OT: iphone factory life....

[mistermo]

Originally Posted by bicycletricycle

It is easy to try and hang this all on greed but once a competitor moves off shore and can drastically undercut you in the market often times the choice for companies is not stay and make less make money but rather stay and go out of business.

The consumer has the most direct power in this situation.mThe market will provide anything that we demand.

Friendly debate here, but "greed" exists on both sides of the supply-demand curve. Consumers are greedy for lower prices. Suppliers are greedy for lower increased margins. They work in tandem, in opposing directions. Can't isolate one. Both consumers and suppliers, in tandem, drive production to lower priced production with their respective (greedy?) desires for lower prices and higher margins.

I'd even add another layer and say that it's not "lowest" priced that matters, but most efficient. There is mfg in the US that isn't lowest priced, but still remains most efficient in the world.

[bicycletricycle]

Originally Posted by ftf

This is what Marx calls the Tendency for the rate of profit to fall, or TRPF. Meaning that countervailing forces of pressure from other competitors and consumers, will both work to destroy the profit margin, and then we will see cannibalization of the public sector, such as education, and state defense to open new sectors for exploitation by the elites. Also consolidation in to monopoly powers, such as banks that are too big to fail.

Yes, and it is especially pernicious when you are competing against a labor market with entirely different standards.

[ftf]

Originally Posted by mistermo

I'd even add another layer and say that it's not "lowest" priced that matters, but most efficient. There is mfg in the US that isn't lowest priced, but still remains most efficient in the world.

Because of automation. Yes factories will come back to the US, absolutely true, but they aren't going to be employing humans, at least not many.

[bicycletricycle]

Consumer has the most direct power,

if everyone wants illegal drugs-market provides
Imported water that is the same as domestic water-market provides
Beanie babies-market provides

Companies try to shape consumer demand to their advantage but in the end marketers listen and respond

Originally Posted by mistermo

Friendly debate here, but "greed" exists on both sides of the supply-demand curve. Consumers are greedy for lower prices. Suppliers are greedy for lower increased margins. They work in tandem, in opposing directions. Can't isolate one. Both consumers and suppliers, in tandem, drive production to lower priced production with their respective (greedy?) desires for lower prices and higher margins.

I'd even add another layer and say that it's not "lowest" priced that matters, but most efficient. There is mfg in the US that isn't lowest priced, but still remains most efficient in the world.

[ftf]

Originally Posted by bicycletricycle

Consumer has the most direct power,

if everyone wants illegal drugs-market provides
Imported water that is the same as domestic water-market provides
Beanie babies-market provides

Companies try to shape consumer demand to their advantage but in the end marketers listen and respond

Going to have to disagree, people didn't demand bottled water, quite the opposite, that was a created market from nothing.

No one knew they wanted beanie babies until someone created them and told them they did.

Razr flip was great until blackberry, then Blackberry was fine until iPhone, etc.

[bicycletricycle]

Originally Posted by ftf

Because of automation. Yes factories will come back to the US, absolutely true, but they aren't going to be employing humans, at least not many.

Every feel good story about the return of manufacturing always talks about the increased of efficiency through automation.

They never talk about the fact that that trend ends with factories with no people in them.

[ftf]

Originally Posted by ftf

Going to have to disagree, people didn't demand bottled water, quite the opposite, that was a created market from nothing.

No one knew they wanted beanie babies until someone created them and told them they did.

Razr flip was great until blackberry, then Blackberry was fine until iPhone, etc.

In fact water is/was a public entity, again following the TRPF logic, that sector is turning private. The elites have to get the last juice out of the orange before discarding the peel.

[mistermo]

Originally Posted by ftf

Because of automation. Yes factories will come back to the US, absolutely true, but they aren't going to be employing humans, at least not many.

Agree, and if you look at the US worker as competition for robots, then you're right.

We need to view humans and our workforce as innovators.

There's efficiencies in the US market that extend beyond human labor. Knowledge capital, for example. Take drug development. There's no place in the world that can compare to the human knowledge base that assembled here in the US. While there may be components of this that are outsourced overseas, the US remains the undisputed champion of biotech and medical innovation and development. We, the US, have to maintain our edge in value-added activities, such as innovation. If we compete with robots and cheap overseas labor, we will lose.

