Coming Home – Manufacturer brings the factory home to the U.S.
Don’t get me wrong, I think it’s great when any company moves it’s manufacturing to the United States. I just wish it were being done by more manufacturers for the right reasons but I guess any reason is good enough if it will produce jobs for Americans and lead America back to actually manufacturing products.
I’m perfectly willing to spend a little more of an item manufactured in the United States. I don’t often find items made in the U.S.A. any more. I’ve found that you usually get what you pay for and cheap, made in China junk, doesn’t usually last long. Since I don’t love shopping I would rather get a quality item for the first time rather than have to replace cheap items over and over again.
It took a recession for manufacturers to wake up to the need to produce items closer to home – maybe that will be the silver lining in this storm cloud.
By TIMOTHY AEPPEL
HOUSTON — Farouk Shami, a Palestinian-born hairdresser who built a $1 billion manufacturing company around a popular line of hair irons, is moving all of his production of hand-held appliances from China to a sprawling new factory here.
The move flies in the face of conventional wisdom, which says gadgets like this are best made in a low-cost country. But, he says, outsourcing has led to a loss of control over manufacturing and distribution.
“We’ll make more money this way — because we’ll have better quality and a better image,” says the 66-year-old, who says his company, Farouk Systems Inc., spends about $500,000 a month fighting counterfeits, most of which he says originate in China. The company collects the fake products and tracks the source, and then brings action in China to shut down illegal producers.
[snip]
Many U.S. producers got hurt when the recession hit and they were left holding large backlogs of goods ordered from overseas. Producing closer to customers — and limiting the inventory in the pipeline — is one solution, says Mr. Meckstroth.
August 25th, 2009 at 11:03 am
Outsorsing out of country is all to common and in my opinion very dangerous in some cases. For example our passports are completed overseas. Right away the blanks went missing.
Another area is Title searches when you finance or refinance a home. Many companies have outsourced to India. Yet the homeowner pays the same amount as they would if an abstractor personally went and searched the title of the property at the Register of Deeds.
Both examples require your personal information. Enough to steal your ID. Already smaller Title companies have been contacted to see if they want to puchase the data base of clients from the big title company that outsources.
At the least, this type of business should stay in country.
August 25th, 2009 at 1:56 pm
Sage, I agree with your comments. Like you, I don’t like to shop. I’d rather buy American but find it difficult to find anything made in America. I’d prefer to pay more for a quality item rather than pay for things that don’t last. Also, I believe things made in China are not only junk but quite frequently dangerous (think lead on toys and the melamine in food).
I agree we need to find a way to get the manufacturing jobs back to America. In light of that goal, I’d be interested in knowing your thoughts on Cap and Trade. I recently read that manufacturing was starting to find it more economical to produce products here because, given the cost of oil and the resulting high cost of shipping, it was becoming just as cost effective to make the products here. However, Cap and Trade will change that. We will be penalizing American manufacturers, thus causing the cost of producing items in this country to rise even higher, and thereby eliminating the cost of oil/shipping advantage. Also, I actually heard one of the nuts in D.C. say taxpayers in the U.S. should pay for China’s share of Cap and Trade because WE use the products they make. Huh?
August 26th, 2009 at 12:32 pm
haha ANY reason is good for bringing manufacturers to the U.S.?
Ok so let me get this straight….manufacturing facilities are the largest sources of pollution and litter. and you want more of them?
Took a recession for manufacturers to realize they need to produce closer to home?! Where are you getting this from? Because one company decided to move it’s plants here? Manufacturing jobs have dropped to their lowest level since 1941, and are now below 9% of the workforce for the first time.
Thats not to even mention the very basic observation that in times of recession investors pull their capital from that country and take it elsewhere, like china and asia where they are still having huge economic growth rates (not that thats really a good thing but it shows where the people with money are spending money.) And why are jobs a good thing? You really want to live a life of drudgery having someone tell you how you can make them money and accomplish their dreams and be underpaid? What about your wants, desires, and dreams?
