Making stuff in the USA

As I’ve been working on stuff made in the USA, here is an interesting article about the resurgence of things being made in the USA. How is this relevant to the fly fishing industry? Try to find a cut and sewn product made in the USA? THERE IS NOT ONE (except for *some* waders) to be found in any fly shop! But look at where the trend is going? See article here… and interesting comment  by a man named Rajiv from Palo Alto CA. – quoted below, notably not from China but same same right, sort of an [insert developing country name] here scenario? To read my rant on the subject and its relation to the AFFTA see Crack addicts, Bullshit and Taxes, even farther down on this here page.

There is another reason why the macro trend is a return to American manufacturing – rising wages in emerging countries. As a CEO of a company with a significant Indian labor force, I can tell you that wages are rising rapidly – over 20% per year. This is even higher for skilled labor. These newly “wealthy” people want nice house, cars, iPhones, malls and top shelf liquor. I’ve seen people who made $500/month spend 1 month’s salary on an iPhone. Now that person makes $1,000/month. While labor is less expensive for now, the price of a Honda Civic is higher than the US as is Levi’s, Polo’s or Jack Daniels. Energy costs more in these countries, not only because of higher energy taxes, but because of inefficient and uncertain distribution. As people get wealthier, they want cleaner air and water. They start to impose emission controls on vehicles and power plants. They tell people to stop dumping garbage into the river.

As this occurs, companies will want to bring manufacturing closer to their customers. It make no sense to coordinate with someone across the world unless there is a 2:1 cost advantage. The cost of shipping and difficulties in development iteration diminishes the ability to compete against local players that know the local market. With union power diminishing, workers are paid closer to their global value. Therefore, the faster Chinese workers get wealthy, the more they will want. Manufacturing costs will grow moving more out of China into the US.

Granite countertops cost the same around the world. It’s just like oil. As wages go up, the US will make more of its own stuff.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s