That is what our customers are telling me on the phone. They are basing that on total costs of Customs duties for the stuff they have to Import to China to make their goods there shipping costs to and from China via both containers and sometimes air freight when the ship is delayed due to a mechanical breakdown in the middle of the Ocean or at another port. It happens more than you realize. The labor costs the taxes and unlike us or at least not as bad greasing the palms of the corrupt government officals. One customer we have that would love to bring all his production home when his contracts run out can't get anything out of China for less than 10k to a local party boss in an envolpe in 100's why becuase he can and has declared his product Banned under Chinese Law and seized the entire run before. What does this man make your going to laugh your butt off those pizza box inserts that keep boxes from crushing each other. You know those little plastic ones. Well the Offical in China has in the past declared them to be Religous in nature and seized Millions of them. Yeah he thinks they are crosses.
Shadow the Cats owner Even though the cost of doing business over there is within 2% of here
Even though the cost of doing business over there is within 2% of here
Thanks to Chris / CopCarSS for my avatar.
Even though the cost of doing business over there is within 2% of here the Regulatory costs of being here is over 40% higher alone. Over here if you fail to promote a what is considered a hampered person is how I will say it your company will face thousands of dollars in fines from Government agencies. Then throw in overzealous regulators like the EPA that will come in Fine you for something they Suspect your doing then when your proven Innocent of all charges they still refuse to acknowelge that you where innocent. Then throw in the higher taxes that they have to pay here compared to there China IIRC it is 20% my boss pays 35% on top of all the other taxes and fees an OTR company pays. Or as my boss says by the time he sees a dollar in profit after taxes Uncle Sam the State and County taken 60% of it first.
He wants to grow his business however with the current Regulatory climate and tax structure in this country he can not afford to do it. He would love to grow his fleet to over 300 trucks he has the customer base to do it however the rewards for going that size are not large enough for him to justify the close to 14 million dollars in capital outlay it would require to get the equipment needed. Then the task of finding 50 more drivers that can meet our requirements begins plus the extra 500 grand in health insurance 700 grand in Fleet coverage.
Shadow the Cats ownerWe basically are doing a backwards team track with our SIT mixing facility we have. We buy the plastic in bulk and then mix it to our customers needs then ship it to them and they pay us for both the materials and the handeling of the product. We ship it all over the eastern US like that. I started asking our customers that have some of their manufactoring out of the USA if they would bring it home if this plan is passed all of them have said YES they will. Why by the time they pay shipping from China after the hikes in rates the price difference between the USA and China is now going to be less than 2%. Why so low the price of raw materials and other issues are going up in Chinca labor is going up.
What manufacturers are finding out as they move plants to the 3rd world countries for their cheap labor is that the labor does not remain cheap forever. In a world of world wide communications those in the 3rd world see how others are compensated for their labors and undertake efforts to raise their own levels of compensation. You can only keep people dumb, ignorant and in the dark about the world for so long, especially when you put them in the world of modern manufacturing.
Remember textile mills moved from New England to Southern states for cheap labor, then southern labor raised their cost and the mills were move off shore, now off shore labor is rasing their cost. What's next Antartica?
Never too old to have a happy childhood!
EuclidThe lower cost of manufactuing in places like China will be rising naturally as their standard of living rises.
In the 60's, the low cost labor location was Japan., then it moved to Korea, then China and the rest of SE Asia. The last stop will be Africa. The Chinese have been investing heavily in Africa.
In the end, everybody has more and works less. Best analogy is mechanisation of agriculture a century or two ago. More food for much less farm labor.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Shadow the Cats ownerI started asking our customers that have some of their manufactoring out of the USA if they would bring it home if this plan is passed all of them have said YES they will. Why by the time they pay shipping from China after the hikes in rates the price difference between the USA and China is now going to be less than 2%. Why so low the price of raw materials and other issues are going up in Chinca labor is going up.
The lower cost of manufactuing in places like China will be rising naturally as their standard of living rises. From what your customers say, it sounds like the cost of manufacturing in China is now very close to the cost of manufacturing in the U.S.
If that is the case, why do we need a 35% import tariff to level the playing field? It sounds like it has leveled on its own by the natural economic process over time. So why would your customers require the tariff as a condition to them deciding to move manufacturing back to the U.S.?
