Tag: manufacturing

Recommended by Ricochet Members Created with Sketch. Unwind from China? Can It Be Done?

 

This is a subject that has come up first in the comments with the @jameslileks post “Watching the CCP Press,” and which @iWe explored further by asking “whether one would trade with Nazi Germany.” We need additional information, indeed hard data, to even begin to look at the practicalities. Some here have mandated that we somehow absolutely cease trade with China. Others (and indeed most, I should think) would argue that an absolute embargo is both undesirable, and indeed impossible in any situation short of open warfare, but that we should certainly reevaluate what we are trading with China, and how we are doing so.

But to even have that discussion we need to know something of the extent of what we buy from China (and really, from everywhere else too), and how that really affects us, otherwise, should the absolutists be granted their immediate wish and all trade cease, the results may be distinctly unpleasant. I own and run a company that manufactures electronics, and so, at least as far as electronics go, I do have rather a lot of insight into what exactly comes out of China, and whether alternatives exist. I have done a Country of Origin query on the bills of materials (BOMs) for a couple of my products, and will detail those below, and what the implications are.

Recommended by Ricochet Members Created with Sketch. Ricochet COVID Symposium: “Essential” in the Ghost World

 
An empty mall parking lot

My business is essential, at least according to DoD guidelines – our customers build the trucks your cable, power, cell phone, and sundry other utility and delivery companies use to make staying at home a bit less awful. In many respects you could say this shutdown passed us by: you cannot do manufacturing at home, engineers are next to useless after a few weeks if they lack for hardware to test, while everyone else has been needed to answer the phones, place orders, receive goods, and ship. We only had 2 people working from home during the entirety of the shutdown, and 1 person on reduced hours because daycares were basically shut. But our industrial park was otherwise a ghost town tucked behind a ghostly strip mall, with ghostly commuters on drives to work and home again.

As Ohio rapidly progressed through one closure after another, until all that was left were the “essential” businesses, everything took on an unreal character. The last weekend before the stores were largely ordered shut was, of course, the great toilet-paper panic. I was in our grocery several nights before the panic, and the only things the stores were out of were chicken broth and Combos, and that one was because they were BOGO. 4 days later the store was picked clean, except for fresh fruits and vegetables (I don’t know why kale is perfectly suitable for other uses).

Recommended by Ricochet Members Created with Sketch. The Food Supply Chain is NOT “Breaking”

 

It was disappointing to read the ad in The New York Times & Washington Post today from Tyson Food’s CEO that “the food supply chain is breaking.” The media of course ran with that (and not much else), consistent with its own obvious strategy to spread fear. Tyson and a few other companies have had serious issues with Wuhan Virus victims, and some plants – some 30 in total, if what I read is correct, have had to close temporarily. Other plants have had partial shutdowns. But as a food industry veteran of 23 years, let me assure you – our food supply chain, while stressed, is NOT breaking.

Oh, sure, some are more stressed than others, some pretty severely, especially if ingredients or products from China are in your supply chain. If you are part of the “foodservice” supply chain, you’re really stressed.

Member Post

 

What novels, memoirs, and films with a business setting do you like? Most fiction seems to be about people who are lawyers, policemen, criminals, soldiers, spies, students, politicians, and noble but struggling writers. But there are indeed some works of fiction, and some vivid personal memoirs, in which business plays a central role without being […]

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Contributor Post Created with Sketch. Recommended by Ricochet Members Created with Sketch. The Near Side of Space

 

“This is really important. I need this at the top of your list.”

The boss-man looks haggard. He’s definitely not been getting enough sleep. And, judging by the look in his eye, he knows exactly how silly of a request he’s making. He’s still gotta make it. He and I aren’t the only ones on this call, and the boss-man has boss-men of his own to appease. That’s life.

Contributor Post Created with Sketch. A Tale of Economic Dynamism from North Carolina Furniture Country

 

This would be a terrible time for American to reject dynamism, that churning of jobs and firms that marks a vigorous economy where creative destruction is happening apace. Even with big economic policy actions in recent years, this still seems to be an economy where potential growth is around 2%. The Atlanta Fed describes a healthy, dynamic economy thusly:

In a dynamic economy, firms are constantly opening and closing, with workers churning among them. In a dynamic economy, entrepreneurs and innovators are incessantly commercializing new ideas and business models, keeping established firms on their toes, and pushing the economy to evolve and advance. … Like a living being, the economy needs circulation — churn — in order to remain healthy. It needs its old or damaged cells to be broken down and their raw materials recycled. It needs to develop new resiliencies when exposed to the contagion of a recession or technology-driven disruption. And it must be able to constantly adapt to changes in its environment in order to survive. Dynamism powers all of this.

