Best I’ve heard.




  1. scadragon says:

    Gotta love them Democrats!
    **goes back to polishing his AK47**

  2. Ah_Yea says:

    JoaoPT,

    Most of the points on Chinese labor costs are only a small part of the puzzle and wildly out of date.

    Hold on for a lengthy explanation.

    The companies I deal with in China are mostly manufacturing. They use the same HAAS machining centers we use here in the US.

    They produce the same part as their American counterpart but can get it to us for 1/3 less. Why?

    1. Cheaper labor. The LEAST significant part of the equation. When a part is manufactured, it is done in batches. 500 parts a shift with one operator on one machine.
    Each part costs ~$10 for a total of $5,000 of production/shift.

    Now the labor in China comes out to ~$16/shift whereas in our American shop ~$96/shift.

    The percentage labor to production cost in China is 0.32% while in America it is 1.92%, still less than 2%

    What actually drives the Chinese savings are raw materials cost and infrastructure/business costs.

    The raw materials cost in China is typically 40-50% less! This is because Electricity, mining, and production of materials such as steel and aluminum is state controlled and held undervalued.

    So take off $1.50 from the Chinese production cost per unit.

    Next, the overhead in China is much less because they pay ~2/3 LESS in taxes. 17% max compared to our ~35%. Take off another 1/3 or $0.75 for less overhead.

    This gives true Chinese production cost at $6.75/each. Here is the real problem. Their stuff costs ~ 32.5% less on materials and overhead due to state control. The cost of labor is insignificant compared to this.

    This of course applies to manufacturing and not painting eyes on dolls, but manufacturing is also their most profitable.

    What counterbalances this inequality is shipping and handling. After all, the Chinese live in China! They still have to crate, handle, ship halfway around the world, uncrate, and ship to the final destination. This all cost substantial money.

    So, we as a country need to level the playing field in cost of production and we prevail.

  3. Ah_Yea says:

    To finish my last thought.

    Therefore it’s not the labor which is significant, it’s the cost of production.

    But when shipping and handling from China to Wal-mart is figured in, the cost is still less but not by much and having the part manufactured in America become much, much more attractive. Often the cost of manufacturing can be cheaper in the US except for one thing….

    The Chinese dollar, the RMB. It is being held artificially low. Up to 40% by some estimations.

    Here is where a significant price difference comes in. 40% less because of the Chinese dollar!!

  4. Ah_Yea says:

    And one last thought.

    Corporate greed.

    WalMart may be getting the Chinese product for 40% less (because of the undervalued RMB), but they SELL the product for only 20% less and keep the other 20%.

    Corporate greed, the destruction of America.

    No surprise. Corporations going international to undercut America and pocket the difference.

  5. ECA says:

    #22,
    good points..
    Lets add some facts also..
    Tariffs, coming to the USA adds abit of Cost to the product, as a restriction…
    UNLESS, they do a few things.
    And if you have a VERY expensive product isnt worth doing..as in shipping from China to a FREE PORT, reloading and getting NO TAX on the goods. To shipping PARTS, that arent taxed, and are assembled HERE, and a few other tricks.

    Also the Thought that LOW priced goods, that DO get to the USA, and companies that CHARGE 10 times the COST, as a SELL price..as IF’ it was made in the USA. THEN whom is making ALL the money?

    In the end, The corps Have things made OVER THERE..for a few reasons, but they come down to 1 point. PROFIT. NOT that it is cheaper THERE and it would be BETTER/CHEAPER to the consumer.

    In the USA we dont believe in INTERNATIONAL pricing.. we inflate EXPORTS as well as IMPORTS. we dont believe in NATIONAL pricing, EITHER.. IF we sell Goods to another nation at an INFLATED PRICE, we match it NATIONALLY..thats what happened to WOOD and metal prices. and killed HOUSING and building in this nation..

  6. ? says:

    Yea,

    Labor is an end-to-end cost.

    Dig up the minerals, and the fuel to convert the raw material to a useful form, have labor costs that factor into final cost, and on an on. Even the costs of building the factory, includes a lot of labor costs.

    I have a WAG that all stuff, in terms of end-to-end manufacturing cost, is 80% labor costs.

    So your argument that manufacturing cost reductions, of building stuff in China, are not significant falls apart when you start to think of the total labor cost of
    building anything.

  7. ECA says:

    #26,
    do you want to SCARE USA corps..

