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Ross Perot a prophet?
3

Ross Perot a prophet?

RE: Ross Perot a prophet?

When I hear powerful people in high places in government saying things like "thank goodness we are moving away from a manufacturing economy" - "we need to move to a service economy" etc - I just despair. There are government schemes to re-train people in service jobs who are laid off because their jobs have moved off shore. It's all quite intentional. The penny will drop, (I estimate about ten years time) but by then it will be too late.

RE: Ross Perot a prophet?

Look on the "bright" side, once the US economy completely collapses we will become a third world country and a source of cheap labor for others.  Hmm, no emoticon available for sarcasm .

"No man's life liberty or property is safe while the legislature is in session." - Jacquin's Postulate

RE: Ross Perot a prophet?

(OP)
This problem of free trade is a pretty big concern of mine.  I find myself thinking, planning, and reading about it quite a bit.  

I really don't know how to "become part of the solution", as I see that there are some entities whose desire remains to keep this issue as far removed fromt he public eye as possible.

I have written my state legislators about this issue.  I have written letters to the President.  I have writtten letters to some of the Fortune 750 CEOs, explaining that I refuse to buy their product as a result of off-shoring labor.  

I am very selective with respect to country of origin when making purchases, but sometimes I have no choice but to buy imported.  Sometimes I pay 5-10 times as much for domestic goods, and the product quality is poorer than the alternative.  This is the most disappointing facet of all.


I don't know what else I can do.  The issue is just not scandalizing enough for mass media coverage (yet), so it goes ignored by millions.  I hate to get into a Y2K syndrome, i.e. preparing for the worst by stocking up on certain items that may prove unaffordable* in the near future, but it is beginning to seem necessary.

(*Being a diabetic, I dread to think what will happen to me the day that I cannot afford insulin.)

Anyone have any ideas of how to fix the problem?  My ears (er.. eyes) are open...

RE: Ross Perot a prophet?

I see the NAFTA article more a trade issue and not an engineering/manufacturing issue.

RE: Ross Perot a prophet?

(OP)
chubPE

Explain to me how NAFTA, trade and Manufacturing are unrelated issues, especially when considered in a "Trends" forum...

RE: Ross Perot a prophet?

rhodie,

It seems you are already part of the solution.  You are participating in the political process and you are deciding as best you can where your money goes.  Aside from the Craftsman hand tools in my garage and food bought from local growers, I would be hard pressed to identify anything else produced domestically (US).  My vehicle is considered a domestic product simply because it has >50% "domestic content"

I do not think NAFTA is an appropriate acronym because trade is not "free".  I think that this is especially true when there is a disparity between living standards between trade "partners".

RE: Ross Perot a prophet?

rhodie,
I wrote "I see the NAFTA article" not "I see NAFTA."

The article briefly mentioned manufacturing going overseas, as I remember it, I can't access the link anymore.

NAFTA is Canada and Mexico not overseas.

I see the NAFTA article a trade discussion with Mexico and Canada. Thats the way I see it. I didn't see it as North America Free Manufaturing Agreement. I don't see many things with "Made in Mexico" on them. I know there are a lot of firms moving there, probably as a result of NAFTA in some way.
The article you posted was good, but I didn't get what you got out of it, sorry.

RE: Ross Perot a prophet?

I know one thing - I don't see a lot of things with "made in USA" on them any more. When you do see it in advertisements. , there is usually an exclamation point after it, or at least the implication of one.

RE: Ross Perot a prophet?

I bought a door the other day that had a rough image resembling a flag with stripes and a field in the upper left hand corner. Below it where the words:

MADE IN NORTH AMERICA

PSE be carefull Craftsmen doesn't automaticly mean made in amercia any more. :(

ProEpro
www.whitelightdesign.com

RE: Ross Perot a prophet?