We basically are doing a backwards team track with our SIT mixing facility we have. We buy the plastic in bulk and then mix it to our customers needs then ship it to them and they pay us for both the materials and the handeling of the product. We ship it all over the eastern US like that. I started asking our customers that have some of their manufactoring out of the USA if they would bring it home if this plan is passed all of them have said YES they will. Why by the time they pay shipping from China after the hikes in rates the price difference between the USA and China is now going to be less than 2%. Why so low the price of raw materials and other issues are going up in Chinca labor is going up.
tree68 rrnut282 railroads should see some benefit as carload margins are generally higher than containers. Will the Class 1's come to regret having sloughed off non-bulk track/industries?
rrnut282 railroads should see some benefit as carload margins are generally higher than containers.
Will the Class 1's come to regret having sloughed off non-bulk track/industries?
schlimmNonsense. In that category (4K) 50-59", Best Buy shows 45 sets. 31 are under $1000, 24 under $750, the cheapest $300. All are Asian.
A key question for this is - what are the wages? How many manhours does it take to build, package, and ship each TV, and what does that translate to at a burger flipper's $15 an hour?
Info from 2014 (Yahoo Finance) indicates the average manufacturing wage in China was about $3.50 an hour, half the current US minimum wage, a quarter the burger flipper's wage, and one fifth the average US manufacturing wage.
But that info isn't of much use for comparison unless we know how many manhours it takes to turn the item out.
Still, if we throw out a random number - say 25 manhours, that means it costs nearly $500 to do in the US what $87.50 will produce in China in that amount of time. And that cost will be passed directly on to the consumer.
In the process of digging up numbers for this, I found an article that indicates that the manufacturers are losing money making LCD TVs...
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
CJtrainguy oltmannd Anybody want to pay $1500 for a television or $250 for a pair of sneakers? (I bought a 19" TV in 1980. It was make in Indianapolis. It cost $500 which is $1500 in 2016 dollars.) Making the US more business friendly and investing in basic R&D are the formulae for long term success. Plenty of $1500 TVs around at Best Buy. 50-60" screen and 4K and made in China most likely. People are buying them. Now for the real question: What would that TV cost if made in the US? And I just really don't think it would be multiple times $1500.
oltmannd Anybody want to pay $1500 for a television or $250 for a pair of sneakers? (I bought a 19" TV in 1980. It was make in Indianapolis. It cost $500 which is $1500 in 2016 dollars.) Making the US more business friendly and investing in basic R&D are the formulae for long term success.
Anybody want to pay $1500 for a television or $250 for a pair of sneakers? (I bought a 19" TV in 1980. It was make in Indianapolis. It cost $500 which is $1500 in 2016 dollars.)
Making the US more business friendly and investing in basic R&D are the formulae for long term success.
Plenty of $1500 TVs around at Best Buy. 50-60" screen and 4K and made in China most likely. People are buying them. Now for the real question: What would that TV cost if made in the US? And I just really don't think it would be multiple times $1500.
Nonsense. In that category (4K) 50-59", Best Buy shows 45 sets. 31 are under $1000, 24 under $750, the cheapest $300. All are Asian.
C&NW, CA&E, MILW, CGW and IC fan
I think the right policy changes would make this economy explode with growth overnight without adding an import tariff, and without bringing back a single job lost to outsourcing. And that explosion of growth would sweep up all the 95-million unemployed people and put them back to work with new jobs. New factories will spring up like mushrooms. Human resource hiring managers will be camped in your front yard waiting to offer you a job.
All of this nonsense about bringing back jobs lost to outsourcing is a distraction beside the point. Not only is it beside the point, it will have the unintended effect of slowing down the economy. It is a BAD IDEA.
The hero in this story is Malcom McLean.
https://en.wikipedia.org/wiki/Malcom_McLean
Without containerization, transportation and handling costs and damage from break-bulk handling would swamp a good bit of the labor rate difference.
That, and a few other things, have hammered the world flat.
https://en.wikipedia.org/wiki/The_World_Is_Flat
oltmannd CSSHEGEWISCH Too many of these people seem to believe that there are all these idle factories and mills all over the country that will instantly re-open once the future inhabitant of the White House unilaterally imposes said protective tariff without any Congressional action. +1 Even with a tarriff, you're not going to have $2/hr jobs come back as $20/hr jobs. You'd need 10X the productivity for parity - that's a huge investment in automation. That doesn't happen overnight. Anybody want to pay $1500 for a television or $250 for a pair of sneakers? (I bought a 19" TV in 1980. It was make in Indianapoliw. It cost $500 which is $1500 in 2016 dollars.) Making the US more business friendly and investing in basic R&D are the formulae for long term success.
