'Amazon couldn’t make a Kindle [in the U.S.] if it wanted to'

[Graham]

Originally Posted by carpetmojo

"China has around 1.3 billion people, India around 1.1 billion" [Kali Yuga]

Now reversed, figures released last week show India now has the biggest population on the globe.

Have you got a link for that? All I can find is comments that it's likely to pass China by about 2030.

This site seems to have the current figures:

http://www.geohive.com/

Graham

[Kali Yuga]

Originally Posted by Rtturvwsxmavpduc

It's about money. More specifically greed. How much is enough profit? America has one of the largest income gaps between wealthy and poor in the world. Google it: the population of Nigeria lives in a more equitable environment.

Correct, but this is not because manufacturing jobs are moving offshore. A lot of it is due to tax cuts, better pay for upper management, and tax advantages to owning stocks and equity (50% of which is in the hands of the top 1%).

Also, many Western nations like Sweden, Finland, Germany, Denmark and the UK have significantly more equitable economies, and aren't particularly reliant on manufacturing.

Nigeria also isn't more equitable, by the way. The US has slightly lower income disparity ratios and GINI numbers, though Finland has significantly lower ones than the US. I'm also not sure if these numbers include foreign workers, who are likely earning much higher wages in Nigeria's oil industry than many of the locals.

[Kali Yuga]

Originally Posted by carpetmojo

For a perfect example, look at what happened to the British motorcycle industry in the 60's/70's. A long time ago, but the same lessons are there....

So what motivated the Brits to try and rebuild their motorcycle industry? It presumably wasn't need, since foreign products were readily available.

Note that I didn't say "the US could rebuild those industries and beat cheap foreign labor in the process." If there was a dire economic necessity -- one that outstrips a profit motive -- then that expertise could likely be rebuilt.

I may be wrong, but I don't believe it took China 50 years to dominate the electronics industry; more like 10 or 15. And that was starting from a much less technologically and economically advanced society.

I agree it would be very expensive. However, the basic premise -- namely that innovation suffers if the manufacturing expertise isn't in your back yard -- simply does not match what has happened in the US over the last ~25 years. Manufacturing jobs have declined, but output has slightly increased, and innovation is off the charts.

If anything, perhaps moving the manufacturing offshore has increased innovation, since you're freeing up people from a lifetime of repetitive tasks and they are encouraged to get more education.

[Rtturvwsxmavpduc]

RockDaMan: "Hardcore debaters is that way -->"

Facts are not subject to debate.

[RockdaMan]

Originally Posted by Rtturvwsxmavpduc

Facts are not subject to debate.

LOL
When it comes to Apples success, its detractors regularly ignore that.

[Greg Anos]

The real impact of automation has not been truly felt yet...Mostly it's been labor substitution. Also the extra costs (in time as well as money) involved in a long production chain has been minimised in this discussion.

I'd like to use a low-tech example. The clothes you're (usually) wearing.

Today clothes are made (mostly) in low wage countries, in large runs, to minimise the costs. They are then shipped (slowly, because slow shipping is the cheapest) to the retail chain in an advanced country where they are sold.

You go in and pick the one that hopefully fits well, and has the color and material that you want. Or at least something somewhat close.

What happens when you have a machine (or a small set of machines) that takes your measurement, cuts the fabric (from a choice of a 1000 different fabrics) and sews them together according to one of a 100,000 different patterns available. With a turnaround of less than 24 hours?

That'll kill the cheap labor advantage. And there will be no reason to put those machines half a world away. The shipping costs (money and time) will be more than any marginal cost saving.

(Foxconn claims it is going to add a million robots to it's assembly force in the next three years. In the long haul, will it matter where those robots are located?

[afa]

Originally Posted by miguel1626

Here and Here.

BTW, Boeing is another matter entirely. And yes, they made very poor decisions.

With respect, can I know what those links are supposed to show?

Because all three are very brief blog posts (although the last was from a writer on the NYT) which hardly stated anything of consequence.

[Kali Yuga]

Originally Posted by afa

With respect, can I know what those links are supposed to show?

