🚀 go-pugleaf

Brent P wrote:
> 
> >> "Low wages do not necessarily mean low production costs abroad. This
> >> is because low wages are mainly a signal of low worker productivity.
> >> In much of the world, workers are less productive than their American
> >> counterparts because they enjoy less access to the training, tools,
> >> ideas, and broad market institutions that are the foundations of high
> >> productivity."
> 
> >> Once upon a time this was true. That was when US employees, working
> >> with US capital, technology and business know-how, were producing
> >> products to compete in import and export markets against products made
> >> by foreign workers, who worked with less capital and inferior
> >> technology.
> >>
> >> Those were the bygone days of international trade.
> >>
> >> Today when a US multinational moves a factory from Ohio to China, the
> >> Chinese labor works with the same capital and technology that formerly
> >> employed Americans in Ohio.
> >>
> >> The Chinese workers are no less productive. Yet, their wage is far
> >> lower.
> 
> Actually, something I call ledger theory comes into play here. There
> is a great deal of scrap and other costly problems with manufacturing
> in china. Chinese workers are not as productive. This comes from my
> experience dealing with the same product made in multiple factories
> world wide. I still believe that the cost of manufacturing in china
> is generally as high or higher when *everything* is taken into account.
> 
> However, executives prefer to look at conversion cost alone, which
> china wins hands down. Also just wages, etc. The cost to product quality,
> the lost sales from turning out crap, the scrap pile, extra engineering
> time that could be spent elsewhere, etc and so forth eat the cost advantage
> away. But the shift to china will continue because the big picture isn't
> realized, and the big picture puts long term sustained profits (abit smaller
> per year) ahead of todays profits.
> 
> Based on the perception system and short term thinking that rules
> corporate decision making is what gives china the big advantage.

Plus with investors so short-sightedly fickle, only the next quarters
numbers have to be good, and those can be easily manipulated so
the long term/real costs are not redily evident.

-- 

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VOTE HIM OUT! November 2, 2004