Recently I went on an expedition to the new local Harbour Freight Tool store. Its a wonderful place full of Chinese sourced tools, along with a smattering of higher quality stuff.

This week's ad included a few notable items: a digital VOM (with DC amp range) for $3.99 (regularly $9.99) and a clampon ammeter for $9.99
(regularly $17.99). I bought one of each figuring I rarely need either one and I will not feel that awful if either gets stolen while I am on site somewhere. The ammeter came with a nice zippered case and includes a poorly defined 500VDC insulation test function.

In looking through the store, it occurred to me that it is very sad the US (and other "developed" countries) are seemingly unable to compete in the lower end of this, and most other manufacturing arenas. If you look
at just about any lower priced manufacturered product that is made in any quantity, you will almost inevitably find they are made outside the
US.

I asked myself why is this, and came up with some pretty sad answers like:

1. Americans by and large will not work at minimum or low wage jobs. They would rather stay on unemployment or welfare.
2. American companies are uninterested in competing in this down and dirty market.
3. Legal liability issues do not exist for these foreign companies, yet here we allow the legal profession to sue people or companies over
injuries that have not occurred, and probably won't, and things the company had almost nothing to do with (asbestos is the best, but by no
means only example). I have read that half the cost of ladders is to cover insurance costs that foreign competitors do not have to pay since
they are essentially safe from lawsuits.
4. We saddle our companys with increasingly strict regulations (environmental, safety, PC silliness, etc.), that foreign companies are
not required to abide by. many of these regulations had a purpose in years gone by, but I wonder how much of the increasing regulation is of any real benefit, and how much of it is just the tendency of things set in motion to remain in motion.
5. Our tax system discourages manufacturers in many ways, including the double taxation of dividends, special tax credits for favored companies or those who do certain favored activities, etc. Many a better choice would be to just eliminate corporate income taxes altogether (they are only a small part of federal tax receipts anyway). This would reduce
the tendency of companies to do things to reduce taxes rather than actually producing a product for sale.
6. We allow other countries to have high tariffs on imports from the US while having low tariffs on goods exported to the US. How about just eliminating all tariffs?

Its occurs to me that the price of commodity items (such as raw materials) is little different in these '"third world" countries, and the little bit of labor that it takes to build these devices probably is overshadowed by the transportation costs, it would appear to me that there is no real reason why a US manufacturer could not compete if they really wanted to and got some relief from the more onerous regulatory and legal issues that face them.

Is it possible that the real issues that face our economy are things we have done to ourselves? If so, just how to we go about fixing them without unacceptable backsliding on things that actually do matter (I for one like clean air and water). technology has helped us to reduce real problems in areas such as safety and the envrionment, maybe its time to focus on ways to use technology to bring back this manufacturing expertise to the US and be able to compete successfully, at least in our own market. Automation and other technology that the US (and other more advanced countries) invented can perhaps be applied to bring back our manufacturing base. Otherwise, we may not be able to build anything a few years down the road.

Bob Peterson

US Filter, Rockford Number 815-877-3046 X344

You should be able to reach this phone directly by dialing 815-921-8344, completely bypassing the switchboard. It will also still be possible to call through the existing phone number(s) and reach this phone at extension 344.

 

I have several thoughts:

1. Any place filled with (or even containing) tools made in China, or other socialist, tyrannical country, is not a wonderful place.

2. The only place we used impressed labor in this country is in prisons, it's not that big a part of our economy.

3. People in this country have the opportunity to work for a living wage, so why would a rational person choose to work under conditions as inexpensive for the employer as what prevails in China? This opportunity is the result of economic competition between employers, something which is much more limited in centrally controlled economies than here.

Steve Myres

Steve Myres, PE
Automation Solutions
(480) 813-1145

 

Hi Bob

I would agree with you on all points, but add top heavy companies to the reasons for inability to compete along with millionaire CEOs.

