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If shipping costs were really 50% of a products price, the company would be crazy not to re-locate to Chicago and avoid those costs entirely. I think that's what Mark is saying, but what you're missing is that all else is NOT equal. For examle farm land in Montana is dirt cheap compared to Iowa, real estate taxes are also much lower, as are corporate income taxes., fuel taxes etc. Other costs, such as shipping are more expense, but I think you're way over-stating what part of total costs shipping actually represents. As others have said, labor costs and environmental laws are big factors, that's why so many plants that produce for the domestic market have moved to Mexico. I know of one comapny that trucks unfinished product from southern California to Mexico for painting, then back so they can avoid the CARB & EPA regs. <br /> <br />As for China, a lot of manufacturing is moving there in part because it has low costs, but a major factor often overlooked is the huge market for goods and services that exists there. Why for example would GM export mini-vans to China, when they can build them there and sell them for the equivalent of US$5000? It doesn't mattrer what rate UP gives GM for shipping from Detroit to L.A., there's no way GM can sell a US made minivan in China for $5000.
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