[bicycletricycle]

#1- all those products have precursors (imported liquids are not a novel idea, selling water is not a novel idea, stuffed animals/dolls are not a new idea)
#2- the market is responsive, if you bring something to it at there is no demand it goes away (amazon fire phones) no matter the marketing campaign.

sure what makes it in the market is a combination of what is available and what people want.

but.

if the market demands it it will be provided no matter what the cost or risk (drugs)

and

if the market doesn't want it it is near impossible to make people buy it (fire phones)

that is why I think the consumer is more powerful than the companies and/or regulators servicing them.

Originally Posted by ftf

Going to have to disagree, people didn't demand bottled water, quite the opposite, that was a created market from nothing.

No one knew they wanted beanie babies until someone created them and told them they did.

Razr flip was great until blackberry, then Blackberry was fine until iPhone, etc.

[bicycletricycle]

In some ways this is the only argument that makes sense, in other ways it is a hopeless plan.

If you have a standard of living that demands higher wages and you are competing with other labor markets that have a much lower standard, you have two options, not trade with them (or at least not free trade with them) or figure out a way to employ your people with higher value added work (idea based, creative, technology, etc.), whatever the market deems higher value (which is a moving target).

unfortunately,

A lot of this labor is highly valued because the attributes that are required for a person to be good at it are rare among the population. Certainly a better education system would turn out many more tech skilled/knowledge economy participants, but there is a limit.

for example, saying something like "If everyone would just design something amazing or make new computer programs that are disruptive and revolutionary we would have no employment problems" is silly because not everyone can be a successful inventor/programmer/scientist etc. These jobs are valued and paid well because they are rare talents. If everyone could do them they would be low paying jobs.

Originally Posted by mistermo

Agree, and if you look at the US worker as competition for robots, then you're right.

We need to view humans and our workforce as innovators.

There's efficiencies in the US market that extend beyond human labor. Knowledge capital, for example. Take drug development. There's no place in the world that can compare to the human knowledge base that assembled here in the US. While there may be components of this that are outsourced overseas, the US remains the undisputed champion of biotech and medical innovation and development. We, the US, have to maintain our edge in value-added activities, such as innovation. If we compete with robots and cheap overseas labor, we will lose.

[fuzzalow]

Originally Posted by bicycletricycle

Consumer has the most direct power,

if everyone wants illegal drugs-market provides
Imported water that is the same as domestic water-market provides
Beanie babies-market provides

Companies try to shape consumer demand to their advantage but in the end marketers listen and respond

Agree, if properly directed in terms of pressure applied and directed to what commercial interest.

Fears of Revolt by Consumers Felled O’Reilly

Social media has its benefits and downsides - in this case towards largely constructive ends. A fitting example of consumer power as more formidable than even revenue and ratings from a lead franchise in cable media. However the choices are not always as clear cut when weighing reprehensible behaviour in this example to a more amorphous choice involving own their own consumer self interest.

[summilux]

Originally Posted by bicycletricycle

I would be interested to see what that $450 dollars gets a person in that economy, seems like that housing was included so I guess they have $450 in cash per month to spend.

I've just spent the last month working in Shanghai so I have a little perspective on what things cost in China.

For things like groceries and restaurant meals, 1 Chines Yuan (RMB) will buy in China about what $1 USD buys in the States. He mentions a cheap meal for 5 RMB (~ $0.75 USD) and that's the equivalent of a $5 lunch special in North America. In Shanghai, a cheap noodle meal with a little meat would be 10 RMB. A steamed bun on the street costs 2-3 RMB, kinda like getting a muffin at the local coffee joint. One pound of high quality apples cost 6RMB (~$1 USD). The pricing of Chinese branded clothing works similarly, you can get cheap jeans for 20 RMB and a cheap T-shirt for 5-10 RMB in local markets. Interestingly, Western branded clothing (GAP, J. Crew, Nike etc) costs more in China than it does in North America because of their luxury connotation. Chinese colleagues of mine who visit Canada go crazy at the factory outlet malls because the branded clothing is about one quarter the Chinese price. Cars are VERY expensive in China, 2-3 times what they cost in North America. Beer and cigarettes are cheap. 3 RMB (50 cents) for a can of Tsingtao in the corner store, 10 RMB ($1.50) for a pack of smokes. Apple products cost somewhat more in China than they do in North America.