What worries me is this. When the USA began, it had the advantages of unrivalled geographical and natural resources. It had a growing population with a diverse gene pool to make use of them. Then a manufacturing economy developed to support all this. And then various service industries evolved to support the manufacturing economy and its industrial base, and then a world class R & D and academia was able to emerge, supported by everything else. And now the manufacturing economy is being dismantled, and people in high places say "well, we don't need that, we've got aerospace and world class universities etc etc, we'll do the advanced engineering here, and all the nuts and bolts manufacturing will be done off shore". But we all know what that will lead to eventually. If you pull out a link in the chain, everything collapses. When you design a piece of machinery even now, at an early stage of the inevitable decline to come, you usually cannot build it without Japanese and German components - and when its finished, 95% of the technology of the machine is in those components. America's industrial base is disappearing, little by little, year by year. Even a lot of aerospace manufacturing is done in Japan, Taiwan etc - its surprising how much - the general public would be amazed if they realized and it was written and talked about. All you hear about when this sort of thing is mentioned on a political level is the loss of jobs - which is undoubtedly serious - but the deepest problem is the loss of industrial base. I once read that Ludwig Prandtl had many of his scientific "Eureka" moments while walking around machine shops - not laboratories. I also think there should be more engineers in government. I remember hearing somewhere that 80% of the people in government in Singapore were engineers. Of course, someone is going to say that this isn't Singapore, but it will be before long if we don't watch it.

RE: Ross Perot a prophet?

kinda on the line of what ProEpro said, I bought Calphalon pots because they were made in Toledo Ohio as was stamped on the bottom of the pan.  Well, I bought a set of 10 and on the smallest pan in the set, made in china was stamped in small letters on it.  Knowing I was ripped off, I wrote the company.  They dont need to clearly mark the product made in china, just a piece.  This is stratigic marketing on their end, they know that people in the states are becoming import sensitive.  I agree with englishmuffin that the media play is not there with this issue and people would be shocked to understand what is going on.  Now I have no problem with manufacturing in china, it has to be done since that type of manufacturing has been regulated and unionized out of existance here in the USA, but I prefer to clearly understand that nation of origin to make my personal decision....Seeing companies be deceitful is where I think engineers play a role in educating people. Companies are seeing the power of the nation of origin and that is the tool we can use to tame nafta at the consumer level. I think NAFTA may be a good thing in the future, but like all political animals, they run wild in the beginning until they are domesticated.  Engineers are the only ones that can tame NAFTA, and as usuall we are sitting on our hands, quietly watching our childrens future careers slip away....

I am learning spanish right now, I have read the writing on the wall a while ago....

BobPE

RE: Ross Perot a prophet?

You know, there's a funny thing that I don't quite understand. Although there are a lot of things like pots and pans etc that are made off shore, its also the case that when you do see something  made in the USA, its quite often a relatively simple thing like a hammer - so somebody is managing to make a profit out of manufacturing in this country even now. But the complicated things nearly always seem to be made elsewhere - and not necessarily third world places, but Japan and Germany. I think one of the root causes has to do with this country's huge natural and agricultural resources. I originally came from the UK a long time ago, where they have been going down this same route for a bit longer than the USA. Things were getting to a really low ebb - and then they discovered North Sea Oil - and I remember someone saying at the time that this was the worst thing that could have happened, because now they would never have the incentive to straighten things out. Countries like Japan and Germany have virtually no natural resources, and have to rely on their balance of payments, so they have to succeed at manufacturing.. The US balance of payments (or trade gap) is terrible, but it doesn't really matter to us that much. Of course, its true that Japan and Germany farm things out elsewhere as well (Germany is using the ex-communist countries for example). But they will never go to the extreme that we will - they can't afford to.

RE: Ross Perot a prophet?

One of the problems with Ross Perot's publicly held opinion against free trade is that he's privately slanted toward making money from restricted trade.  The Perot family owns several free trade zones that stand to lose money in the face of expanded free trade that does not require a Perot-owned free trade zone.

Wanna see?  Just go to Google or Yahoo! and search using keywords ross perot free trade zone

I may make you feel, but I can't make you think.

RE: Ross Perot a prophet?

rhodie - I think my last line should have read "They realize they can't afford to".

RE: Ross Perot a prophet?

