So correct me if I am wrong, but it just seems impossable to get anything made in the USA for a competive cost.
If my notes are correct, the typical retal price is 3 time wholesale. Wholesale is at least 2 times cost. So lets say you design a table that conservitvely cost $500 to get fabrcated. You will need to make it up by a factor of 2 to $1,500 to make a profit, then it will be pruchased by a retailer who will need to mark it up by 3 which is industry standard. That means the final product would cost $4,500.
Yet, the same table could be made in Asia for 50.00 x wholesale markup of 150 x retail with a grand total of $450. Which is about average.
So being American, I would love to have things made here, also because of language, laws, and many other reasons but I just cant see how you can compeate with that.
So is anything being made in this country any more that is not total junk or ultra pricy? Yes, I know in an ideal world price is no object but lets be real, most people are not going to pay that kind of price difference if the quality is almost the same. There is no guarantee that my $500 price US would be any better quality then the low labor laws in other countries that can make this stuff for a fraction of the cost.
Am I missing something? Is there some secrate way of doing business in the US that is not talked about or should I just say if you cant beat them, join them?
American Apparel is made in LA, of course there really isn’t any tooling or development costs in T-Shirts, but they are nice and soft.
I think the car industry might be an interesting look at what you are talking about. In a lot of cases GM looses money on passenger cars sold, but they make it back in financing charges. They also are locked into antique union deals and so they do as much manufacturing in Canada and Mexico as possible. Toyota designs and builds a lot of its vehicles in the US and using practices in some cases developed in the US they make the most money per car out of all auto makers, in spite of manufacturing in the US. Suposedly they do this by designing as much cost out of the product as possible and maximising parts. I don’t know how the hell they do it, but they make the case for US based production. Ironicly that Toyota Tundra might be more American than the Chevy.
Ha, thats funny, I accidently walked into a t-shirt factory in downtown LA looking for a print shop and man, did I ever see the sweatshop from hell. Everyone there looked overworked and could not speak a word of english.
I should have clairified, if you dont export, cheep labor, its usually imported.
I know one place I worked at a few years ago now imports workers from India once they found out the aveage salary for the same type of work and skill level in Animation was 50,000 US to 7,000 India. Great for them, bad for us.
In the late 80 and early 90s several Asian car manufacturers moved assembly plants to the US for cars sold here. This helped to aviod import taxes, as the cars would be assembled in the US. Many States offered huge tax incentives not given to the established “domestic” plants. In addition, younger plant workers were hired and new union contracts were established. On top of that, there is no huge legacy cost for retired employees. GM now supports a huge amount of former employees. That = $1,600 extra cost per car from GM.
True, but I paid $15 for my last American Apparel t-shirt, AT the Am Ap store. Virtually the same t-shirt could have been purchased at H&M for $5 (or K-mart for $2). I purchased it because I like the company’s philosophy, ethics, and aesthetics, so I was willing to pay a premium for that backstory. (Experience design anyone? I didn’t buy a t-shirt, I bought a business philosophy and an edgy ad campaign).
So I guess my point is that products can still be manufactured in the US if they can be considered “premium” and sold at “premium prices”. Commodities manufactured in the US (a tshirt) need an experience surrounding it to command a premium price.
I’m curious, as most commodities become cheaper and cheaper and more ubiquitous does anybody think the value of this ‘experience’ and ‘back story’ will increase. will the population look for ‘values’ in their purchases (as opposed to just monetary value)?
Huh? Where are you shopping? A 100% retail markup is the old standard but that’s pretty fat these days. A wholesaler that can markup something more than 60% is laughing all the way to the bank. This is for low volume specialty stuff. Mass merchants are working on retail and wholesale markups of less than 20%. I do work for a company that is only “allowed” to take a 10% markup by a very, very large furniture retailer that it sells to.
Your $500 table example shouldn’t cost more than $2000 in a store, and it really ought to be closer to $1500. That said, there are people selling $500 tables for $4000, and they richly deserve the beatdown the Chinese are giving them.
