How much more would a product like Nike shoes or an iPod cost if the factory were moved back to the USA, US wages were paid, US environmental regs adhered to, etc? Any idea? Would it be 2x current prices? Have any corporations done this? Unless the cost increase were huge, it seems like it would be great PR with our current unemployment rate.
They could do that and sell at current prices, but profit margins would be reduced. I'm pulling this number out of my rectum, but maybe would increase production costs by $10/pair of shoes?
it depends on which products in question. For things like ipods and shoes, probably a very significant amount, because making these things is very labour intensive- you need lots of people to eg stitch shoes, which makes up a large part of the cost. So if the companies were to move back to the US, they would have to pay vastly more in wages and the prices would explode.
But for some technology products, wich depend more on skilled workers useing technology, the price would not be much different, because the main cost of production is the technology, eg the robots that make cars.
Here's an infographic showing the price breakdown of a pair of running shoes. (Obviously the total would be a bit different for the US without the VAT.)
http://www.ransacker.co.uk/running-shoes/the-true-cost-of-running-shoes/
Currently the production and labor costs (including profit for the factory) account for about 4% of the total shoe cost. This amount would go up if the shoes were manufactured in the US, but the transports and import taxes would go down.
Due to recent oil price spikes, raw material and transport costs have risen. Labor and production costs have remained flat, but the price of shoes has increased. Markup percentage (both at the manufacturer and retail levels) have stayed the same.
Best post in a long time. If you watch "Walmart the High Price of Low Cost" they touch on parts of your questions. The current business culture is to cut cost by exploiting markets without regulation at the cost of American jobs and its not likely to change any time soon. Here is the bottom line, if the ratio of CEO pay to the average worker in the US is 475:1 where is in Mexico its 47:1 we will choose to business in Mexico. Everyone gets paid less and the US business make more. We can move production back to the US but the decision makers will not do this because it will hurt their bottom line. There would be an adjustment period of 10-15 years but in the end we would see that ratio drop to a more reasonable figure and see the "good ol' days" of the 1950's when manufacturing was king.
EAT THE RICH!!
It would never work and will never be done. They have to stay competitive. If Nike shoes went up too far in price, far less people would buy Nike. Everyone knows that and that's why they wont do it. Companies are always looking for new ways to cut costs, not increase costs, and remain competitive. There's fierce competition among companies in this world market we live in. There's no turning back.
The only possible way is what a liberal sounding person like you would never accept and that is regulations were have to be dialed way back. And taxes would have to be decreased dramatically. Yes employment would rise, more people back to work but you would have to cut spending dramatically also. Goodbye EPA and other agencies, entitlement programs drastically cut. It's a fantasy and a nice one but the evil Democrats stand in the way.
some one took the name i wante wrote:
it depends on which products in question. For things like ipods and shoes, probably a very significant amount, because making these things is very labour intensive- you need lots of people to eg stitch shoes, which makes up a large part of the cost.
Another question is could companies even get Americans to do this work today? How many kids coming out of high school would be willing to spend long hours doing menial tasks for minimum wage?
It would just encourage more immigration from low wage countries - legal and otherwise.
Ghost of Steinbrenner wrote:
They could do that and sell at current prices, but profit margins would be reduced. I'm pulling this number out of my rectum, but maybe would increase production costs by $10/pair of shoes?
Yeah, let's just make up random bullshit, that's a good way to have a discussion!
Saz!@12^lk*qmnd+(^);o) wrote:
It would never work and will never be done. They have to stay competitive. If Nike shoes went up too far in price, far less people would buy Nike. Everyone knows that and that's why they wont do it. Companies are always looking for new ways to cut costs, not increase costs, and remain competitive. There's fierce competition among companies in this world market we live in. There's no turning back.
The only possible way is what a liberal sounding person like you would never accept and that is regulations were have to be dialed way back. And taxes would have to be decreased dramatically. Yes employment would rise, more people back to work but you would have to cut spending dramatically also. Goodbye EPA and other agencies, entitlement programs drastically cut. It's a fantasy and a nice one but the evil Democrats stand in the way.
this
To follow up on this, take agriculture as an example. The value of agriculture is higher in Calif. than any other state, by far. And it is almost entire dependent upon immigrant labor.
Many unskilled jobs in manufacturing and agriculture and mind-numbingly boring and physically exhausting. If people have a choice they won't do them. After all, what would you rather do, spend long hours performing the same backbreaking task all day or hang out with a bunch of people with signs in lower Manhattan?
