Has King Kutter gone Chinese

[have_blue]

it is going to be rough here inside the next decade. Wow, and I'm generally optimistic. Frankly, we are fast asleep. Big business gentlemen is fully incapable of resolving this.

I disagree. Our workers and businesses are second to none. If the government will release the stranglehold on business and let them compete fairly, we can "git-er-done". I'm not saying to rescind all environmental and safety rules, and remove all taxes. I'm just saying we should give them a break from the really STUPID levels they are burdened with at this time. It's been proven time and time again that heavy taxes smother business, prevent growth, and the government winds up with LESS revenue than from low taxes.

 

[bugstruck]

Bob,

Our workers, investments, technology, and businesses are in China. Who do you think is enabling this explosion? Your view is certainly admirable and patriotic and I could only wish it were real.

Business can't resist the cheap labor. If they could we wouldn't be having this conversation. If we were capable of restraining them, you'd see signs of it by now.

Government regulation isn't the huge drag it's made out to be. We are much better at efficient compliance with regulation than people think. Look at the benefits to us as a people and the business spin-offs it creates. Certainly helps the woodworking industry. One has to see that it's not only a burden but a benefit too. Financially and socially as it relates to internal business. Across the border it's tough to compete cause as soon as some bright Americans figure a better way the company that employs them will ship the technology and knowledge to a lower cost base where ever it is. This is probably a 100 year cycle until all is balanced. The good news is that therortically it will stop one day. The bad new is you and the guy in Taiwan will make the same wage.

 

[Turbys_1700]

The Chineese are buying 20 to 30 billion dollars each month of our currency in order to keep their currency pegged to our dollar. They are financing our trade defecit with cheaper goods and proping up our currency so we can buy their goods. Some of those dollars flow back to us with investments. The Federal Government wants this to continue so that they can finance their overspending with cheap money. I still don't think it's good for us to lose our manufacturing base. For example the furniture industry has lost over 60% of it's employment base here in NC in the last 10 years mostly to the Chinese. The Chinese are now having problems with rising wages. Those furniture plants over there are now competing with other industries for the same labor. Some of those companies are now looking at Vietnam for even cheaper labor. Further complicating matters is the cost of oil and transportation. Two months ago Lacquer Craft, the world's largest manufacturer of case goods, located in China, purchased a low end manufacturer of upholstered goods right here in NC. Cost of transportation of an upholstered sofa is now over $150 each to the east coast from China. BTW, Lacquer Craft employs over 8,000 people in their company.

 

[joerocker]

God help us if the Dollar stops being used as the official currency. If oil goes off the dollar...we're toast. Why do you think we kiss their (OPEC) **** so. They have us over a barrel by threatening not keeping the dollar as the trading/standard currency and again because they have the oil that everyone NEEDS.

 

[roxynoodle]

Just a little perspective from a teacher. In 1950:
20% of jobs required a 4 yr degree or higher
20% required a 2 yr degree or tech school
60% were unskilled labor

Right now:
20% of jobs require a 4 yr degree or higher (unchanged)
60% require a 2 yr degree or tech school
20% are unskilled labor

This means 80% of my students should plan on attending college to have a reasonable paying job. I don't see the manufacturing jobs returning to the US. At our end of the world economy I see us being the technical country. We will be doing the research and design but the manufacturing will be in China, Vietnam and Indonesia. Math and science skills are becoming more important than ever. In 1992 when talking with GM they told me 4 out of their 5 engineers were Japanese. Not because they wanted to hire foreign engineers but because they couldn't find enough American engineers. What this says to me is that we are not steering our young people in the right directions career wise. It seems to me if these jobs are not emphasized in school we will have a large number of unemployed Americans and will be giving the professional jobs to the foreigners too. Just a thought from my end as a high school and community college math instructor.

 

[jmc]

In 1950:
20% required a 2 yr degree or tech school
60% were unskilled labor

Right now:
60% require a 2 yr degree or tech school
20% are unskilled labor

Those are disturbing statistics but I suspect that part of it may be that a High School diploma in 1950 was a better education than it is today. However, you can't argue that undermotivated kids of my generation (DOB:1950) might still get a good job at the factory where dad works while today, these undermotivated kids are casting their fate to a lifetime of low wages, boredom, and maybe welfare, if society can still afford it. I wonder if education money may be better spent on showing these kids the future rather than trying to teach them how to diagram a sentence.

John

 

[joerocker]

Bravo John! You got it right! My kid graduated in 2000 and really didn't know anything except music/bands and video games. Trust me, I tried! He flat out said "I don't care and YOU can't make me learn!" He moved out, worked as a cook, went broke, joind the AF. Got out because he didn't want to follow ALL the rules (weight and PT). LUCKILY...he married a smart girl who is now leading him to a better life. He's got a kid and a house and he's only 23. Not bad for an "idiot" kid. They CAN change, they only need the right motivation.