It’s still possible to make things here, you just have to make things that either 1)can’t be effectively made in Asia or 2)can’t be cost-effectively shipped from Asia. Factor #2 will get better and better as fuel costs continue to rise. Factor #1 will get worse and worse as Asian factories continue to improve their skills and capabilities.
Another factor I should mention: in many cases, Asian factories aren’t competitive becaue of their low labor costs, but rather because they have made huge investments in efficient new factories. Electronics manufacturing isn’t that labor intensive anymore, but all the good factories are over there. In the same vein, most US furniture factories are literally over 100 years old. There is no way they can crank out furniture as well as a brand new factory in Vietnam, cheap labor or no. Car manufacturing isn’t very labor intensive either, which is why Toyota and Honda and MB and BMW can be successful making cars here in their modern new factories.
I agree with Guest on the mark up. The mass-market products I’ve designed are sold at retail for about 4x manucturing cost (actually a little more mark up than that, because the the manufacturers in China have to mark up to make their profit too). Let’s say 5x. Big diff.
So, $500 table is $2000 or 2500. Actually, I’ve seen that for high design, low-run furniture before. The maker would just have to convince enough people that their American design was what really cool people have instead of Italian design. (American version of Alesi?)
I still see commodity products made in the US and Canada (more here though). Some of it is probably sweat shop stuff, socks, shirts, etc. Some is made through automation, cheap plastic goods that require little if any hand-labor on them. I’ve seen some kitchenwares like that at Wal-Mart. Of course, knowing Wal-Mart that “made in USA” sticker is questionable.
As for cars, it’s like coal. It’s a political thing. A politician can let thousands of jobs leave, but if he brings in 50 new auto-assembly jobs, he gets re-elected.
Look at your newspaper. When was the last time you saw in bold on page one, “Local rapid prototyper forced to lay-off 1” or the equivalent of a fairly big chunk of assembly workers but in an un-sexy industry.
OH…and with Canada and cars, the workers at the Big 3 plants in Canada are unionized too. Canada used to have a law requiring the Big 3 to produce something like 1/3 of new cars for sale in Canada to be made in Canada. They repealed the law, but the Big 3 still has reason to fear a return of the law if they don’t appease the gov. Also, the government gives interest free loans and grants for them to upgrade their factories. I wish they did that for my company!
Customization encourages local manufacture or final assembly.
As for “Made in China” vs. “Made in USA” vs. “Made in Canada”… I’ve found that the country of origin is less a statement about the quality and more a statement of the politics of the buyer.
The only reason I encourage Canadian supply is because I am in Canada and don’t want to deal with import duties, shipping costs and all the stuff with not made in my back yard. It should be the same in the USA, but for some reason the local culture there puts a political spin on it. And really, only a fool would denigrate the “Made in China” label… especially the truly ignorant ones who use anything electronic, of which 99% of all finished units, sub-assemblies and individual parts are made or assembled in China. Or maybe the overly patriotic have never seen the neon signage in Shanghai?
Retail price vs mfg cost is another story. Mark-up of 100% (or margin of 50%) is still common. You are all forgetting to add expenses that are not cost-of-sales like real estate, bookkeeping, human resources, even the employee benefit package. Trust me, you don’t want to know how much the coffee and water cooler are costing your employer… and could you imagine the backlash if those “perks” were chopped?
And finally, it continues to surprise me that many have yet to realize that the difference between volume manufacture and small-run shop is the startup cost. The quality may in fact be the same. A custom designed aluminum chair made to order by a metal shop would cost maybe $500 each and sell for $2000 in qty of 10. That same chair slammed out by a factory with big hydro presses might cost $50 and sell for $200 in qty of 100. If the big factory were to run only 10, the startup costs for the machines would bring the unit cost back up to $400 each.
That’s why it’s always wise to ask a vendor to itemize a quote into set-up charges and per unit run charges. That way, you can make fairly accurate guesses as to the most efficient volumes and how much effort to put into your sales team.