1. GM, Ford, Chrysler, Boeing, GE, HP etc have shown that America just is not suited for manufacturing. working in a manufacturing plant is boring because the job is repetitive, and because the job is repetitive stress injuries occur frequently which companies are (and should be) responsible for.
if you make widgets for company X out in BFE, maybe your assembly line can work M-F and 9-5. if you make products for a retail Fortune 500 company where most have adopted Lean 6 Sigma, tight inventory control or some version of JIT, then the assembly line can never sleep. otherwise there would be no way to adjust for demand spikes on Saturdays and Sundays... the retail peaks of a week. this means that your line would probably incorporate 4-5 shifts to avoid going over 40 hours or 3 shifts if the company is willing to pay overtime. unless the majority of the fast moving consumer goods (FMCG) industry change their inventory management techniques... we are stuck with robots and 80 hr weeks.
so where does the little pay come in? low skilled repetitive work means a good majority of applicants can do it. it also means that college grads would probably not be the one handing over their resume for this billet. this is probably the biggest factor of justifying low pay right? otherwise how do you explain to all the newly minted engineering and computer science grads that the workers with GEDs over at Apple are making $80k and you're starting at $60k? the second biggest factor is that assembly workers by accounting rules have to be allocated as COGS and not regular OPEX. in laymen's terms it means COGS eat directly into the margin of a product while OPEX does not. in the FMCG industry you can only charge so much for a product before you just price yourself out of competition. for example, building a MacBook Air competitor at the same price point without a subsidy from Intel.
the two constraints are price and demand. with the number techies/blogs/posts in MR ranking products based on specs and how much they can build it for via parts off NewEgg... i doubt any tech company would dare to slap an extra $65 or more on every phone. in retail, the number of irate customers that get pissy when stores run out of item Z negate the chance of reducing work weeks to M-F, 9-5. another example, American Apparel claims they use all US labor in fair conditions... but then in the past 5 years they've always ran cash flow negative and needed recapitalization from last minute investors 3 separate times. Timbuk2 bags originally was all made in California until the price of their product could no longer justify a 100% made in USA label. now part of it has gone to China as well. New Balance, also once made in USA is now partly off shored.
it's not just profit, the US really isn't built for manufacturing anymore. not from an education, legal, corporate management and economic perspective. for any business school student, try the Bullwhip Effect exercise in a ops/supply chain class and see how much cash volatility you can create by impacting timing of inventory. also, Samsung, Toyota, Nissan etc build plants in the US because they receive huge tax and trade incentives. the would be stupid to NOT try and build a plant here. if the government offered the same tax incentive for US companies to repatriate their cash as a one time deal, banks would so flushed with cash that it'd be popping out of Geithner's ears. ok... exaggeration on the last part.
2. people in China don't choose to work in Foxconn/similar company because they like to... most simply have no choice. either they didn't make the cut on high school entrance exams or college entrance exams. since Chinese are so focused on school rankings and GPA (i can personally attest to this tidbit), if you didn't get into a top 15 college your job prospects are basically close to zero. if you didn't get recruited upon graduation, most Chinese companies don't even look at you one semester out... reason being, if nobody wanted you then why should we want you now?
so what would you do? pack your bags and go back home to live with your parents? eventually it seems most people would rather have a crappy job by US standards, a roof over their heads and food to eat because there's no such thing as food stamps/soup kitchens/government aided housing in China.
so no, to sum it up, manufacturing jobs went off shore because Congress made laws without truly understanding the long term economic impact it would have. it's not their fault either because who could've forecasted that China would become an global economic power 50-60 years ago? i'm not saying it's right or wrong but that's just how it happened. if the UAW could redo every negotiation event they had with Detroit from 2000, i'll bet my last penny that pay/work time/benefits concessions would have looked very different if it meant having auto plants still running in the US. Chinese workers don't have a life outside of their jobs because they can't afford to... not because they don't want to. I'm sure they'd like to work in a safe and healthy environment if given a choice but there are far more people than jobs... so there is no choice.