And I have one of those same ammeters. The megger function requires an attachment. I've seen the meter many places, but I'll bet no one has ever seen the attachment.

I have several of the DMMs, with transistor beta test no less. I throw one in each car and have a couple for bench setups. The amazing part was that I hooked several up in parallel with a lab standard and they were +- 1 lsd on voltage. In fact the only thing I have found to bitch
about is that the switches oxidize if not used. They are not rugged or deluxe or wide ranging, but I'd hate to have to match the bang per buck. In fact, if even the test leads break, its cheaper to buy a new one than replace them. A good 9V battery often costs more than the meter.
Something is definitely out of whack here. But I'd be a lot more sparsely equipped buying from Fluke or Simpson. I keep my Fluke to show to customers.

Regards

cww

 

There are lots of things manufatured in this world. Many similar products are offered at varying prices for different quality levels.

Only the things that meet a minimum standard should be allowed to float in the market. And the minimum standard varies with country. But Big price tag does not mean high quality or long life. Just buy what fits your pocket and upgrade when you can. And do not buy what you do not want now. It happens in every part of the world. I keep one set of china made tools just for borowing to friends and I never use them and won't be bothered if lost or broken.

Best regards,
Sekar

 

I agree with you Bob..................my dad used to call it the race for the bottom and what he meant was........in his day working for a very large steel company (taconite mining), his company used to try to employ the most people and be the largest company it could be...make more, hire more (has its drawbacks). But as he said, "We were always trying to be #1".

Now we want to be the smallest company......he was an Engineer and spent most of his early career "inventing" things......As the cutbacks came, his "final straw" was when they had downsized so far that he became a shift work Forman in a pellet plant after 35 years of days shift Engineering and Drafting work. He protested, then retired and then was brought back to do his old job as an Engineer (Bizarre). I am sure there is a Scott Adams story in there "Please don't throw me in the briar patch" or something.....

Now for the sad part, in his last 5 or so years as a "temp"/"consultant", his drafting dept had gone from 20 desks, 18 people to 1. Engineering/R&D had gone from 25 to 3, and my dad spent his last years working on nothing but government mandated EPA controls issues.

Now I am not saying that I do not agree and like clean water and air but in his case they went from one extreme to the other...from very few regulations to so many that all they did was that. No time for R&D, no time to improve and no time to actually get more competitive.........

I see it every day now in my own work, some of it very good but a lot of it just the wheels of beurocracy run mad.......

We are in a terrible pinch right now and I am not sure how we are going to get out............without manufacturing.....I think (opinion) we are done. And now with CEO scandals etc, we have lost our trust and are pulling in our reins, which just raises the cycle.

We have no long term outlook, it is just quarter to quarter and we are all a part of it.....Look at your 401K lately, move your money, sell any off, these all contribute to this quarter to quarter thinking and we are all part of it......we are all more aware of it as our retirements over the last 10-15 years all depend on our 401K plans etc............we demand this. Only in the old days we would "grind the stone" and produce more and better, now we look to cut for profit right away.......

I do not know what the answer is...........neither did the Romans, Mayans (SP), English empire, etc......etc and any other world power..

I just am worried for the kids, we need to get a hold of "government gone wild", we are so over regulated now, all in the name of good, that we cannot compete. So either we have to make the rest of the world "over-regulated" or use some common sense........

Unfortunately it is a world economy whether we like it or not and some will win and some will lose........just hope we can get our act together in time....for the kids sake. I will get by but am worried about my kids, but then again I think every generation has experienced that ....."The good old days" syndrome.

Could discuss for hours.............

Dave

DAVCO Automation

 

It wasn't all that long ago that people were saying the same thing about Japanese made items. The Japanese made a name for themselves initially copying European and American designed electronics, engines, cars. Then after initially being shunned in the global market for doing this, they then began to make their own improvements and eventually made better versions than their European and American cousins.