The US problem (and likely an EU problem as well) is that our standard of living has evolved products outside the reach of less developed nations.  Other nations find it difficult to offer anything in return other than an inexpensive labor force for foreign "investment".  Free trade might be able to exist at an equitable or symbiotic level amongst countries of equivalent development.  Amongst non-equitable partners, it is likely to become parasitic.

RE: Ross Perot a prophet?

(OP)
EnglishMuffin  

Your perspective is very enlightening.  It makes me wonder if the US will stumble upon some kind of "bail-out" commodity (like North Sea Oil) anytime soon.  I guess we might already have with the advent of the world wide web. (and now that cash-cow is dried up.)

From reading the article, it seems that an old East vs. West bias exists even in Germany today.  I hope the Krauts can put aside the excessive holidays and labor union demands and remain a viable manufacturing economy.  Otherwise, the precendent that is set for the US doesn't look good.

RE: Ross Perot a prophet?

How about this for Made in the USA. For my 4th of July celebration I went to a local department store and got some new patriotic shirts.

One t-shirt with the American flag was made in Mexico, but it said printed in the US!

The other was a polo shirt with the flag on it. It was made in Jordan! I can just imagine the people in the factory making that shirt!

RE: Ross Perot a prophet?

I find this protectionism puzzling for a group of people who are taught to solve problems.  If you cannot compete with foreign services or products why should consumers of these products be subsidize your inefficiency?  I am better off and more able to support my family if I choose the products with the best value, regardless of their origin.

The US economy will not collapse nor will we become a second rate player in the world as some of the previous posts (see other threads in this forum) seem to indicate.  Our political structure and recognition of property (both real and intellectual) rights provides a significant advantage over most of the world.  Consider the economic gains the US has made over its history, surpassing over nations that were significantly more developed at the beginnings of the US.  Also consider the vast natural resources available to African nations, but without a stable political climate and inconsistent recognition of property rights, many of these nations have had little relative advancement.  An example of free and stable political systems benefiting the economy is evident in the Czech Republic, Slovakia, the Ukraine and other former Soviet block nations, while the "traditional" European nations have been stagnating with increased government intervention.

It is frequently not wise to support restrictions on trade.  It is more important to ensure that our property rights are not eroded.  

Bring on the competition!

RE: Ross Perot a prophet?

MrStohler, Your views are no different than those of others on this forum who have declared sentiments similar to, "I didn't care when the manufacturing jobs left, but now engineering and IT jobs are leaving..".

You asked, "If you cannot compete with foreign services or products why should consumers of these products be subsidize your inefficiency?"  US workers are among the most efficient in the world.  How would you care to measure efficiency?  Work/hour or work/dollar?  I am guessing that your view leans toward work/dollar.  What are your views on slavery?  A more "efficient" means of production has never been found.  Certainly any gains in "efficiency" realized through technology can be applied as well by slaves?

So there lies the difference in our viewpoints.  I don't view the race to the cheapest labor market as being beneficial for the long run.  For anyone.  I definitely do not consider it an improvement in "efficiency".

You are concerned with erosion of property rights.  Certainly the Chinese have had no qualms about infringing on US intellectual property in the past.  And yet Wal-Mart would cease to exist if a long term strike shut down the docks unloading the container ships from China.  MFN status even with all of the copyright and patent infringements.  Are we only concerned with OUR property rights?  How does China come down on their worker's rights, property or otherwise?  Or does that not matter, so long as they are "efficient".

The property (and other) rights that you value are granted and defended by a government which is supported by tax revenues.  When the revenue stream dries up, so will the services provided by the government.  You see this an a small scale when factories close up in smaller communities.  The schools and police are the first to go.

You seem to believe in the myth of free trade.  There is no such animal.  ALL nations have trade rules, tariffs and restrictions when dealing with other nations.  The role of each nation's government should be, IMO, to secure trade rules that benefit the populace.  Our current problem is that we are willing to sacrifice long term strength for short term gain.

 

RE: Ross Perot a prophet?

I believe that there is a limit to how much can be outsourced overseas.  It happened with manufacturing.  There are some things that, for reasons cultural, economic, or political, can not be done properly in third world countries.

