CDZ The cost of "Made in America"

[Indeependent]

What does this have to do with sending White Collar jobs to India and bringing in millions of Business Visas from India to replace anybody with an advanced degree?

Nothing because that is neither the thread topic nor the aim of free trade.

Read the OP. Read the content at the links contained in it. Watch the video. Look at the pictures. then maybe you'll understand what is being discussed.

Take the time to do so. A quality response, if you are inclined to respond, is far more useful than a rapid one.

I fully understand your position...you're POV is rather one dimensional and has already been quite deflated by those who postings preceded my own (because I DID take the time to read them).

As someone who only buys products that receive TOP reviews, I have only seen prices go UP on top rated items.

Blue:
Okay, if you say so, but I know immediately from your "red" comment along with your prior comments about a single pair of shoes (LOL...yet I'm the one dimensional one according to you...yeah, right...) that you haven't read the one post you need to have read, or understand very well before you read the OP, which is the OP and the content found at the links in it. Were you to have read the OP and it's related links, you'd have realized:

• The point you are making has to do with emotional marketing and pricing strategy and not economics.
• There's a unique "thing" going on in the sneaker segment of the shoe industry, which itself is also in a "boom" period as go prices.
• That exactly the things you are wont to denounce about manufacturers has begun to happen to Chinese factory workers.

But of course you don't realize those things because you neither read carefully the content found in and via the OP, nor did you do your own research into the sneaker industry (U.S. or elsewhere, elsewhere would help too for "elsewhere" is where most U.S. bought shoes are made and the trade in shoes has buyers and sellers/producers, both sides of "the story" need to be understood) to find out whether what's going on there is consistent with what I wrote and what the authors of the content that linked in my OP wrote.

Red:
One dimensional is what it is to talk about one specific shoe bought over the course of two years. One dimensional is looking only at the change in price of one model of shoe over two years.

Do you know why that's one dimensional? I'll tell you why. It's one dimensional because it compares precisely one attribute: the price. Moreover it draws conclusions about an entire market and industry based on that one attribute, which, moreover, you don't even endeavor to compare with anything else; thus you are evaluating and concluding about a monopolistically competitive seller's differentiated product as though it's a commodity.

Blessed is the man who, having nothing to say, abstains from giving us wordy evidence of the fact.
― George Eliot, Impressions of Theophrastus Such​

You are consistent...one dimensional.
Did you REALLY get stuck on the SNEAKER story when I made the general statement that I always buy the BEST reviewed products regardless of price?
Of course you did...because you're one dimensional.
Name the product and the cost of equivalent Model, both in features and reviews, has increased DESPITE corporate claims to the contrary.
Greed and lies...simple.

 

[Wilbur Right]

You seem to have missed an important aspect of your well thought out position on free trade.

If you are able and willing to buy a suit for 800 dollars, your income is at a level that you COULD have chosen to support the American producer and suffered no ill effects for paying slightly more.

While sending a strong signal that the upper wage earners support American producers of quality goods.

What would have been wrong with that?

Hey 320,
Really dude? You didn't understand my question? After the word salads you toss out? LMAO.

Ok. I'll dumb it down.

You make a substantial.amount of money. I give as evidence of this your clothes shopping experience. You were shopping for suits costing as much as 1000 dollars or more.

You chose the foreign made suit because it was cheaper.

The question was why upper income people are so cheap that you couldn't support the American made product by paying a few dollars more.

My example as a blue collar guy.
I needed a trailer hitch for a truck. Reese is a well known and respected maker of these products. Unfortunately Reese produces their products in China.
So I found an AMERICAN manufacture of hitches, paid about the same and helped employ Americans. And it was better made than a Reese hitch.

Again the question is, what is wrong with supporting American companies FIRST? Particularly when you are financially able.

 

[Wilbur Right]

It's one of the few meals I have in the PRC that I can directly compare with things I eat in the U.S. and that folks who've never eaten indigenous Chinese food can relate to. I know this because it's what I tend to opt for when I don't go out to a "proper" restaurant for dinner and choose instead go to the "take out" places in the neighborhood behind my hotel in the heart of Shenzhen.

Do you work for the Chinese trade ministry?

 

[320 Years of History]

It's one of the few meals I have in the PRC that I can directly compare with things I eat in the U.S. and that folks who've never eaten indigenous Chinese food can relate to. I know this because it's what I tend to opt for when I don't go out to a "proper" restaurant for dinner and choose instead go to the "take out" places in the neighborhood behind my hotel in the heart of Shenzhen.

Do you work for the Chinese trade ministry?

No.

 

[320 Years of History]

Hey 320,
Really dude? You didn't understand my question? After the word salads you toss out? LMAO.