Contributor Post Created with Sketch. When Government Emphasizes Production Over Consumption: Washing Machine Edition

 

The new thinking on the populist right is that US economic policy has long focused far too much on consumption vs. production. Making stuff is important, too! But what does a change in emphasis look like in the real world?

Well, a new research paper from economists at the Federal Reserve and the University of Chicago seems to give a pretty good idea. In “The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines,” Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot find that President Trump’s decision to impose tariffs on imported washing machines did create about 2000 jobs as foreign companies shifted production here — but at a cost $820,000 a job. Although the tariffs generated $82 million for the US Treasury, they also raised consumer prices by $1.5 billion.

Contributor Post Created with Sketch. Recommended by Ricochet Members Created with Sketch. President Trump Rocks Out with Real Heavy Metal Band

 

The afternoon of 20 March 2019, President Trump rocked out with a group that makes real heavy metal. The event was different from other presidential appearances, but featured many of the same themes. Two themes, American defense revival and energy dominance, stood in stark contrast to news from Germany. In the midst of the prepared remarks, with the usual riffs, President Trump elaborated on his criticism of the politician John McCain, who the appointed Senator from Arizona, Martha McSally, is unconditionally defending, raising questions about her viability or suitability in 2020. President Trump’s visit to the Lima Army Tank Plant was a great political messaging success on several levels.

The setting:

Promoted from the Ricochet Member Feed by Editors Created with Sketch. Major Advance in 3D Metal Printing

 

I just got emails about this earlier today. I have no idea on the cost (I’m waiting for my rep to quote it) and it won’t be released for sale until 2018, but if this tech works out then we’re looking at a truly massive breakthrough in affordable (for businesses anyway, not yet consumers) 3D metal printing. Probably still out of the price range for my business, but this is a significant move towards affordable 3D printing of high-quality metal parts.

First up we have a desktop (really benchtop) metal printing system. Nothing like this has been out before.

Contributor Post Created with Sketch. How Far Back Do the Populists Want to Turn the Clock?

 
The old Heinz factory, now a combination of residential lofts and a manufacturing facility, sits among houses in Pittsburgh.

From Janan Ganesh in the Financial Times:

What western electorates seem to want is a correction of the liberal model, not its extinction. The marginal British voter, who braved EU exit, but only just, can worry that freedom — to migrate, to trade, to avoid taxes — has run away with itself since the millennium without pining for Ye Olde Worlde rigidities.

Contributor Post Created with Sketch. Even If Apple’s iPhone Manufacturing Came to America, the Jobs Wouldn’t

 

foxconnFirst, this headline in a Washington Post op-ed by Vivek Wadhwa: “Trump’s demand that Apple must make iPhones in the U.S. actually isn’t that crazy.”

Well, maybe not that crazy if you don’t care who might assemble those iPhones. Actually, not “who” but “what.” If POTUS Trump could somehow coerce Apple into moving manufacturing to the US, it might not be humans getting those jobs. Wadhwa:

Contributor Post Created with Sketch. Do You Want Fries, or the Extended Warranty, With That?

 

Here, from Business Insider, are where the jobs are:

image

Contributor Post Created with Sketch. After We Kill Free Trade, Are We Next Going to Smash the Machines?

 

pethokoukis_04042016-e1459784418581There has been plenty of upside for America from more free and open trade. A new Economist piece cites many of them: For consumers, lots of things — including clothes and home furnishings — cost the same as they did 30 years ago. Overall, China trade specifically boosts spending power by $250 a year for the average American, with lower-incomers benefiting more. Offshoring and outsourcing low-wage assembly have also boosted the productivity and wages of high-skill workers, with the design (right here) and manufacturing (over there) of many Apple products being the classic example.

