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Why Manufacturing is Returning from China October 8, 2011

Posted by tkcollier in Economy & Business, Geopolitics.
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Shipping and logistics adds 17 percent; finding a viable Chinese vendor adds 1 percent; quality issues add 4 percent; travel and communications add 1 percent and “all others” add another 1 percent to the total price of a product manufactured offshore. Some products are simply not good to produce offshore — those made with highly automated precision processes; those that are bulky and heavy; products that require flexible scheduling; and products that undergo many revisions, causing an increase in quality failures.

In a case study comparing costs in the United States and China, Meeker and his MIT colleague Jay Mortenson found that it is cheaper by 8 percent to produce a current design in China. There are substantial savings associated with purchased parts from China that include direct labor (79 percent savings versus U.S. labor rates), indirect labor and salaries (61 percent savings), benefits (75 percent savings), overhead (40 percent savings) and selling, general and administrative (SG&A) (11 percent savings).

When adding logistics to the China price, the cost advantage of producing in China shrinks to 8 percent: $13.85 for a case-study product made in China versus $14.99 in the United States. But when design for manufacturing and assembly (DFMA) software is applied to the same product, the China advantage vanishes. The China cost declines to $9.79 versus the U.S.-made product at $9.47

via The Case Against Shifting Production To China; Hidden Costs And Growing Risks Make U.S. Attractive For Manufacturing. (more…)

3-D PrintingThe Factory of the Future? September 25, 2010

Posted by tkcollier in Economy & Business, Technology.
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A 3-D printer, which has nothing to do with paper printers, creates an object by stacking one layer of material — typically plastic or metal — on top of another, much the same way a pastry chef makes baklava with sheets of phyllo dough.

A California start-up is even working on building houses. Its printer, which would fit on a tractor-trailer, would use patterns delivered by computer, squirt out layers of special concrete and build entire walls that could be connected to form the basis of a house.

It is manufacturing with a mouse click instead of hammers, nails and, well, workers. Advocates of the technology say that by doing away with manual labor, 3-D printing could revamp the economics of manufacturing and revive American industry as creativity and ingenuity replace labor costs as the main concern around a variety of goods.

3-D Printing Is Spurring a Manufacturing Revolution – NYTimes.com.

Our New Economy’s Direction September 20, 2009

Posted by tkcollier in Economy & Business.
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The U.S. remains the world’s largest manufacturing nation, larger than China or anyone else.  Many of these manufactured goods are sold outside of the U.S..  U.S. farm products, technology products, consumer products, commodities, and services are also sold abroad.

New Car DirectionBureaucracy and hierarchy were wonderful administrative structures for a manufacturing based economy and for command and control based activities like large scale manufacturing, large military, mass education, and the big government of the 1940’s, 50’s, 60’s, and even the 70’s.  However, since the 1980’s, the efficacy of the command and control oriented hierarchical bureaucracy has been poor.  Since that time, large manufacturing companies have been downsizing and failing with great frequency.

On the other hand, many of the more flexible, quick moving, and technologically advanced organizations have prospered.  One reason for this may be that Technology based companies have flat organizational structures rather than hierarchical bureaucracies.  In addition they often have merit-based promotion and compensation schemes, rather than seniority based promotion schemes.  Guild Investment Letter

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