I'm a very good reader, but a lousy mindreader. It did cross my mind that the "problems" with the two sentences about which I asked may have been the result of your having merely made some typos. That kind of mistake is actually what I figured was the case, but nonetheless I didn't understand what you meant; therefore I asked for clarification. That "word salad" remark as part of your response to my honest question was entirely unnecessary.

Look back at what I wrote. I don't understand the sentence fragment that appears as the sole element in your third paragraph. The sentence fragment you penned is, "While sending a strong signal that the upper wage earners support American producers of quality goods." I understood what came before the sentence fragment.

I also don't know what "that" you mean, and the reason I don't is because the relative pronoun "that" (as opposed to the conjunction, adverb or adjective "that") needs to be preceded or followed by the noun to which it refers and your question didn't include the requisite noun (noun equivalent), and seeing as the question is stands by itself in a single paragraph, I don't know which of the nouns in the preceding paragraphs you mean, or even whether you mean some noun not specifically mentioned in your post. The question you asked was, "What would have been wrong with that?", and my question was "what 'that'?" Were there another sentence in the same paragraph as the question I may have known "what that?" you meant.

Thankfully, you have revised your question and presented as follows:

[W]hat is wrong with supporting American companies FIRST? Particularly when you are financially able.

There is nothing wrong with one's doing that.

The reason I shared the anecdote about my recent suit shopping is to point out using a specific and personal observation that "made in America" can and in some cases does cost more than made elsewhere, all the while providing no apparent and commensurate "bump" in quality or performance. Also, the specific price points of the suits I noted is less the point than is that the American made one costs more. I think it'd be interesting to learn what observations others have regarding the price of American made and foreign made garments at stores they patronize.

I wonder if one can even find American made garments in stores that don't sell clothes that are minimally somewhat pricey? But for the fact that the clerk in the store I visited pointed it out, I wouldn't have known what suits they offered were in fact American made.


FWIW, I have enough knowledge about wristwatches that I could have made precisely the same analysis among about four American made watches (I know of six American watchmakers/watchmaking companies) and their foreign made (Swiss, Japanese and Chinese) counterparts, but I figured folks would find it easier to relate to a garment instead of a watch. Because I felt folks "relate" well enough to "rags," I also felt I could "get away with" not having to detail the specific traits and attributes of them that do in fact contribute to higher and lower production/materials costs. In contrast, because I think few folks give a tinker's dam about watches, I'd have had to write many paragraphs explaining them before I could even get to the economics in play.

You make a substantial.amount of money. I give as evidence of this your clothes shopping experience. You were shopping for suits costing as much as 1000 dollars or more.

Look back at my post. You'll find that what I said was that I was shown a variety of suits; moreover, I didn't indicate whether the four suits I noted were the only ones I was shown. I did not say or intimate that I was or was not seeking suits priced at $1000 or more. The only thing one can say for sure is that the store I went to offers suits priced between $400 and $2500, but nowhere did I indicate how much I was willing/aiming to spend, nor did I note what I did spend. (As a matter of fact, the first thing I did upon speaking with the sales clerk was ask whether their tailors could perform any needed alterations and hemming within at most four hours and the second thing I asked for was to be shown my choices in dark blue.)

There is one sentence in that entire post that expressly hints that I might make a "substantial" amount of money, but the information I provided about that particular shopping experience itself isn't it. (And, no, I'm not suggesting in any way that I don't earn a good living.)

You chose the foreign made suit because it was cheaper.

Look back at my post. You'll find I didn't indicate which of the suits I bought.

The question was why upper income people are so cheap that you couldn't support the American made product by paying a few dollars more.

I don't know that upper income people are or are not as cheap as your question presupposes, nor do I know whether penury, assuming a given upper income person or group thereof is indeed niggardly, has anything to do with whether they will or won't buy American made products that cost more than do their foreign made substitutes. I also do not know whether and to what extent the desire to buy specifically American made products factors into upper income people's buying decisions.

Though I can generalize about how and why wealthy people spend what they do on the things they do and why, I prefer not to do so in response to express questions about the matter because I'm not an expert on the consumer behavior (economic or otherwise) of wealthy people as a group distinct from non-wealthy folks. You may find the answer to your question here or here.

 

[320 Years of History]

It's one of the few meals I have in the PRC that I can directly compare with things I eat in the U.S. and that folks who've never eaten indigenous Chinese food can relate to. I know this because it's what I tend to opt for when I don't go out to a "proper" restaurant for dinner and choose instead go to the "take out" places in the neighborhood behind my hotel in the heart of Shenzhen.

Do you work for the Chinese trade ministry?

No.