But there have been downsides, too. New research finds that some American communities whose manufacturing jobs moved to Asia never really recovered. Jobless rates stayed high, worker earnings depressed. Many displaced workers never moved or found work in less-trade affected sectors as economic models had predicted. They just got stuck. But if you listen to some presidential candidates, you would think that trade has been the primary driver of the decades-long decline in manufacturing employment. If they are right, then reversing course might bring jobs back. But that economic assumption appears wrong. From The Economist:

Promoted from the Ricochet Member Feed by Editors Created with Sketch. I, Circuit Board

 

SamsungDo you know how modern electronics are manufactured, or where they come from? Do you know where their component parts come from? The answers may surprise you. That cellular phone or computer you use to check Ricochet may say, “Made in China” on the backplate, but really it should just say, “Assembled in China, Made Everywhere Else.”

There’s been much talk this election season about “getting tough on China” because of their manufacturing costs, or currency valuations, and there have been solutions proposed that sound like Great Patriotic Trade Wars to rectify the supposed ills of international trade, but unless you have some grasp of everything that goes into manufacturing, you are not likely even to begin to see the glimmer of the spiderweb of international trade that gets your computer into your hands.

Contributor Post Created with Sketch. #MakeAmericaCompetitiveAgain

 

shutterstock_208443250Donald Trump hit a nerve on tariffs, American manufacturing, and competition from China. A lot of people find the arguments for free trade unpersuasive and feel they’ve been on the receiving end of a bi-partisan policy that that imposes rules on costs on Americans that lets the rest of the world (literally) profit at our expense. I don’t quite buy that narrative but — as I’d wager some of you are thinking — of course you wouldn’t, Meyer. That doesn’t mean it’s totally wrong, though, and of course I want of my fellow countrymen to have every opportunity to find remunerative, useful employment.

My problem with Trump on this matter isn’t so much his calling attention to problems, but that his solutions are bunk. More specifically, I think the kinds of tariffs he’s suggesting are going to hurt people by raising prices, will spark retaliation against our own manufacturing, and will suffer from all the pitfalls that happen when one person thinks he’s smarter than the combined wisdom of hundreds of millions. Trump may have an economics degree, but his reading seems to have stopped before Adam Smith.

Member Post

 

Are we having fun yet? This morning I spent time trying to get a sense of who thinks the new year financial route will turn around or, as some bears are calling for: “S&P could plunge 75% to 550”. The phone calls with clients and industry friends felt like that moment Roy Scheider said “we’re gonna need a […]

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Contributor Post Created with Sketch. Custom-designed by the Thousands

 

imageAnyone who’s ever had the pleasure of using custom-made goods knows their appeal. No mass-manufactured product can quite match the attention to detail, concern for the user, or feel that a master craftsman can impart into his wares. The catch is that — if you want something made just for you — expect to pay heavily for the requisite time, attention, and skill. That’s why most of the stuff we take for granted was only available to the fantastically wealthy before industrialization.

While no manufactured good can quite match the customization of the best craft-made goods, this Megan McArdle piece touches briefly on just how close we can get. Sure, mass-produced, one-size-fits-all kitchen design leads to some (seemingly) ridiculous and lamentable problems — such as counter tops and cabinets being made too high for the average woman to use efficiently — but it has also been hugely liberating. Not only does the average homemaker have basic amenities that would make her great-grandmother green with envy, those annoyingly standardized-but-relatively-cheap cabinets allow storage and use of (literally) innumerable combinations of appliances and equipment better designed for her family’s tastes and needs.

Contributor Post Created with Sketch. Indigo Labor Day

 

shutterstock_87947731The front-page headline caught my attention: “Tide may be turning for working-class Americans.” Really? We just learned on Friday that a record 94 million Americans are not participating in the labor force. How can this be good news seven years after the Great Recession? Bloomberg columnist Al Hunt explains why we are in fact on the verge of Morning in America, Obama-style:

On the surface, this Labor Day holiday caps another dark year for U.S. unions and many working-class Americans.

Member Post

 

Canada is having a federal election on October 19th, and current predictions show the New Democratic Party (NDP) winning. This would make its leader, Thomas Mulcair, Canada’s next Prime Minister. In this post, I’d like to take a look at his economic plan, with a specific critique from my own experience.  Preview Open

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