Yes, absolutely right. There are so many challenges that may not be obvious unless you’ve been involved in manufacturing and have done international transitions. Skilled labor most certainly. Working with different language, culture and government rules/laws for example. Qualifying locally sourced materials- the effort to qualify the supplier itself, that the new, locally sourced materials they supply perform similarly in your established processes and produce consistent results that meet your quality standards. Also, that are compliant with any regulatory or environmental standards your product must comply with… all this takes a lot of time and effort to accomplish.
Look at how long it takes even an established car manufacturer to re-tool an existing factory for a different model. Now try relocating all production to a new plant half way around the globe. Cha-ching! Better have a long, fairly solid runway of customer demand because it’s going to take a long time to recoup those expenses…
We haven’t even touched on the backdoor agreements between governments and businesses. They may be precluded from ceasing operations for some period due to provisions in the agreements regarding local infrastructure improvements, tax breaks, employment promises and so on. I feel like Rodney Dangerfield in Back to School- whoo boy, you left out a bunch of stuff
Well first off, the investors are probably holders of “EB 5” Visas. They are investors (and their spouses and unmarried children under 21) who are eligible to apply for lawful permanent residence (become a Green Card holder) if they: Make the necessary investment in a commercial enterprise in the United States…
Then for the executive staff of the company, they will use the H-1B visa program for those jobs because these positions require a bachelor’s degree or equivalent.
And finally to round out the staff to get the experience they need they will use the EB-2 and EB-3 Visa Programs which will grant employment-based green card status for the professionals and skilled workers they need to train the locals who will be eligible for the menial and janitorial positions…
Isn’t this the way most of the foreign car companies treated the local population when they “brought” their car factories to America? Which explains why the foreign-owned auto companies have flocked to the US South to exploit cheap, nonunion labor, claiming they do not need to “re-educate” the workforce…
Without getting too long, instead of hand wringing I think we should just see what happens if demand comes back. It went away so if the playing field is leveled, it can come back. Business folks are not stupid and will add capacity as the demand develops. It doesn’t take much to add a second or third shift to expand capacity.
I have worked in three plants as a student worker and between jobs. One national company has opened two additional plants in the area. They move equipment around to set the production up. Talent is used to set up and train staff. Many many jobs in an automated facility only need a few hours of instruction plus a foreman to do the jobs. Sometimes new are built or vacant plants are reconfigured. It doesn’t take years.
One place was a turn of the century operation making quality trucks and casters. They can still be seen in use on docks after decades. It was family owned and sold out and moved but had trouble competing with cheap products from afar. I’ve seen expansion and contraction. Provided the wage and opportunity is there, staffing is not a terrible problem with many spending 30 to 40 years.
Most of you don’t have to worry about it so let’s see how it all shakes out.
There aren’t many jobs in an automated facility, and they require significant skills. Someone operating or repairing an automated machine can’t be trained in a short period.
IDK what that means. When did demand leave? And what does the playing field being leveled mean?
Expand capacity for what? There’s plenty that depends on global trade where expanding capacity doesn’t mean anything when the US capacity is currently zero.
Most people on the planet, including especially those in the US, are dependent on global trade. Pretending that the US can somehow be self-sufficient (skipping global trade) is silly. And anti-market. Economic nationalism and free market capitalism make for poor bedfellows.
Some folks argued that it would take years to build factories and staff them. So now it is we don’t need the capacity. No reason to build a factory, just trade with China. Ever her3vthat song doesn’t matter what is I’m against it.
I was listening to Scott Horsley on the drop in the GDP in Q1. He pointed out that imports subtract from GDP, that businesses were stocking up on inventory to forerun the tariffs. If that’s the case, we may expect a boom in Q2 as consumers stock up in fear of the higher prices tariffs will cause and a drop in imports. If the tariffs stick around a collapse will come later, as consumers are overstocked and prices go up. Good thing I don’t need any dolls…
So much offshoring went to China and other “Low Cost Countries” because of labor costs. Governments didn’t do it. Companies did. In other words, it was market economics, not politics. Sourcing for stuff is just a part of doing business, and labor costs are a main determinant. There’s no “we.” There are just companies doing business - lots of “we’s/they’s”. “Countries” aren’t the economic units that are “we.”
And much of the intensive offshoring that some people bemoan goes way back to the 70’s and the aftermath. The genie has been out of the bottle for a very long time. And it was economics, not politics. It wasn’t caused by things like tariffs. It was lopsided labor costs which are linked to lopsided costs of living which is linked to global inequality. No one will fix any of it with political interventions into global markets.
And furthermore, anyone who thinks that bringing manufacturing back to the US (a meaningless idea) needs to understand that way back when - like in the 40s/50s/early 60s - manufacturing worked for regular middle class folk because of strong labor unions and nothing more. Without that, you get sweat shops - like the ones we see in the service industry - Walmart, fast food, and etc.