I look at China as the "new" Japan. They are making cheap electronics, clothes, etc by not doing as much design work themselves. Basically copying designs and then mass producing them. At the moment we consider Chinese made equipment as inferior but one day they will stop being a developing nation and become a developed nation. This has nothing to do with their system of government or economy, simply this is where they are in their nations history.

--
Chris Jennings Ph +61(0)351360417
Elect/Control Engineer Fax +61(0)351360540
Australian Paper Maryvale Mob +61(0)407320113

 

> I have several thoughts:
>
> 1. Any place filled with (or even containing) tools made in China, or
> other socialist, tyrannical country, is not a wonderful place.

China is not the most oppressive place in this world. There are far worse countries - North Korea and Iraq come to mind. And China is getting better, rather than worse as time progresses.

> 2. The only place we used impressed labor in this country is in prisons,
> it's not that big a part of our economy.

Impressed labor is not a huge thing in China either. There is a bit of it going on, but its more akin to the situation faced by US workers during the 30s when government make-work projects were all that was available for many people. Its not as if they are rounded up at gunpoint and forced to work.

> 3. People in this country have the opportunity to work for a living
> wage, so why would a rational person choose to work under conditions as
> inexpensive for the employer as what prevails in China? This
> opportunity is the result of economic competition between employers,
> something which is much more limited in centrally controlled economies
> than here.

Just what is a living wage? I have run across families of immigrants in the US who have a dozen familiy members working in a small business and all living together to save money on living expenses. They are willing to endure hardship for the short term to gain long term economic security, something many native born Americans are unwilling to do. I was told of a Chinese
familiy that had 8 members, all working in the family business (a Chinese restaurant of course). As I understood their financial condition, they barely kept the doors open for a few years before they actually became successful. The 8 family members all worked for NO pay for that time, taking just enough out of the business for their combined living expenses. I am sure they felt it was a living wage. they all survived quite nicely, and IIRC now have a dozen successfull locations.

If you were an average Chinese citizen, you'd probably ahve to accept whatever you could find as well. its not always about choice. I'd like to be able to choose to win the lottery, but its just not going to happen.

I agree there is far more opportunity to succeed in the US and other relatively free economies (Hong Kong comes to mind).

Bob Peterson

 

Your points are well taken.

As far as more oppressive regimes are concerned, I won't be buying tools made in Iraq or NK, either, even if they should become available.

I try to buy from a supplier who is as close to me as possible, economically. Thus, I would rather buy US made products than imports. I would rather buy a product made in my home town or home state, as well, playing the odds that I might see some of that money again.

Your illustration of the Chinese family who was willing to make such sacrifices was good but a little off point. Remember that when the sacrifice began to pay off, they were the owners of the company, and were the ones to profit. Someone who would make similar sacrifices as an employee (without a potential equity interest) would be much more difficult to find.

When I was just starting in business, my employees were better paid than I, even though they probably contributed less to the success of the enterprise. But--the pay they got at that time is all the compensation they will ever get (for that specific ammount of work).

 

I buy at a quality level I am comfortable with. For most hand tools I get decent tools but not top of the line. I find that the store brands at Walmart, KMart, Farm&Fleet, etc., are typically quite good and more than adequate for my needs. Snap-On is nice but costs three times as much, and I see no benefit in my case. If I used them all day every day, it would be a different story.

My latest acquistions came from a closing KMart. All 50% off - Coleman air compressor, KMart brand scroll saw, and KMart brand compound mitre saw. Since I don't use the kind of stuff much, they will probably outlast me, although I must admit that I now appreciate air tools a lot more than I did before I had any.

As for "Only the things that meet a minimum standard should be allowed to float in the market" theory, its basically already true. If a product is inferior in some way (usually some combination of price and quality), it will ultimately fail.