 

[Wilbur Right]

I don't know that upper income people are or are not as cheap as your question presupposes, nor do I know whether penury, assuming a given upper income person or group thereof is indeed niggardly, has anything to do with whether they will or won't buy American made products that cost more than do their foreign made substitutes. I also do not know whether and to what extent the desire to buy specifically American made products factors into upper income people's buying decisions.

Why don't you know those things you mentioned not knowing about?

It sounds like your profession is promoting free trade between nations. The info on upper income buying/spending habits would be worthwhile information.

Lower income buyers purchase the cheapest item available. Where it is made is not a factor. While this is unfortunate, it is to be expected. They have no money either way.

However everyone has a purchase choice to make. When possible I choose to support my fellow American worker even if I spend a few dollars more. Fellow Americans jobs means more to me than saving a few dollars on something made in China.

Just the way I was raised.

 

[320 Years of History]

I don't know that upper income people are or are not as cheap as your question presupposes, nor do I know whether penury, assuming a given upper income person or group thereof is indeed niggardly, has anything to do with whether they will or won't buy American made products that cost more than do their foreign made substitutes. I also do not know whether and to what extent the desire to buy specifically American made products factors into upper income people's buying decisions.

Why don't you know those things you mentioned not knowing about?

It sounds like your profession is promoting free trade between nations. The info on upper income buying/spending habits would be worthwhile information.

Lower income buyers purchase the cheapest item available. Where it is made is not a factor. While this is unfortunate, it is to be expected. They have no money either way.

However everyone has a purchase choice to make. When possible I choose to support my fellow American worker even if I spend a few dollars more. Fellow Americans jobs means more to me than saving a few dollars on something made in China.

Just the way I was raised.

Red:
Go back and read the paragraph that follows the one you quoted in asking me that question and you'll find the answer to that question. You'll also find two links that may help you get the information you need re: wealthy consumers' buying behavior that I'm unable to provide off the top of my head.

Blue:
You obviously think so. That you do is merely another illustration of how what you've come to think regarding this thread's topic and me is mistaken.

Green:
Again, I understand that you think so. Go read the info to which I linked in my OP to see whether any of the nation's best informed economists agree with you.

Pink:
Why does that matter? Are you still under your parents'/guardian's influence as go what you think and how you respond to stimuli? Have you not reached the life stage whereupon you objectively evaluated whether the merit and accuracy of the "way you were raised" to think about economic topics?

 

[Wilbur Right]

Have you not reached the life stage whereupon you objectively evaluated whether the merit and accuracy of the "way you were raised" to think about economic topics?

Interesting question. And yep, it's even more important to me today that I spend my little bit of money on American made products if at all possible.

I grew up in a GM city. There is no longer a GM presence in the city and the city will never recover from the loss of those jobs.

So again, I look for the label that says made in the USA and support an American worker.

Nothing wrong with that as a way to think about economic topics. When it comes to the purchase of consumer goods, all I have is the power of MY purse. My purse wants to purchase goods made in the good ole USA.

So yes, I have thought about economics. I just like a simpler approach than all the analysis

 

[320 Years of History]

I have thought about economics. I just like a simpler approach than all the analysis

I too would prefer a simpler approach than rigorous analysis. Unfortunately, drawing conclusions after having made but cursory and simple investigations into economics, lo other topics as well, led me astray more often than it did not.

 

[Wilbur Right]

Unfortunately, drawing conclusions after having made but cursory and simple investigations into economics, lo other topics as well, led me astray more often than it did not.

I can understand that it would be complex to figure out how to integrate the entire world's economies. Even more complex to make those that are suffering declines in standards of living due to outsourcing of their jobs believe in the inherent benefit of this effort.

I think I like the KISS principle. Keep it simple. Buy a product produced in your own country when at all possible. Your friends and neighbors will appreciate your purchase of an American made good.

Simple.

 

[320 Years of History]

FWIW, I just saw a piece on CNN that discusses Donald Trump's (DT) shirts and other apparel, all of which are made outside the U.S. Among the facts noted were:

• DT dress shirts cost from ~$16 to ~$70 (I didn't check to see why the range is so wide), and are made in Bangladesh. They used to be made in Honduras.
• Honduran garment workers earned $1.30/hour.
• Bangladeshi garment workers earn $0.30/hour.
• New England Shirt Company (referenced in the CNN article/video) -- per the video, garment workers are paid between $10 and $12 per hour.