Roxy,

Problem is that the "new" countries taking the manufacturing jobs are ALSO taking over (thank God slowly) the high end engineering too. Both India and China have their OWN high end universities al la MIT, CalTech, etc. And WE taught them everything they know.

And I'm not sure I agree with your breakdown. At least around here it's 5% 4 yr degree, 10% 2 year, and 85% unskilled. But hey, I live in the sticks where the cost of living is LOW.

 

[roxynoodle]

Okay, I'm sure that does differ depending on the part of the country you live in. That is the breakdown I keep getting at conferences and inservices. For whatever reason though the students don't seem to believe us. Well, not my high school students. Many of my college students are older and have been out in the world awhile and KNOW they need that 2 year degree in a field with jobs. Sadly, some of them are in their 50s or even 60s and have lost a job they had for 20-30 years and now need to get an education. But, yes, you are correct that there is still hope for teens. Sometimes that "idiot kid" needs to get out in the world and find it out for him/herself. We definitely do need engineers, CAD operators, computer programmers and other research and design folks. Getting a college degree is not so helpful if you major in English literature. Not trying to knock someone who does but there aren't anywhere near as many jobs for them as there are for engineers. I have a friend who is finally getting a degree but it is in Historic Research and Preservation. She will graduate in December. I said can you get a job with that degree? And she said no, I will need to get a 4 year degree next and maybe a Master's. She is 38 and works at least 4 jobs now. Hate to knock someone's interests but after all this work I think she would have been better off with a 2 year degree that led to a job. I will feel really bad if she invests however many more years and money for an education that doesn't pay off with a job in the end.

Oh, aside from technical jobs, we also have a huge nursing shortage. You can become a registered nurse with a 2 year degree and make good money and have benefits.

 

[bugstruck]

The Chineese are buying 20 to 30 billion dollars each month of our currency in order to keep their currency pegged to our dollar. They are financing our trade defecit with cheaper goods and proping up our currency so we can buy their goods. Some of those dollars flow back to us with investments. The Federal Government wants this to continue so that they can finance their overspending with cheap money. I still don't think it's good for us to lose our manufacturing base. For example the furniture industry has lost over 60% of it's employment base here in NC in the last 10 years mostly to the Chinese. The Chinese are now having problems with rising wages. Those furniture plants over there are now competing with other industries for the same labor. Some of those companies are now looking at Vietnam for even cheaper labor. Further complicating matters is the cost of oil and transportation. Two months ago Lacquer Craft, the world's largest manufacturer of case goods, located in China, purchased a low end manufacturer of upholstered goods right here in NC. Cost of transportation of an upholstered sofa is now over $150 each to the east coast from China. BTW, Lacquer Craft employs over 8,000 people in their company.

"Good comment and example on how it works, they have 6,000,000 SF of manufacturing production in China. Huge capability. We have to string multiple US companies together to equal that as best I'm aware. Some of the biggest furniture names here are around 3M SF facilities. Casegoods capacity in NC lost about 750,000 to 1,000,000 SF of production capability in May and June alone. Say another 1,000 people looking for work and running a bleed on local, state, and national ecomomies. We sometimes forget that the vast majority of pure (society wide) wealth is created through manufacturing. You can't develop it from law suits, service work, insurance, hospitality, medicine, etc. However, those industries do create wealth second hand by putting manufacturers to work in support of their operations. Most of the money those industries touch is pass around wealth that the manufacturers created. Something permanent or semi-permanent has to be created for true wealth to be created. Thankfully we sare still are good at farming. That's still manufacturing IMO even though it's shorter duration. Wealth and money shouldn't be confused. Closely linked but not the same. Herny Ford got it. Actually, the Chinese get it quite well. We seem to struggle with the concept these days. Imagine we had been poised for this global expansion instead of them. We were in the past.

 

[JoeinTX]

This thread has veered off-course a little bit, but....

-As for the KingKutters, their units don't look terribly different from the ones they were producing 5-6 years ago and the Chinese gear-boxes are a more common item these days including some makers as (gasp!) Bush Hog.


-As for the greater socio-economic discussion which has ensued:

China is today's Japan of the 1970s. Cheap labor with a rising expectation of quality. It's economics at work and benefits the average consumer. BUT, the Chinese worker is demanding more for their work and labor costs will rise within their country. Importing "cheap" goods from a foreign land works only as long the wages paid combined with import/transport costs are less than the cost of the domestic alternative. We've seen Japanese/Eurpopean/Korean manufacturing move on-shore more and more within the last decade or so as it has become cheaper to produce domestically when considering growing their domestic wages and the cost of moving the product to our shores. As GM/Ford/Chrysler close plants in North America, how many new plants have we seen opened by the foreign brands to supply our demand because the economics are changing....??? Track the sales statistics, as domestics lose market share, the foreign brands increase N.A. production capacity to meet the demand economically.