The line between inferior and acceptable keeps changing though. Usually, the trend has been towards higher quality and lower cost simultaneously. But in the current economic climate, a lot of companies are buying capital equipment that is closer to being a commercial grade rather than industrial grade. I suspect there may be a lot of money to be made replacing this stuff, or upgrading it down the road. I see a LOT of stuff with proprietary controls on it that people would never have accepted a few years ago. Its now accepted because its "cheaper" (at least up front) but when the stuff needs repair the cost benefit may evaporate when you have to buy spares from the OEM and it takes 2 weeks to get them, leading to down time. We had a client a few years ago who ripped out a bunch of proprietary HVAC control systems and replaced them with standard PLCs for that reason. It had just gotten too expensive to buy spare parts, and keep training people on the odd ball equipment so they just ripped them out as they failed and replaced them with PLCs that they already know and have spares for. Another client has a guy whose sole job it is to sell standard PLC based replacements for the proprietary controls they sold until about 5 years ago, that can no longer be repaired due to a lack of spares. He is doing a land office business.

BTW - I happen to be the proud owner of a 25+ year old electric drill. It still works and I occasionally use it, although I mostly use my cordless drill these days. I think I got my money's worth from a birthday present received when I was in high school.

Bob Peterson

 

This is the "Automation List", not the "Economics List". If anyone is really interested in this subject, I would suggest that they read a basic economics book on "comparative advantage" to see why "absolute advantage" is irrelevant in determining trade flows.

If you find economics a bit dull, then Frederic Bastiat wrote a series of articles in the 1840s which deal with this subject in a way which has probably never been equalled in terms of explaining it with everyday examples. You should be able to get a reasonable english translation of Bastiat's "Economic Falacies" in a good bookstore.

As for whether "Re: BUSN: Is the trade dying a slow death??", it should not be particularly surprising that after an investment bubble in the United States, that they should be experiencing a slump in the capital goods market. This isn't a new topic. You might look in the archives for "Re: INFO: Why is the Automation market declining?" (fall of 2000).

I'll repeat something I said back then (more than 2 years ago). A cyclical change is not the same thing as a long term decline. Capital equipment markets tend to be more cyclical than the general economy. If I look back in my old e-mails I see that I said:
"This may rather be a sign of a general economic decline rather than just a problem in industrial automation ..."

I notice that I also made a point in the same set of messages back then about some of the shady accounting practices being used to inflate share values, but that is another topic I suppose.

--

************************
Michael Griffin
London, Ont. Canada
************************

 

Steve Myres wrote:
> Your points are well taken.
>
> As far as more oppressive regimes are concerned, I won't be buying tools
> made in Iraq or NK, either, even if they should become available.
>

I doubt that we can make a significant difference in what happens in China one the basis of a one-man boycott. Freedom is its own reward, and as the Chinese people experience more freedom economically they will expect more political freedom as well, and its entirely likely the Chinese rulers will have to oblige, whether they really want to or not. A slow slide towards
more freedom is a whole lot better than the slow slide towards less freedom that has been in progress in western Europe over the past few decades, and to some extent in the US. Who would have ever believed the Soviet Union could have collapsed as quickly as it did, freeing hundreds of millions of people from the bondage of Communism. It only took the right kind of nudge,
expertly applied by a few leaders (such as Reagon and Thatcher) who knew that liberty was inherently better then slavery.

Iran seems on the verge of a similar revolution against their masters. If a stable and free country can be created out of the ashes of this theocracy, the whole region will benefit.

> I try to buy from a supplier who is as close to me as possible,
> economically. Thus, I would rather buy US made products than imports.
> I would rather buy a product made in my home town or home state, as
> well, playing the odds that I might see some of that money again.
>

How much extra are you willing to pay to buy from a nearby supplier? I tend to agree with the practice of buying local IF the costs are comparable. I would not go out of my way to save 10 cents on a chocolate bar, but I will go out of my way to save $2000 on a new car.