In the meantime, until we reach that point, buckle in for a wild ride.

All this machinery making modern music can still be open-hearted.

RE: Ross Perot a prophet?

(OP)
MrStohler:

Why don't you recommend to the US agriculture industry the solution "to just solve the problem"?  Building on what funnelguy addressed in his post, the US agriculture industry is the most efficient and productive such industry in the world.  Yields are higher, quality is better, and personal productivity is enormously higher.

Why then, can't the farmers compete?  Why must they resort to gov't subsidation?  Why do 300 family farms declare bankruptcy every month?  Why, with all this wonderful technology and technique, do millions of farmers find themselves saddled with huge capital debt?

The simple answer to this question is the US cannot compete because we are not playing the same game.  It is not a matter of trying harder.  It is not a matter of fixing great inefficiencies and quality gaps.  

US manufacturing received that wake up call in the '70s and '80s, so guys like Dr. Deming and Juran brought us back to reality.  The result: the US has more ISO-900x registered companies than continental Europe, where the whole movement originated.  Our quality and productivity IS better than the rest of the world.  The economic environment we are currently dealing with in the US is NOT something that can be solved with quicker machine tools or better logistics flow, and to hope that it can is futile.

The solution is obvious, yet people hesitate when considering it;  Corporate greed is killing America, and our Government is doing nothing to stop it.  

Shut the door on "Free Trade", take the time to re-establish the rules, protect strategically important industries, and only then re-open the door.

RE: Ross Perot a prophet?

Rhodie. You are an engineer. Let's see the numbers for:

"(Agricultural) Yields are higher"

By what measure? Compared with who? Everyone in the world?

"quality is better"

ditto.

"personal productivity is enormously higher"

not very important, but ditto

"Our (manufacturing) quality and productivity IS better than the rest of the world"

Measured how, and compared with who?

In the only manufacturing industry with which I am familiar I doubt the USA as a whole tops any measure for quality(1), or productivity per direct dollar spent(2). It may, like agriculture, achieve impressive results in productivity per man hour (it doesn't according to (3)), by investing hugely in machinery, which, to answer one of your questions is why US farms appear to be over-capitalised.

If you reintroduce (or more accurately raise) tarriffs then you will syphon money from the American consumer into the pockets of shareholders. That may be a good thing (doesn't sound like it to me), but it doesn't seem very sustainable in the long term.

References

(1)"in J.D. Power’s Initial Quality Study ... reports that Big Three facilities are now even with European automakers in terms of quality, and fast closing the gap with Japanese companies."

http://www.uaw.org/solidarity/03/0703/feature03.cfm ie, Japanese quality is better than American. No surprise there.

(2) Can't find a free reference for this, but anyone with knowledge of the marketplace can see that productivity per dollar is what is hurting US automakers more than anything else.

(3) ""Our estimates indicate that productivity — measured by the number of worker days required to assemble a vehicle — currently stands at 3.04 in Canada compared with 3.27 in the United States, nearly a 7% advantage," says Carlos Gomes, Scotiabank auto industry specialist. "This represents a further improvement from Canada's 5% edge in 2000 and 1% advantage in the mid-1990s." Canadian plants are 33% more productive than Mexico. "

http://www.canadaone.com/ezine/sept02/automotive_productivity.html

Cheers

Greg Locock

RE: Ross Perot a prophet?

Greg, your source for (3) is a staff writer for a Canadian small business web paper?  Anyway...

Do you suppose there may be some differences in the facilities in the referenced North American assembly plants?  I recall Ioccoca running to Canada to escape the health insurance costs in the US.

Now, let's say there are no tarriffs and no trade restrictions at all between any of the countries being discussed.  Canada at 3.04 days looks to be the winner UNTIL we apply a wage to those worker days.  Now Mexico wins hands down.  They don't have to be productive, they work cheap.  Yup.  No trade restrictions.  Gooood idea.  We can all work for $8.00 per day.

No wait, John Deere has decided Mexican labor costs are too high and they will relocate their small diesel production facilities yet again.  Tyco preceded them by a couple of years.  The race to the bottom.

