In business, they are as successful as ever. They dumped the low-margin laptop/PC business and are humming along.

Under former chief executive Louis Gerstner, IBM pulled off one of the most remarkable turnarounds in corporate history. The company concentrated its business on services, embraced the internet and sold its personal computer business.

As for rapid, I agree, it’s BS. However costs are falling and quality is improving. If the improvements continue along an exponential growth, I think we could have class A finish in a home printer that costs $500 in ten years. If it evolves linear, it might still be 100 years away. We’ll see.

40

I think we could have class A finish in a home printer that costs $500 in ten years.

And that will be the beginning of the end of civilized humans actually knowing how to make anything… [sniff]