My company uses the approximately the following in their cost models when considering manufacturing locations of new product launches:
Cost of labor in midwest: $35/hour
Cost of labor in Puerto Rico: $5/hour
Cost of labor in Tijuana: $1/hour
This includes burden rates (benefits, etc) but not facility costs, lead times, freight, tax implications, yada yada yada.
some one took the name i wante wrote:
But for some technology products, wich depend more on skilled workers useing technology, the price would not be much different, because the main cost of production is the technology, eg the robots that make cars.
A lot of those products are already made in the USA. I work in the development lab for a tech company. The manufacturing floor is a few buildings over. It's a fairly automated process, and I would think any labor gains they could make by doing it overseas would be lost with shipping.
Chinese Chicken wrote:
Cost of labor in midwest: $35/hour
Cost of labor in Puerto Rico: $5/hour
Cost of labor in Tijuana: $1/hour
This includes burden rates (benefits, etc) but not facility costs, lead times, freight, tax implications, yada yada yada.
A 35x multiplier seems low for textiles labor (I'm thinking 50-60x), but let's use it just to see what the numbers look like:
Labor costs are currently .40 EURO on a 100 EURO retail pair of shoes. .40 * 35 = 14 EURO. So, even if all other costs remain the same, moving manufacturing to the U.S., at least just in terms of labor, adds just under 14% to the retail cost of a pair of shoes.
Would you pay $114 for a pair of shoes that you normally pay $100 for if they were made in the U.S.? I would.
Realistically, shipping costs, infrastructure costs, tariffs, taxes, and a bunch of other things are going to change, which could affect the 14% number by +/-5%, but labor is going to be the biggest mover in that calculation.
Great thread.. I've wondered this a lot lately. The USA has the biggest and most iconic brands in the world but we export all the labor, so if you look at Apple, Nike, Levis, etc.. they really don't employ many people.
I think people are focusing too much on just the floor labor of manufacturing. If you were manufacturing Apples and iPods and Nike shoes you'd also have middle managers, supervisors, transportation, logistics, IT support, mechanical repair, purchasing, etc.. The spin off jobs are more than JUST peons stitching running shoes together.
I think that .40 EURO is supposed to be the total cost of all labor, including management and others. That's also why I think if all of those jobs moved to the U.S., we'd have a 50-60x multiplier due to all the management and technical jobs that would move as well.
Buy New Balance made in the good ole US of A...and they dont seem that much more expensive.
common wrote:
I think that .40 EURO is supposed to be the total cost of all labor, including management and others. That's also why I think if all of those jobs moved to the U.S., we'd have a 50-60x multiplier due to all the management and technical jobs that would move as well.
yeah, I mean a few people on here were saying that Americans wouldn't do those jobs. I should have said that you could "work for Nike" but not be stitching shoes together.
the multiplier would be H U G E. Just imagine, those people work Nike, those employees buy groceries, someone delivers groceries, someone works at the store, the Nike employees need hair cuts, they need their cars repaired, they buys houses, someone sells them the house... it's just a shame we've price ourselves out of the market.
agitateddoper wrote:
Buy New Balance made in the good ole US of A...and they dont seem that much more expensive.
This ^ would seem to provide an answer for that \/
"Have any corporations done this? Unless the cost increase were huge, it seems like it would be great PR with our current unemployment rate."
I think there is an ethical dilemma people often look past when thinking about this subject. Sure, companies are firing American workers and moving operations overseas where they can pay people a lot less to do the same work. But you also have to consider that someone in Indonesia or Bangladesh or Vietnam would not otherwise have a job and a way to provide for themselves and their families. These are still human beings were talking about, even if they live in another country, don't they have the right to work? And remember, the salary of one American worker is equal to the salaries of, what 100 Bangladeshi workers? So instead of one American family having a big house, two cars, a big screen tv, vacations to Disneyland, and a swimming pool, we have 100 Bangladeshi families who finally don't have to worry about starvation, who can get vaccinated for easily curable diseases, who can live without fear of violence, and can send their children to school so they have a chance at a better life.
Americans aren't entitled to having a life that is far better than anyone else in the world. We are not entitled to using 20% of the worlds resources. We lived with that privilege for a long time when the third world shunned capitalism. Yet, with the price of a lot of money and lives, we fought a long Cold War to force the world to live like we do, and now that they're trying it and liking it, we say that we shouldn't let them because they're stealing our jobs. Well the world is a better place and everyone is much richer because everyone wants to live better lives. You may deny it, but it is the truth. The rich in America are far richer than they used to be because they have a much larger market to sell their ideas and products to. The poor and middle class in America are poorer because they no longer have a labor cartel, businesses can go hire people elsewhere. Inequality, believe it or not, is falling, GLOBALLY, and that is great for humanity, if not for Americans.