Sage Reply:
August 26th, 2009 at 12:41 pm
It came from the article:
“I think you’re starting to see more manufacturers rethinking outsourcing,” says Daniel Meckstroth, an economist at the Manufacturers Alliance/MAPI, a public policy and research group based in Arlington, Va., calling a June speech by General Electric Co. CEO Jeffrey Immelt, where he said that overseas outsourcing had gone too far and that U.S. companies needed to expand domestic production, a “bellwether of what’s happening in manufacturing.”
Why are a jobs a good thing? Well, duh….people need to work to live. Some people don’t have the luxury of dreams. Southern Virginia, Danville in particular, has been hit hard and repeatedly with the loss of manufacturing jobs. I’m sure they would love to take their wants, desires and dreams to the bank but banks are funny that way, they prefer dealing in money.
Try clicking on the article and reading before you snark. And speaking of snark, it’s really unnecessary.
Anderxander Reply:
August 26th, 2009 at 1:52 pm
read more than one opinion before making such a large blanket statement. I did read the article and if you read it, there is nothing backing that claim. Have you read anything Meckstroth has written for MAPI? It is the biggest fudge pile of numbers ever that make rich people even richer. You have to some serious economic gymnastics to make the claim “I think you’re starting to see more manufacturers rethinking outsourcing,”
I.E. from the report “Globalization Complements Business Activity in the United States”
“The most frequently expressed fear of globalization –that multinational corporations will shift production from the relatively high-wage U.S. to low-wage foreign countries for the purpose of reducing labor costs — is misplaced,” said Daniel J. Meckstroth, MAPI chief economist. In the report “Globalization Complements Business Activity in the United States” Meckstroth states that the primary motive for multinationals to invest in businesses abroad is to gain access to larger markets for their products and services.
*Oh really DANIEL? Why do we continue to run such a large trade deficit if this is the case? The fact is that near 50% of our trade deficit is US firms producing in low cost regions to send back to the US market with lower costs and higher profit.
This chronic trade-deficit is causing exchange rates to fall and foreign capital to flee. When foreign capital flees (that money banks so do love to print and find ways to take it back) it takes all the things it represents in the real world with it. That means, manufacturing plants and jobs which you love so dearly.
He cites statistics that U.S. manufacturing foreign affiliates made only 10% of their sales to U.S. parents in 2004 and less than 2% of sales to nonaffiliated U.S. businesses.
I love gymnastics!! they don’t sell finished goods back to the parent companies – they sell to US market/customers. There is NO WAY that this number is 2% of sales. I need to some more digging to check how that number is calculated and who else is calculating it but there is just no way that number is right.
The report points out that when foreign affiliates expand, their U.S. parents also expand domestic operations, especially in the areas of research and development, finance, management, sales and marketing, purchasing, logistics, and other skill-intensive business services.
Those are all SERVICE sector jobs. Not manufacturing. On top of that I’d like him to provide the statistical evidence that US firms have hired more skilled positions (i.e. those that pay higher wages) the more they outsource production overseas. Again the facts show that college educated real wages have declined over the past 5 years and high school level education wages have declined in real terms for the past 25 years or more(manufacturing jobs).
With regard to the issue of outsourcing, Meckstroth explains that from a macroeconomic point of view, foreign outsourcing changes only the industrial mix of jobs, not the overall level of employment in the economy. For instance, foreign outsourcing can cause employment resources to move out of manufacturing and into the service sectors of the economy. Some domestic jobs are destroyed in industries subject to outsourcing, but a market-oriented economy will offset the negative effect by creating jobs in other business segments, he explains.
WHICH is totally true! The jobs that are being created are in non-importable services like home health care aides, restaurant work, etc. the mix of jobs that we are now creating are generating less wealth overall. Why else would growing nations and mercantilist ones want manufacturing jobs? Because they are far more productive and they create more secondary service jobs and drive wealth creation. Exporting nations build up stocks of assets. Importing nations build up stocks of debt and consumption.
The multinationals that own and control 50% of business activity are the ones not bringing back their manufacturing jobs. Millions are nothing anymore. You have to have billions to make any change.
Some people don’t have the luxury of dreams? Dreams are a luxury? Not apart of the human conscious that needs fulfilled? What a horrible reflection on this system if people are too busy working in a plant, that will likely lead to their early death, to explore their dreams and enjoy their existence on this planet in peace.
