John asks Jeroen:
>Here's a quesiton for you - why don't *all* companies (or at least all
>manufacturing companies) move to developing countries?
I'll take a stab at it however,
I believe one of the reasons is the high cost to acquire, maintain,
and repair production tooling. A robust infrastructure dedicated to
manufacturing is required before you can start moving tooling to
developing countries. I have quoted many machines (or production
lines) that were to go to "developing" countries. Most of the
companies ended up using existing capacity in the home market (USA).
It was less costly in the long run to use expensive labor and
expensive equipment than cheap labor and expensive tooling. Just
imagine that you are in China and your American built Wonder-Matic
breaks its mainspring. How long is the machine down? How do you get
parts? Who is going to install this mainspring once it arrives?
Without a production driven infrastructure in place, you will not
make product for long.
Making shoes, sweaters, and lacy undies are good industries for
"undeveloped" countries. With those kind of industries, a country
can start to build roads, schools, and all the other things we in big
leagues take for granted. It won't happen on a time schedule that
anybody is happy with, but it is a process that needs to take place.
One of the byproducts of having a developed infrastructure is that a
country acquires a sort of "intellectual inertia" that sustains
further growth. I.E. Due to the auto industry and their tooling
requirements; Michigan has some of the best tool and die shops on the
planet. It also keeps us in the engineered-to-order machinery
business running. Just a theory...
Expensive and built to stay that way,
Matthew Bos