if you make widgets for company X out in BFE, maybe your assembly line can work M-F and 9-5. if you make products for a retail Fortune 500 company where most have adopted Lean 6 Sigma, tight inventory control or some version of JIT, then the assembly line can never sleep. otherwise there would be no way to adjust for demand spikes on Saturdays and Sundays... the retail peaks of a week. this means that your line would probably incorporate 4-5 shifts to avoid going over 40 hours or 3 shifts if the company is willing to pay overtime. unless the majority of the fast moving consumer goods (FMCG) industry change their inventory management techniques... we are stuck with robots and 80 hr weeks.
so where does the little pay come in? low skilled repetitive work means a good majority of applicants can do it. it also means that college grads would probably not be the one handing over their resume for this billet. this is probably the biggest factor of justifying low pay right? otherwise how do you explain to all the newly minted engineering and computer science grads that the workers with GEDs over at Apple are making $80k and you're starting at $60k? the second biggest factor is that assembly workers by accounting rules have to be allocated as COGS and not regular OPEX. in laymen's terms it means COGS eat directly into the margin of a product while OPEX does not. in the FMCG industry you can only charge so much for a product before you just price yourself out of competition. for example, building a MacBook Air competitor at the same price point without a subsidy from Intel.
the two constraints are price and demand. with the number techies/blogs/posts in MR ranking products based on specs and how much they can build it for via parts off NewEgg... i doubt any tech company would dare to slap an extra $65 or more on every phone. in retail, the number of irate customers that get pissy when stores run out of item Z negate the chance of reducing work weeks to M-F, 9-5. another example, American Apparel claims they use all US labor in fair conditions... but then in the past 5 years they've always ran cash flow negative and needed recapitalization from last minute investors 3 separate times. Timbuk2 bags originally was all made in California until the price of their product could no longer justify a 100% made in USA label. now part of it has gone to China as well. New Balance, also once made in USA is now partly off shored.
it's not just profit, the US really isn't built for manufacturing anymore. not from an education, legal, corporate management and economic perspective. for any business school student, try the Bullwhip Effect exercise in a ops/supply chain class and see how much cash volatility you can create by impacting timing of inventory. also, Samsung, Toyota, Nissan etc build plants in the US because they receive huge tax and trade incentives. the would be stupid to NOT try and build a plant here. if the government offered the same tax incentive for US companies to repatriate their cash as a one time deal, banks would so flushed with cash that it'd be popping out of Geithner's ears. ok... exaggeration on the last part.
2. people in China don't choose to work in Foxconn/similar company because they like to... most simply have no choice. either they didn't make the cut on high school entrance exams or college entrance exams. since Chinese are so focused on school rankings and GPA (i can personally attest to this tidbit), if you didn't get into a top 15 college your job prospects are basically close to zero. if you didn't get recruited upon graduation, most Chinese companies don't even look at you one semester out... reason being, if nobody wanted you then why should we want you now?
so what would you do? pack your bags and go back home to live with your parents? eventually it seems most people would rather have a crappy job by US standards, a roof over their heads and food to eat because there's no such thing as food stamps/soup kitchens/government aided housing in China.
so no, to sum it up, manufacturing jobs went off shore because Congress made laws without truly understanding the long term economic impact it would have. it's not their fault either because who could've forecasted that China would become an global economic power 50-60 years ago? i'm not saying it's right or wrong but that's just how it happened. if the UAW could redo every negotiation event they had with Detroit from 2000, i'll bet my last penny that pay/work time/benefits concessions would have looked very different if it meant having auto plants still running in the US. Chinese workers don't have a life outside of their jobs because they can't afford to... not because they don't want to. I'm sure they'd like to work in a safe and healthy environment if given a choice but there are far more people than jobs... so there is no choice.