RE: Ross Perot a prophet?

Well, feel free to post better numbers. Since in essence we are discussing numbers, I just thought that some objective identifiable ones were better than handwaving.

FWIW I doubt that Canada is especially efficient, and, frankly don't like measuring productivity like that. The reason is that it is possible to show incredible vehicles built/man day merely by assembling modules. Their methodology may account for that. Generally transplant and greenfield sites show very high productivities, partly because the traditional plants are poorly laid out, and partly because the newer sites are custom designed.

Cheers

Greg Locock

RE: Ross Perot a prophet?

(OP)
Hello Greg:

I'm putting together a reply, just need time to gather sources.

Thanks,
rhodie

RE: Ross Perot a prophet?

Greg,

My point was, is, and remains that worker productivity measured in units/time is washed over by labor cost differences.  My knowledge of the auto industry is limited, but I think the principles I argue are universal.

Japanese automakers have formed partnerships with US automakers and were literally using the same workforce and facilities.  Mazda and Ford jump out immediately.  Mitsubishi and Mopar.

Is there a general consensus within your industry as to which nation of origin has the best manufacturing efficiencies?  I have a suspicion that productivity has more to do with the corporate culture and methodologies than where the factory happens to be located.

Even Henry Ford understood that he needed his workers to buy his vehicles.  Manufacturing efficiencies allowed hourly wages to rise.  Today, we are reversing that principle.

Rhodie advocates protecting "strategic" industries.  Certainly I acknowledge the need to protect our defense industries.  More generally, however I expect ALL governments to govern for the interests of their populace, not business interests.  This is where the US is failing right now.  I would be perfectly happy for corporate profits to leave this country, so long as the jobs (and payroll taxes) remained here. We already do this in the auto industry.  I favor expansion of the same principles to ALL imported goods.  Aliens from another planet have widgets they wish to sell in the US?  Fine, build a plant here and employ the same people you want for customers.  Want to sell Frisbees in Turkey?  Build a plant there.  I favor ALL nations protecting their workers, jobs, and tax base.  Businesses will continue on their current path until it becomes unprofitable or illegal to do so.

RE: Ross Perot a prophet?

I realize the last paragraph in my post above is too simplistic to be practical.  Still, I like the principle of it...

RE: Ross Perot a prophet?

In a different study JNA plants (Japanese owned North American plants, ie transplants) have efficiencies about midway between JJ (15 h/vehicle) and NANA (20) plants.

However, I have read one article that said the methodology for working out these efficiency figures is biased, because it underrepresents the additional hassle at first tier suppliers caused by JIT, which is more widely implemented in Japan. JNA plants seem to use a lot of JIT, therefore they may benefit from the same skew in the data. I also doubt they factor in the days of lost production when your JIT brake supplier has a fire, Honda.

Note that there is also a systematic error, JNA plants are greenfield, whereas NANA are often built on 50 year old sites where it may be that slight increases in inefficiency are economically sensible if some old facility can be used.

As an example of that, we run the last car of the old model down the line two hours before the first of the new model - not many places worldwide do that. Some places close for six weeks to do the same transition. In order to do that each new model has to be very compatible with the old, which must force cost into the design.

I agree that wage costs need to be factored in... that's why I'd like to see Rhodie produce numbers showing this productivity advantage.

I have worked on a Japanese style assembly line. There is not as much automation as you would think, most of the advantages come from space and organisation, and sensible part design.

One other misconception - the proportion of the cost of a car that is due to the direct labour at the assembly plant is (as you can see from those numbers) actually not all that significant. Third world assembly plants build cars using cheap labour, for sure, but their real advantage is that their parts cost less. I'm unable to remember the exact numbers, but here in Australia there are 4 manufacturers who directly employ maybe 30000 people, yet our first and second tier suppliers bring the total employment up to 100000 or so. Therefore the local wages have an impact perhaps 3 times the crude hours/vhicle would suggest.

I wish I could find more concrete numbers, the trouble is these surveys are expensive, so you only get a few headline numbers in any one article.

Cheers

Greg Locock

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