Why Equipment Production Leaving the USA!

[inveresk]

On one job recently we imported a little short of $56,000 of carved stone from China, including seven gargoyles carved in the form of Haida animals, stone corbels, stone spiral and straight stairs, quoins, window rybates, lintels and sills, door canopies, walk-in fireplaces, 3000 sq.ft. of stone flooring and much more. The carved gargoyles were prepared to my design for around $300 apiece. Prices we obtained from local carvers were in the $4,000 mark. In all, we saved the client in excess of $150k by importing.

The project includes a good deal of forged metalwork - Juliet balconies, weather vanes, handrails, balusters and a yett. The weather vane cost us around $390. Local blacksmith quoted between $3200 and $6000 for preparing to my design. Total savings by going Chinese supply for the metalwork was in the tens of thousands.

It's not just in the fabrication where we can't compete. Shipping from China to Vancouver docks was cheaper than getting it from Vancouver docks to the jobsite 40 miles away.

The chinese quarry that we sourced the stone from was new to us. Once we built trust with the first two orders and wire transfers, they shipped our third order (value around $17,000) before we had wired the money. The stuff was produced quickly, the prices remained firm even after we had wired the deposit and the quality was first rate.

There's talk of China adjusting it's currency so their goods aren't so cheap. But even if the goods had cost us twice as much, there's no way local outfits could come close to their prices.

I honestly don't know what the answer is. On the same job we used a lot of ledgestone, all sourced locally and we imported the slate for the roof from Vermont. Where I can I like to support local trades and industries, but with those price differentials and quality of service, if I'm going to properly act in my clients' best interests, I have to buy to price. I expect many other companies are experiencing exactly the same market conditions.

 

[Gale Hawkins]

inveresk the differences you found is alarming in more than one way. Clearly it is time to stop referring the Chinese solutions as being substandard automatically. While it is true the rules are not the same in both countries giving the China firms an edge operating costs beyond just labor it is going to be hard for Congress to do much and still get them to finance our every growing debt with no end in sight.

Once our skilled labor is gone it will be hard to get it back. Short of people in the USA working for less importing may be the wave for a long time. China labor rates will do like those in Japan at some point and some jobs will return.

http://www.cnn.com/2011/WORLD/asiapcf/01/05/china.us.fighter.jets/index.html?eref=mrss_igoogle_cnn

They may pick up some of defense sales too in the future.

 

[inveresk]

Gale, they've also identified that renewable energy is going to be the growth industry in the 21st century just as computers were in the 20th and they're investing heavily in renewables research. They're going to be supplier of alternative energy solutions to the rest of the world whilst we're still bickering about whether the world is running short of oil and what we're going to do about it. The renewables industry is going to be truly enormous. Denmark and Germany apart, the rest of the west has already missed the boat.

 

[Cat_Driver]

...Nothing beats cheap labor. Matierals are now globally priced in most cases, so the only varible left is cheap labor. Cheap labor means that you are going to see a lot more Mexican and asian products in the next few years. Cheap labor rules.

Not so much. Materials are far less expensive in China. The Chinese buy all our scrap metal and sell it back to us. Furthermore my wife's Dad was a mining Engineer that mined Iron Ore and it was cheaper to get finished steel from China than it was to mine it in MN. and send it to Cleveland for processing.

Now add slave labor at $1.00 a day, no regulations from the government for safety, insurance, clean air, water, and on and on. along with liability, it's a no brainer to buy from China.

Yes I get the whole buy America thing but there is no consumer on the planet that will pay 3K for something they can get for $300.00 in China.

I'm sure Cat purchased a metal factory and a manufacturing plant and will have the same tight controls in China as they do here, but they will be making a boat load more money.

 

[texasjohn]

Inveresk, you put your finger on it.

Cheap labor, cheap materials, superb intellectual and technical skills (selected from an immense population), complete motivation to be educated and work (because the alternative consequences are obvious), government/social willingness to pay the price of pollution, resource depletion, poor workplace practices, worker health, etc. producing, paradoxically, a high quality product (except for some well publicized contamination and quality control issues) all create a tempting and inevitable price differential under communism which our capitalist society cannot ignore.

While we are fighting an immensely costly and strange war on terrorism, we have been snookered into ignoring the economic war which invaded our shores when Nixon opened up trade with China.

These trends are immense and have extreme inertia to continue.

 

[jonyyuma]

Most of this is true about imports, add to it-- What Are OUR Youth interested in in College and what degrees are they pursuing? Do we still have the best educated scholars trying to improve our way of life and technology??Btw, do we have cleaner Air here as promised from less manufacturing? It really makes it hard for heavy industry, example any steel mills still operating in USA,besides Nucor, which is recycler? Jy.