I already knew banks were standing in the way of my dreams. They use money to tie them down and hold them back and focus the productive creativity of humans for their own evil ends, like war, guns, drugs…. Someone is manufacturing those things, someone is selling them, someone is profiting. Every war is started at the manufacturing plant.
Sage Reply:
August 26th, 2009 at 2:50 pm
You can either quit being a jackass or go away. If you can’t have a discussion without being insulting then I’m not interested in what you have to say.
August 26th, 2009 at 1:59 pm
“Why are a jobs a good thing? Well, duh….people need to work to live.”
Let’s expand….
What is meant by jobs? Productive work to meet the needs and wants of the person doing the work and for the benefit of those around them? Or work long hard hours to be underpaid and make rich people a ton of money, living a life of drudgery to make money?
Yes…people do need to “work to live”
you really can’t picture any other work that provides for life other than the one capitalists and the rich elite have told you is absolutely 100% necessary or the universe will collapse?
Sage Reply:
August 26th, 2009 at 2:52 pm
Yes, I can picture other work that provides for life but not everyone can or has that luxury. Is your world inhabited by unicorns that fart rainbows? I’m not talking about some pie in the sky libertarian philosophy or whatever it is that floats your delusional boat, I am talking about the reality of people whose lives depend on manufacturing jobs.
2fewfactsaround Reply:
August 26th, 2009 at 5:34 pm
Anderx…, I agree with you that the US is no longer operating under a capitalist system. Mercantilism is a much better description.
But, how do you envision/picture changing the system from mercantilism to something fairer, and that coincidentally will better suit whatever the world is becoming?
Anderxander Reply:
August 28th, 2009 at 9:33 am
easy. use everything that sucks about this system as the key to the new one. There are plenty of examples of how to peacefully organize society if you look for them. There is no one answer. The answer will be a combination of methods and work. Whatever suits the situation for those affected and involved. Some places to look for answers are in Permaculture, the Tarahumara indians of the Copper Canyons in Mexico, The Paris Commune, The Spanish Revolution in the 1930’s, the reclaimed, worker owned and operated factories in Argentina, what’s going on in Venezuela and Bolivia.
It’s a long process and a lot of work. You can eliminate the whole food production and distribution system by growing food instead of grass. Permaculture gardens and food forests. You can eliminate the dishwasher and the whole mining, manufacturing, shipping process involved by making paper plates out of hemp. Plastic forks and knives out of hemp plastic. It would all be compostable. We could even still have trash bags, they would be compostable too. To make all of the paper plates for 3 people for 1 year for 3 meals a day (you could reuse plates) you would need to run a paper plate making machine for 45 min. We can use our precious metals that last virtually a life time like titanium for making cars instead of weapons to kill people. You can eliminate the need for air conditioners and all the production and pollution associated by digging down 3 feet into the ground where it remains 54 degrees year round and put an air tube running into your house. Homes could be built oriented to the sun so they maximize the energy available and more or less cool themselves. Use natural, renewable, materials for construction like cob and bamboo instead of synthetic materials derived from petroleum for profit.
Anderxander Reply:
August 28th, 2009 at 9:34 am
instead of land fills, we have huge compost piles, that go back on fields to grow the hemp needed for next year.
August 26th, 2009 at 4:21 pm
So the question is…why don’t they? and should they? I say yes. What is holding them back from that?
August 26th, 2009 at 4:26 pm
Delusional? If you want the facts and examples in reality that currently exist for anything I say, I have the reasoning to support it and the facts for which that reasoning is based. Since the key to the age of enlightenment was that reasoning was the basis for the legitimacy of authority over others and the construction of the institutions to carry out that authority. Even though reasoning is complete bullshit because it’s manufactured, created truth of the human mind and not actual natural truth and the way things really work in the universe.
Sage Reply:
August 26th, 2009 at 6:08 pm
I wish I had put my boots on before reading that.
Anderxander Reply:
August 28th, 2009 at 9:36 am
?
Desert Sage Reply:
August 29th, 2009 at 1:59 pm
It must have been the hemp crop from last year…
August 26th, 2009 at 4:30 pm
I still use it to prove it wrong. The Age of Enlightenment was full of dummies.