The tariff approach to the perceived ills of the US middle/working class is pure fantasy.
It’s not just manufacturing. Most tech companies have moved away from H1B visas and just started building campuses in places like India. It’s actually cheaper for them. With an H1B visa you’re SUPPOSE to pay the worker the same rate as an American worker (although that line is very fuzzy). But in places like India, you pay them the going rate there (WITH NO BENEFITS since every industrialized country except the US has free health care). The pay rate in India for an engineer is less then 1/3rd of the same job being paid in the US (and that’s not counting health care insurance and the benefits we have to pay for). It’s extremely tough to compete. I could make more money working at an hourly wage job at Walmart. And since there’s no product to import back to the US there’s ZERO tax revenue for the US.
That’s not an opinion - that’s a FACT. Look at Biden’s Chip Act. New tech plants all across the country were starting construction 3+ years ago and they are now just starting to get on-line.
Yes! but also back then, the US was THE market. Not anymore. Look at the Total Addressable Market (TAM) for something like small appliances. I can’t paste it here as those marketing reports cost money to get. The % of TAM for the US is approximately 40% of the global demand. That leaves 60% of the potential consumers outside of the US. The APAC is expected to grow 63% over the next 5 years. As a company, can they afford to ignore the rest of that marketspace? Anything built here will be priced out of that marketspace due simply to cost of labor. Tariffs level the playing field domestically but do nothing for the global market… It’s not the 1950s anymore, we can’t act like we can survive in an isolationist environment. We’ll be directly behind the tidybowl man as he circles the toilet drain…
+1
As formerly impoverished/primitive/undeveloped/underdeveloped nations gained a middle class over the past few decades, they became consumers of products such as appliances and cars. As those other nations grow in (relative) affluence, The US becomes increasingly irrelevant in the global marketplace.
That was our economic model for decades. Unfortunately, finding jobs for displaced workers isn’t part of the economic model. That part of the workplace has been mostly pure capitalism. Maybe if there had been more incentives to locate in high unemployment areas it might be this bad. There certainly are incentives like auto companies locating in South Carolina, Tennessee, and Alabama, or Boeing opening their 787 plant in South Carolina. They get big state tax breaks.
An excellent example of this is in NJ, where big state tax breaks have resulted in movie production moving–in ever-increasing numbers–to this state.
The Governor’s most productive effort in this area led to Netflix building a massive film studio complex on the grounds of the old Fort Monmouth:
On a side note, one of the big productions that was partially filmed here is Oppenheimer. In other threads, we have talked about the development of AI, and I saw an excellent example of that when I visited the Institute for Advanced Study, in Princeton, last year. If you saw that film, there is a scene where Oppenheimer and Einstein walk out the front door of the main building, and pause to talk beside a picturesque pond a few hundred feet from the building. I found that–in fact–there is no pond at that location, but expert use of AI made it look like they were standing next to a pond.
I don’t see anyone saying that we should not trade with other nations. China is a special case. The issue is us products are at a price disadvantage in other nations due to their tariffs on our products. There are other discouragers also that need to be considered. It’s complicated. If Canada has a 200plus % tariff on our dairy products being sold there, is this not an issue?
We have been waiting 50 years for a fair-trading market, apparently, we should remain silent and hope the problem solves itself.
From what I read, the 200% is tariff only applied after a certain volume of imported dairy products and that level of tariff is never used. I have to wonder why the tariff was written, there must be some affect or deterrence at work.
The notion that the U.S. is some kind of a “victim” of unfair trade practices is laughable on it’s face.
And yes, there is a 200+% tariff on the books in Canada re: US dairy that is subject to a quota that is never even close to being met (Trump's Misleading Claim on Canadian Dairy Tariffs - FactCheck.org). He-who-shall-not-be-named, however, knows that reality doesn’t matter. He knows that he can just say outlandish and ridiculous non-reality things and certain people will buy it hook, line, and sinker. His career has been con-man, after all. Also, btw, he signed the USMCA and then bragged about it. (Even though it was substantially the same thing as NAFTA which it was meant to replace). He also recently asked what kind of an idiot would sign something like the USMCA. He relies of people not knowing what’s really happening. It’s kind of like the classic shell game.
New Mexico has been doing this for a while. Economists on both sides of the political spectrum calculate that our subsidies cost more than the benefits - but everyone wants to be in movies. All economists have pointed out that public subsidies for pro sports cost more than they benefit, but everybody wants sports teams. Albuquerque has been silly enough to pay NFL poobahs to come out for a look; fortunately that didn’t cost too much.
It’s the same for those subsidies I mentioned above. It appears that the more important issue is to bring jobs to the state, even if tax revenues from the business and employees never exceeds the subsidy.