> Your illustration of the Chinese family who was willing to make such
> sacrifices was good but a little off point. Remember that when the
> sacrifice began to pay off, they were the owners of the company, and
> were the ones to profit. Someone who would make similar sacrifices as
> an employee (without a potential equity interest) would be much more
> difficult to find.
>
> When I was just starting in business, my employees were better paid than
> I, even though they probably contributed less to the success of the
> enterprise. But--the pay they got at that time is all the compensation
> they will ever get (for that specific ammount of work).

As it should be. My point may have been lost. Americans seem to have lost interest in having to really push to make a buck. People will not work for low wages. They talk about a "fair" or "living wage". My point was that its quite possible to "live" on comparatively low wages if your spending habits are restrained, and you are willing to accept future gains for current
sacrifice. We seem to be losing that, and its just about disappeared from Europe, due to the welfare system they have created. We seem headed in the same direction.

 

Hi Steve,

Seems like a good way to keep the poor poor.

Regards

Peter Whalley
Magenta Communications Pty Ltd
Melbourne, VIC, Australia
e-mail: peter*no-spam*@magentacomm.com.au
delete *no-spam* before sending

 

> I doubt that we can make a significant difference in what happens in China one the basis of a one-man boycott.

Probably not but, so what. 1) Right is right and wrong is wrong. It doesn't make a difference if it makes a difference. 2) You'll never have a million man boycott unless you have a thousand man boycott, and you'll never have a thousand man boycott unless you have a one man boycott.

>Freedom is its own reward, and as the Chinese people experience more freedom economically they will expect more political freedom as well, and its entirely likely the Chinese rulers will have to oblige, whether they really want to or not. A slow slide towards more freedom is a whole lot better than the slow slide towards less freedom that has been in progress in western Europe over the past few decades, and to some extent in the US. Who would have ever believed the Soviet Union could have collapsed as quickly as it did, freeing hundreds of millions of people from the bondage of Communism. It only took the right kind of nudge, expertly applied by a few leaders (such as Reagon and Thatcher) who knew that liberty was inherently better then slavery.

I agree strongly, I have already considered this issue from that perspective, and if anything were able to make me buy the kind of goods generally imported from there, this would be it.

> Iran seems on the verge of a similar revolution against their masters. If a stable and free country can be created out of the ashes of this theocracy, the whole region will benefit.

If this materializes that would be wonderful.

> How much extra are you willing to pay to buy from a nearby supplier? I tend to agree with the practice of buying local IF the costs are comparable. I would not go out of my way to save 10 cents on a chocolate bar, but I will go out of my way to save $2000 on a new car.

Depends upon the product, and how much local or US content is in the alternative. Figure 10% as a starting point, and adjust up or down depending on specific product type, phases of the moon, etc. Don't forget local supplier may come with better service, so higher costs may be justified without reference to the issues we're discussing.

> As it should be. My point may have been lost. Americans seem to have lost interest in having to really push to make a buck.

Agree 100%.

>People will not work for low wages. They talk about a "fair" or "living wage". My point was that its quite possible to "live" on comparatively low wages if your spending habits are restrained, and you are willing to accept future gains for current sacrifice. We seem to be losing that, and its just about disappeared from Europe, due to the welfare system they have created. We seem headed in the same direction.


Unfortunately, counting on "future gains" to materialize in an employment environment (absent initial equity interest or equity as profit sharing) too often amounts to holding a gun to one's own head. Frequently the same companies unwilling or unable to pay employees well are the same ones who don't value their contributions, and don't see it as a problem if the people walk.

With respect to Europe and America, I agree that its getting easier to survive while working little. That's bad. Unfortunately, it seems to be getting more difficult to survive BY working. That's worse. The incentive to innovate and/or work hard seems to be in the process of being eradicated.

 

I'm not hoping to improve the lot of the typical Chinese laborer by my actions. I also don't want to see food taken out of the mouths of American workers. As I mentioned earlier, I want to keep my money in my economy, and would appreciate it if others would do the same.