Chinese salaries are, in actual terms, about 20% of what salaries are in North America. For most Chinese, the dream of a good life is to have a car, an apartment and to be able to send their kid to a good school. The salary that he got from Apple is a good salary for a Chinese youth coming from a rural area. It is 3-5 times an average rural Chinese wage. The dorms look good by Chinese standards and is MUCH better that the living quarters a rural kid would get if he/she went to Shanghai or Beijing to find factory work. 6 day work week is common in China as is a 12 hour work day. Typically, Chinese companies provide housing for their workers except in the big cities. Yelling at subordinates is common management practice. Apple has no trouble filling factory positions because it is, by Chinese standards, a pretty good job if you didn't go to university.

[bicycletricycle]

Thanks for the in depth information.

Originally Posted by summilux

I've just spent the last month working in Shanghai so I have a little perspective on what things cost in China.

For things like groceries and restaurant meals, 1 Chines Yuan (RMB) will buy in China about what $1 USD buys in the States. He mentions a cheap meal for 5 RMB (~ $0.75 USD) and that's the equivalent of a $5 lunch special in North America. In Shanghai, a cheap noodle meal with a little meat would be 10 RMB. A steamed bun on the street costs 2-3 RMB, kinda like getting a muffin at the local coffee joint. One pound of high quality apples cost 6RMB (~$1 USD). The pricing of Chinese branded clothing works similarly, you can get cheap jeans for 20 RMB and a cheap T-shirt for 5-10 RMB in local markets. Interestingly, Western branded clothing (GAP, J. Crew, Nike etc) costs more in China than it does in North America because of their luxury connotation. Chinese colleagues of mine who visit Canada go crazy at the factory outlet malls because the branded clothing is about one quarter the Chinese price. Cars are VERY expensive in China, 2-3 times what they cost in North America. Beer and cigarettes are cheap. 3 RMB (50 cents) for a can of Tsingtao in the corner store, 10 RMB ($1.50) for a pack of smokes. Apple products cost somewhat more in China than they do in North America.

Chinese salaries are, in actual terms, about 20% of what salaries are in North America. For most Chinese, the dream of a good life is to have a car, an apartment and to be able to send their kid to a good school. The salary that he got from Apple is a good salary for a Chinese youth coming from a rural area. It is 3-5 times an average rural Chinese wage. The dorms look good by Chinese standards and is MUCH better that the living quarters a rural kid would get if he/she went to Shanghai or Beijing to find factory work. 6 day work week is common in China as is a 12 hour work day. Typically, Chinese companies provide housing for their workers except in the big cities. Yelling at subordinates is common management practice. Apple has no trouble filling factory positions because it is, by Chinese standards, a pretty good job if you didn't go to university.

[summilux]

By way of comparison, in a month of eating mainly in what the Chinese call "folk-eating places", I spent 1600 RMB (~$200 USD), about half of the Apple guy's monthly salary. A typical day is a few steamed or fried buns for breakfast, noodles with a little meat for lunch, noodle or rice with more protein for dinner and fruit through the day. Food is likely to be cheaper at the Apple campus than in Shanghai and I probably consume more food and have higher dining expectations that a "typical" Chinese factory worker. My bet is that the Apple workers would be spending about a third of their salary on meals. On the whole, Chinese youth are quite responsible and the remainder would likely be sent home to the help the family.

[alterergo]

Originally Posted by mistermo

Agree, and if you look at the US worker as competition for robots, then you're right.

We need to view humans and our workforce as innovators.

There's efficiencies in the US market that extend beyond human labor. Knowledge capital, for example.

Completely agree. It was not someone's greed or unfair trading practices that decimated US most of the US manufacturing. It was technological change, and opening of many developing countries to international trade. You can't really resist it or turn it back. That is why, twisting company's arms or heightening consumer "awareness" won't do much.

You adapt. Raising incomes in developing world generate a lot of demand for products from developed countries. It doesn't have to be manufacturing per se, a lot of it are services actually - education, tourism, health care, finance. But you have to equip the workers with skills (human capital) to capture the opportunities that this larger globalized marketplace presents.