I can't speak for him, but I can say that the Boeing Dreamliner is not really an example of "expertise gone abroad." A lot of aviation work is still done in the US, and the knowledge is readily available.

Rather, the 787 was delayed by relying on too many subcontractors (both domestic and international, and this was Krugman's point), a labor strike, design problems and other miscellaneous delays.

[Fbone]

How much would a Kindle cost if manufactured in the USA?

Would it be successful if it cost more?

[tubemonkey]

Originally Posted by Fbone

Would it be successful if it cost more?

Only if all of the other major ereaders were also priced similarly.

[RockdaMan]

Parts 2 and 3

My article a few days ago on the Amazon’s inability to manufacture a Kindle in the USA and the decline of manufacturing attracted a lot of interest, many supporting comments and a number of questions.

http://www.forbes.com/sites/steveden...le-in-the-usa/

In many of the generous retweets of my articles, Why Amazon Can’t Manufacture A Kindle In The USA, and Does It Really Matter?, I saw comments like “a sad review of American manufacturing’s decline” or “disturbing piece on the loss of US manufacturing.”

These comments, while being correct as far as they go, miss the key point of the article, which is only partly about the decline of manufacturing. The main thrust of the article is the decline of management. Outsourcing and the loss of whole sectors of the economy are the consequence of anachronistic management in the Fortune 500 that is ill-adapted to the needs of the modern economy.

http://www.forbes.com/sites/steveden...manufacturing/

[Kali Yuga]

Unfortunately, he's presented a toothless defense of his own views.

I do agree that once an industry has moved away it can be hard to rebuild that industry, that no one has an unbreakable lock on software development, and a few other minor points. None of the points he's correct about, though, support his primary argument that "you need a manufacturing complex in your backyard in order to innovate and have good management."

The proper way to make that case isn't to cite anecdotes, it's to do a real analysis that correlates poor performance and bad management decisions with outsourcing, and compare it to companies that keep management at home.

Even speaking anecdotally, the Kindle is the perfect counterpoint to his own argument. A major early competitor in ebooks was Sony, a Japanese company with decades of hardware experience and factories in Japan. In the US market, Sony has been clubbed into irrelevance by three companies that all outsource and/or offshore manufacturing (Amazon, Apple, B&N) and two of which had no manufacturing experience whatsoever prior to producing ebook reading devices.

In short, I don't think I'd hire Denning as a management consultant.

[Penforhire]

I agree we are in the transition to more automation but we're not there in enough sectors. Labor cost still matters. But it has come down from >80% of the cost to <20%of the cost of most products.

For example, the company I work for operates a plant with about 800 people in Malaysia making magnetic components (e.g. transformers of all sizes). Not a ton of automation there. Too many different models to invest in full-automation tooling. Similar for our Mexican factory (about 500 people). On the other hand, our sister division in Austria has a very high-automation production line making automotive components using many creepy robot arms.

When you say it doesn't matter where the automation goes you are neglecting huge tax incentives on where capital gets spent. I don't know the exact tax comparison today but some years ago the Asian countries allowed faster depreciation of capital spent there than America. Being able to write the costs off over three years instead of five or more is a big deal if you have sales to justify it.

And part of the original argument is not valid. Just because manufacturing moves elsewhere does not mean design does as well. A large number of customers (and ourselves) make stuff off-shore yet still design and develop locally.

[nogle]

teh critical issue for Amazon and the Kindle is not about manufacturing. It is about understanding what business they are in. Amazon uderstands that its business is selling books (either as physical goods or as information, atoms or bits if you will). It is not in the business of building consumer electronics, which is quite specialized. It therefore makes perfect sense to outsource the manufacturing of the device that allows the sale of books as bits.

As an anaolgy, does your grocery store need to own and operate farms to be able to deliver fruits and vegetables to you?

[kjk]

Originally Posted by Fbone

How much would a Kindle cost if manufactured in the USA?

Would it be successful if it cost more?

The other question is-why would they want to? Someone asked on Quora why Apple wasn't interested in manufacturing in the US, and one answer, which applies to Amazon as well was-they don't see themselves as merely US companies anymore-they see themselves as global companies-and soon the majority of their customers will be in China.