 

The world isn't that big a place. Your life(style) depends on that Chinese laborer whether you like it or not. Post 9/11 you should know that. By all means, buy American, I try to where I can, but don't pretend that the rest of the world doesn't exist or that we shouldn't try to help others where we can (even if its only for purely pragmatic reasons). Keep in mind happy people don't start many wars, and wars cost far more than little plastic baubles.

Eventually we will all be on a level playing field. Labor in China will cost the same as labor in the US. Its just a bit of a bumpy ride getting there.

regards,
Richard Higginbotham
(speaking for me)

 

Hi Steve,

Most companies are quite happy for foriegn nations to buy their good and services. It's not to often anyone asks us not to.

The thing is, trade creates wealth for all. Isolationism doesn't. If the reverse where the case then North Korea, South Africa, Cuba, Iraq et al would be the richest nations on the earth and we would reward nations by refusing to trade with them and punish them by forcing them to trade.

Whilst I have no objection to buying locally made goods if the price and the quality are comparable to imported, to buy locally made goods when imported products are available of the same quality but at a much lower price generally doesn't seem to make a lot of sense. It just makes you poorer than you would otherwise be.

Regards

Peter Whalley
Magenta Communications Pty Ltd
Melbourne, VIC, Australia
e-mail: peter*no-spam*@magentacomm.com.au
delete *no-spam* before sending

 

> Hi Steve,
>
> The thing is, trade creates wealth for all. Isolationism doesn't.

In general I agree, but I measure my wealth and that of my peers in part by the availability of manufacturing jobs. Who wants to live in a country where a hour's worth of work at minimum wage will buy a great deal of arguably inferior merchandise, but the only jobs available are for low pay in the service sector, or working for the government?

 

> The world isn't that big a place. Your life(style) depends on that
> Chinese laborer whether you like it or not. Post 9/11 you should know
> that. By all means, buy American, I try to where I can, but don't
> pretend that the rest of the world doesn't exist or that we shouldn't
> try to help others where we can (even if its only for purely pragmatic
> reasons). Keep in mind happy people don't start many wars, and wars
> cost far more than little plastic baubles.
>
> Eventually we will all be on a level playing field. Labor in China will
> cost the same as labor in the US. Its just a bit of a bumpy ride
> getting there.
>
> regards,
> Richard Higginbotham
> (speaking for me)

I am not all that sure that will ever happen. I suspect there will forever be pockets of poverty around the world. Mostly poverty has to do with lack of freedom. free societys tend to prosper, and unfree societys tend to lag. Socialism is its own punishment.

Bob Peterson

 

Hi Bob and Richard,
Your probably both righ to a degree. Eventually costs in China and India will rise to match that of other developed countries and they will lose their advantage just as has happened with Japan over the last 50 years.

Both China and India have such large populations that this could take a long long time though.

Eventually maybe the world will run out of poor people to make widgets for rich people to buy cheaply. Hopefully by then our automated factories will take over and make cheap widgets for all the worlds population to enjoy.

BTW. One of the things I do object to is countries that artifically hold their exchange rate low to give them an export advantage. I don't classify this as level playing field or fair trade and the effect is to maintain the low wage advantage well beyond what it should be.

Regards
Peter Whalley
Magenta Communications Pty Ltd
Melbourne, VIC, Australia
e-mail: peter*no-spam*@magentacomm.com.au
delete *no-spam* before sending

 

I have travelled to a lot of countries in my short life. I have seen abject poverty in all them - free and not-so-free. One of the other consistencies I have noted between free and not-so-free is the avarice of the ruling class and their wily attempts to make sure that they do not have to share it.

Ignorance is another problem I have noted - insular societies who have no idea about the rest of the world (or for that matter their neighbouring countries and largest trading partners). I am not sure anyone is truly better off now than their equivalents were in the early 1970s. I read somewhere that many people are just as badly off in 2001 as they would have been in 1901.

I have never seen freedom be a guarantee of wealth.

RA