    REQUIRE, that the companies we deal with in other nations, BUILD/LIVE/are run by the environmental LAWS/regulations created in the USA. You would TRIPLE the cost of goods.

    we went thru this in the 60-80′s…and MOST of the corps WENT OUT of country, because of all the regulations. esp. for the disposal of pollutants.

  8. cgp says:

    The dollar devaluing outcome is not as simple as the goldbugs would tell you.

    Sure the us$ has gone down a bit, but it is market behaviour that is occurring and not a fundamental mechanism at play. Ie the markets are US-centric and are manipulated.

    The thievery at play is the stealing of the future generation in that they are purchasing bad bonds that halve in value immediately, and the big boys get to play with the yields (% interest of halved value bonds that they purchase).

    We need to know the likely outcome, and the goldbug devalued dollar (I mean 10% not 80%) is not remotely likely given the real market monster.

    I believe what is going to happen is QE2, QE3, QE4, … all these escalate because the short term bonds (5-7 years) are coming back, requiring repurchase (at fraction of the original, the main).

    So this is a continuous defaulting thievery. The escalation will stop in the near future by its own as there cannot be an unlimited tolerance of theft.

  9. Yankinwaoz says:

    Hey! Where the hell is the luxury British Cruise Chip?!?

  10. pedro says:

    It would be really nice to read sheeple dallas support his beloved leader, but I guess he should still be in deep seizure and foaming on the mouth after reading bobbo & watching post #15

    Oh! I misspoke! He came out on #18. Although the seizure seems to have subsided, his mind still cannot take the truth. Poor sod.

    #16 You have it half right. The other part of why the US is in such a bad shape is because sheeples like #18 who cannot understand he’s been had.

    #20 Have you checked the salaries on your country lately? How do they fare with what they were 10 or 20 years ago? I thinks there’s your answer about the labor costs. Spain is no better. Salaries that bring tears on anyone’s eye and people living on a month by month basis. No hope to even have small savings.

    #24 And the corporate greed in America, together with corporatism is indeed what is bringing the US down. As in Europe, CEO’s & CFO’s are squeezing worker’s wages and incentives in a fast chinification of their operations. Shooting at the wrong target.

    This is still to fully catch on on the main European countries (e.g.: Germany) but it has come full strength in European fringe nations like Portugal & Spain. Their cost of living is on par with the rest of the European union yet their salaries are fractions of what the bigger ones are.

    You have made excellent points all around.

  11. Dallas says:

    #30 I said I support cartoons to train the sheeple but this one is done poorly and lopsided. Sheeple are unlikely to comprehend that there is not such thing as magical math when it comes to a balanced budget.

    For instance, tax cuts equate to deficits w/o corresponding spending cuts. Sheeple just think ‘tax cuts’ , yay! Pretty sad, IMHO.

    Do sheeple realize that we spend more in military than the next 28 countries – COMBINED? Never mind that 27 of those are allies. No, but the sheeple are scared.

    Do sheeple realize that Medicare and Medicaid entitlements need to also be cut to balance the budget? lalalalalalalala. Don’t want to hear that because the sheeple are also sick and old!

  12. pedro says:

    #31 You wouldn’t know reality if it hit you in the face. You’re a hoot!

  13. pedro says:

    #31 It’s also funny how you keep referring to yourself in third person, sheeple!

  14. Benjamin says:

    I agree with the video. If the FED keeps printing money we will be carrying our money in wheelbarrows to buy bread.

  15. cgp says:

    Fools, money in fact will be scarce. They are printing money in the form of bonds purchased on behalf of our kids. This stuff will never reach us in the form of loans and jobs.

    The dollar will not drop to 10 cents, the market manipulators will not allow that to happen.

    When the QEn theft finally crashes the system’s belief mechanism all hell will break loose in that all money flow will stop. This is a complete credit/liquidity shutdown.

    Did you note the panic of the near-credit crunch that almost happened when that major bank crashed. That will happen to the complete system.

    KaBoom

  16. bart1452 says:

    Credit is the quick and easy artificial leavening of the economy. Too much of it creates explosive bubbles that burst. Not enough leaves the economy flat. Maybe it’s time to mostly wean ourselves from credit. Some companies operate without debt and have huge cash reserves with which they can expand, innovate, and weather downturns. That’s the old fashioned, slower acting, and natural leavening. It’s time for it to come back into style and save credit for start-ups and emergencies.