CSSHEGEWISCH Too many of these people seem to believe that there are all these idle factories and mills all over the country that will instantly re-open once the future inhabitant of the White House unilaterally imposes said protective tariff without any Congressional action.
Too many of these people seem to believe that there are all these idle factories and mills all over the country that will instantly re-open once the future inhabitant of the White House unilaterally imposes said protective tariff without any Congressional action.
+1
Even with a tarriff, you're not going to have $2/hr jobs come back as $20/hr jobs. You'd need 10X the productivity for parity - that's a huge investment in automation. That doesn't happen overnight.
Anybody want to pay $1500 for a television or $250 for a pair of sneakers? (I bought a 19" TV in 1980. It was make in Indianapoliw. It cost $500 which is $1500 in 2016 dollars.)
As usual, most political slogans and campaign promises are worth about 2 cents. The Barnum Effect lives on!!
schilm everyday I deal with the economics of helping my boss run 250 trucks all over the eastern 2/3rd's of this nation. I also have to deal with all the Regualtions that have been imposed upon this industry in the last 8 years and help our drivers deal with those DOT officers that think our trucks our rolling ATM's for their States. Tolling Authrities that think we are their only source of revenue that matters and try and hose us with 20-40% increases annually. Then I get to deal with both our lawyers and other party lawyers and we had one that thought his client cutting one of our trucks off causing the accident caught on our dash cams that led to his broken arm was worth 2 Million dollars to his client to avoid a lawsuit. We are taking that one to court ourselves and our first piece of evidence is going to be the dashcam showing his client dive bombing a loaded acid tanker in Rush hour traffic.
My husbands town was devastated by NAFTA they lost 3 factories to it alone 1 glass plant 1 finished clothing plant and near us one electronics componet maker. All went south of the border right after NAFTA was signed. But the ironic part for the glass company they kept their Mold making operation up here. Thats right all the molds for their NEW plant in Mexico come from here the best molds still come from the USA for glass. Yet to hear a lot of people on here you think there is Zero chance of any heavy industry ever returning to the USA. I can tell you this the Workers are here in the states we just have to get the Regulators off the freaking backs of industry so they can make it profitable for them to make things here again. You want to know how screwed up over regulation of businesses look no further than how the FDA regulates the size of fruit. The stuff that is undersized they can not sell it at all or even give it to a food bank they have to Destroy it. Millions of Lbs of fresh Produce each year are destroyed why because it is considered to small by the FDA to be consumed at all. Just think about that one. In a country where millions go hungry we destroy perfectly good food in the fields that the Government deems to small to use.
Just an observation. It's funny how many on here and in the general media who used to lament at the idea of companies moving jobs to other countries now seem to rail (no pun intended) at the prospect of those jobs staying here or possibly coming back.
Jeff
Perhaps take some econ courses at your community college?
It is simple math really. You think UP or BNSF is going to pay 35% more for the new EMD locomotive versus the GE models I think not. Freightliner is the largest OTR truck maker you think they are going to risk losing this market to having to raise their prices 35%. Right now my boss buys Volvos why they are made in the USA he would love to buy Freightliner however they are made in Mexico. Petes and KW's are to freaking expensive anymore they cost over 200K each with our specs in them compared to Volvo at 170K Freightliner is in there ar 150K however not made in the USA. Toys used to be made here in the USA it was not until the 70's and 80's they went overseas. Maytag used to make all their Products in the USA along with other appliances and made a profit. TV's were made in the USA in the past we used to build things here in the STATES not overseas. We can bring it home to the USA again. We do not need to buy Saudi oil anymore people with what we have found recently in TX and with what they have in the ND we have enough here in the USA to meet all our needs without any imports from the Middle East at all. Think about that we can produce enough oil that what OPEC wants to do no longer matters to us. All it is going to take is someone strong enough to make the changes needed to allow us to bring home the jobs instead of offshoring them. From the newsreports I have read I think we have a chance right now.
Euclid Shadow the Cats owner Let's just look at what would be coming home shall we. Heavy truck production Ferightliner builds most of theirs in Mexico. Locomotives from EMD would be coming home to Muncie from Mexico I can see several Car plants reopening for the Big 3 across the midwest also. Then throw in Clothing toys Steel Electronics and other consumer goods that are now almost all made overseas. Your talking Millions of Jobs for this nation with Higher wages. We would be the economic superpower that no one would ever want to screw with ever again. What make you believe that a 35% import tariff would result in all these industries and jobs coming home to the U.S. ?