Is the cost of labor high here? Yes, in pure dollars-per-hour, but when combined with growing overseas wages and greater costs of transportation it will become more and more desirable to produce locally. Is more American industry becoming owned by foreign concerns? Yes, but do they have less financial interest in success than their domestic counterparts. No. When they succeed their American employees succeed and the country benefits..........doesn't matter whether it's a Toyota or Kenmore nameplate on the product, it produces a domestic benefit.


Oh, well, enough for now.

 

[JoeinTX]

I would just like to throw one example of my statements above in as evidence.

Australia.

Australia has very little in the way of domestically owned manufacturing capability when compared to other Western nations. What are the famous Australian car lines? Which Australian aerospace companies are major players? What is Australia's biggest producer of home appliances?

If you're not an Aussie, you won't likely be able to answer any of the questions above. Why? Because there really aren't any. But, the Australian economy is flying along and personal wealth is on the rise.

Economic activity, a buying public, and money exchanging hands is what the publics' economic well-being is based upon.........not whether or not the majority of toasters they buy has a "domestic" name of them. The anti

So, we can decry the loss of "American" brands, but the jobs are still there and being paid higher than ever.

And, buying "domestic" doesn't always mean buying the recognized brand. We have a lot of Hondas and Nissans which are designed in the U.S. and built with a majority of domestically produced components whereas there are also a good number of Fords and RCAs that come straight off of a ship from foreign shores.

 

[roxynoodle]

This is true. Had a Nissan built here but at the same time I was looking at Chevy S10s and they were built in Mexico.

 

[Botabill]

I worked in a GM automobile plant and I left to work for 25 percent less money. If you spent 6 months working in an auto plant I think you'd re-consider the overpaid comment. Also you should remember it was the auto manufacturing bosses who agreed to those wages so they and stockholders can continue with there big pays and profits. That's just business. All workers should get better wages. America is a fantastically rich country however the distibution of wealth is stratified with the lower wage earners being underpaid to fatten the pockets of the industrialists and investors. Don't get me wrong I'm not talking about small business owners under paying their workers. Yes some of that may occur but generally it is because the businesses don't generate enough $ to pay more. When workers are paid more they can buy more and that means they spend more much of it in their own community. The American government is allowing companies to set up off shore which allows those industrialists to exploit foreign workers, then take the money out of the pockets of American worker for products sold in the US to increase their personal wealth. Sorry to get so political but I don't begrudge any workers the money he earns honestly and it stirs me up when someone else does.

 

[bugstruck]

Joe, Australia has a slightly higher percentage of GDP from manufacturing than the US does, not less. Props them up reasonably well.

Ownership may not matter to many but it does to me. If I don't own something, others do. The owners control much of the game. I know in a global ecomomy I can own most anything, that's the argurment put forward anyhow........

I agree with much of what you said, but the current trend to dismiss ownership of manufacturing concerns is not healthy for us in the long run. I guess I'm just greedy but even on a local level I don't want my ownership in real estate aligned with Baltimore City. Likewise, I don't want the US level of ownership (whatever it is) aligned with China. I want them a distant third behind the EU. Most people don't know thier economy is 2/3 as robust as ours (GDP) right now and is poised for 200% more growth in rather short order. We'll be a very distant second before you know it if we don't care.

Finally, back to the thread topic. Am I buying a Chinese products? I just talked the President of our company out of a $35,000.00 savings on a Chinese equipment purchase he was considering. I reminded him I got dusted on an 850K contract in May by a US broker of Chinese millwork. I was second low of 5 bidders. The Chinese concern was over 300K below me. He dismissed Chinese competition too until he saw his way of life slightly impacted. We are all in the same American boat and he sees it now too after 5 years of my badgering that it's coming. He was shocked. The short (modern) vision would be to buy the Chinese equipment, keep costs down, and reap the short term benefits as if no one is impacted. If someone has no commitment to Country and Family, these are easy decisions. While this was not a huge financial decision, he has concerns that competitors will make the other decision and get some competitive advantage. I reminded him we are small, adaptable, capable, growing, expanding facilities, and usually very tough on our competition. Now that we know who the international competition really is and know not to send them money (don't send our regular US business competitors any money either ).... will be a snap to develop a strategy to keep us well positioned. While the others are wondering what happened and laying folks off, we'll have an improved employee applicant pool. Now if I enable them.... I contribute to their success and our downfall. Pretty simple stuff for an old country boy. Once in a great while the narrow view is the clear one.