Shadow the Cats owner Let's just look at what would be coming home shall we. Heavy truck production Ferightliner builds most of theirs in Mexico. Locomotives from EMD would be coming home to Muncie from Mexico I can see several Car plants reopening for the Big 3 across the midwest also. Then throw in Clothing toys Steel Electronics and other consumer goods that are now almost all made overseas. Your talking Millions of Jobs for this nation with Higher wages. We would be the economic superpower that no one would ever want to screw with ever again.
Let's just look at what would be coming home shall we. Heavy truck production Ferightliner builds most of theirs in Mexico. Locomotives from EMD would be coming home to Muncie from Mexico I can see several Car plants reopening for the Big 3 across the midwest also. Then throw in Clothing toys Steel Electronics and other consumer goods that are now almost all made overseas. Your talking Millions of Jobs for this nation with Higher wages. We would be the economic superpower that no one would ever want to screw with ever again.
What make you believe that a 35% import tariff would result in all these industries and jobs coming home to the U.S. ?
Illusions beyond argument.
Let's just look at what would be coming home shall we. Heavy truck production Ferightliner builds most of theirs in Mexico. Locomotives from EMD would be coming home to Muncie from Mexico I can see several Car plants reopening for the Big 3 across the midwest also. Then throw in Clothing toys Steel Electronics and other consumer goods that are now almost all made overseas. Your talking Millions of Jobs for this nation with Higher wages. We would be the economic superpower that no one would ever want to screw with ever again. Why our leaders would love all that Tax Revenue they would be getting from people and not want to lose it to shipping those jobs overseas again. Also the Unions would see they have a second chance and be willing to not chase off the good jobs. The Major Cites will be reborn and solve alot of the issues we have there. Why people working are happier than those that are not.
This nation is just chomping at the bit for someone to put us first and we finally found that person that wants to do it for the American people that means We the People of the USA win instead of the Rest of the World first. The Railroads will be busy hauling all the raw matrieals needed for production all over the USA plus all the Domestic Containers as the OTR industry is going to be overwhelmed. I will admit that IM freight if all his plans come to fruit the OTR side is going to overwhelmed at first until we can gear up to meet the demand. That means the IM companies will be hauling alot of frieght to keep themselves busy and you will see a spike in rates until capacity catches up with what needs to be hauled.
Probably, if they are honest with themselves. Consumer spending (household final consumption expenditure) is 68.4% of US GDP in 2014. (World Bank and OECD) U.S. manufacturing had gross output of $5.9 trillion in 2013, more than one-third (35.4 percent) of U.S. GDP in 2013. Manufacturing is by far the most important sector of the U.S. economy in terms of total output and employment. It employed 12.0 million workers in 2013, 8.8 percent of total U.S. employment. (Economic Policy Institute)
rrnut282railroads should see some benefit as carload margins are generally higher than containers.
An import tariff is not all doom and gloom for railroads. As I see it, railroads can make more money handling and delivering raw materials than they can finished products. As domestic manufacturing ramps up to replace sources of consumer goods that get priced out of the market, railroads should see some benefit as carload margins are generally higher than containers. Will it be enough to off-set the loss of coal, not even close. Will the gains in raw materials be enough to off-set the loss in intermodal? That is the question that needs answered.
Deggesty75 years ago, the automobile/light truck manufacturing plants were put to use manufacturing military equipment. Could the plants that we have now be retooled as quickly as those were if it became necessary?--could the robots be quickly reprogrammed for such work?
Where are the steel mills to supply raw materials, not to mention the supply channels required to provide raw materials to the steel mills. Heavy industry barely exists in the US anymore. In the pre WWII US there was excess production capacity available from the effects of the Depression, and that production capacity could be repurposed relatively easily.
Today's production capacity is cost controlled to insure there is no excess capacity, beyond that most capacity that does exist is for light duty type products.
If there were a WWII type War we would be sucking wind. If there is a War, it will be nothing like WWII.
75 years ago, the automobile/light truck manufacturing plants were put to use manufacturing military equipment. Could the plants that we have now be retooled as quickly as those were if it became necessary?--could the robots be quickly reprogrammed for such work?
Johnny
Deggesty Another matter: how many of the factories that were idled because of low cost imports are ready to be started up again? How much new construction would be necessary before our manufacturers would have product ready for the market?
Another matter: how many of the factories that were idled because of low cost imports are ready to be started up again? How much new construction would be necessary before our manufacturers would have product ready for the market?
I think that's a valid point Johnny. Much of our manufacturing base has disappeared. We'd be in somewhat of a bind if the worst should happen and require post haste manufacturing of critical defense equipment in a rush such as happened in World War II.
Norm
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