Additional information gathered from around the WWW:

• Labor, on average, accounts for 4.9% of cost of goods sold (COGS) for apparel made in the U.S. by sole proprietors. (For a simple explanation of what is included in COGS, see this.) Owner's compensation accounts for ~28% of the retail price of such a shirt.
  • Here another U.S. sole proprietorship shirt making company that makes dress shirts:
    • Gitman Brothers (If you've not worn them, their basic oxford cloth button down shirt is essentially the same as Ralph Lauren's Polo oxford button downs (~100 - ~$125), or a Brooks Brothers button down, in style, cut, thread counts, stitch counts, materials, and design. Of course, there's no pony on a Gitman shirt.)
  • Note: I realize that if one looks around the WWW, one can find varying stats for what the COGS elements cost, but the point I'm making noting them has little to nothing to do with the specific sum -- I just have to mention it/some to make the point -- but rather to show that the high cost of American labor that forces American apparel manufacturers like Gitman into the luxury segment of the apparel market in order to remain profitable.
• A shirt made in Bangladesh has a total COGS of ~$4.00 - $5.00 - and one made in the U.S. is ~$15.00 - $20.00. (These figures are clearly averages and could vary quite a bit depending on the maker, the material, etc. Nonetheless, they are informative in an "order of magnitude" context.)
• Typical retail markup on apparel runs at about 100% to 130%.
  
  (Retail markup is the sum added by a retailer to the manufacturer's selling price. It becomes the list price or MSRP that consumers see on price tags. These days, manufacturers sell their wares directly as well as through retailers. Makers sell at retail list prices/MSRP so as not to cannibalize retail sales. Retailers won't buy from makers who routinely sell the same product for substantially less than they profitably can, and makers who also sell their wares at retail won't sell to heavily promotional retailers. The specifics of pricing terms -- how often a retailer can place the goods on sale, the extent of discount the retailer can publicly announce, when "such and such" a discount can be offered, etc. -- are in the contracts between makers and their retail partners.)

Looking at the above facts, I ask you, do you really imagine the average American paying for an American made dress shirt such as those found at the links above? I don't. Sure, they may buy one such shirt that they consider their "nice shirt" and that they wear on "special" occasions but not weekly to work. Companies like Gitman and New England Shirts don't stay in business on the sales of "one nice shirt" customers, not unless there are a whole lot of those customers entering the store each year because that "one nice shirt" will last for decades if one isn't wearing it somewhat regularly. They need customers who buy multiple shirts a year, and at $150+, the average American isn't buy several shirts a year, if any.

• Can American Apparel Keep Making Clothes in the U.S.? - The New Yorker
  
• http://www.nytimes.com/2013/12/01/business/that-made-in-usa-premium.html

Lastly, I ask, "Do you think that if apparel manufacturing were to return to the U.S., would the workers who got those jobs now done in Bangladesh and Honduras and other low cost labor places will see wages high enough to keep the factory owners in business?

A $200K/year salary equates to ~$95/hour. Now I don't know about the folks you know who earn around that much, but the ones I know (mainly just the mid-level staff in the firm -- not the mid-level partners) live pricey lifestyles, and while they'll buy a BMW or MB, they aren't keen to buy a $150+ shirt when it doesn't look any different from that Ralph Lauren shirt I mentioned above, to say nothing of an even more modestly priced shirt such as maybe a Macy's brand shirt. The folks I know who won't blink at routinely spending that sort of money on a shirt they'll wear regularly make at least a third more than $200K/year. No surprise there; most folks won't spend large sums on mundane items, but rich folks will. Well, rich folks currently are who buy those things and it's not as though bringing those manufacturing jobs back is going to create notably more rich people, or even notably more folks who can and will glibly spend $150+ on several shirts per year.

Looking at basic economics, we know the following laws how true (italicized text is the same for each outcome):

• Demand is directly proportional to prices.
• Supply is indirectly proportional to prices.
• Competition increases result in price decreases.
• Wages are the price of labor.

So putting that all together, what is likely to happen?

• Outcome 1: The shirts
  • Apparel manufacturers return to the U.S.
  • That increases demand for garment workers.
  • Garment worker wages increase.
  • Garment prices on American made garments increase.
  • Demand for American made garments remains about the same because there aren't more rich folks created by bringing the factories back to the U.S.
  • Fewer low priced shirts made by companies that have the profits from their low priced shirts flow to the U.S. are available in the marketplace because the makers who used to make them abroad now make them in the U.S. using significantly higher cost labor, thus moving them into the luxury end of the market.
  • American shirt makers cannot compete in the low-price segment of the market.
  • The opening in the market gets filled by low price producers from abroad, and none of the profits flow to U.S. owned companies and none of the wages for making those garments goes to U.S. workers.
• Outcome 2: Wages
  • Apparel manufacturers return to the U.S.
    
  • The supply of available workers is high; anyone can do the work (no highly specialized skills needed).
  • The demand for garment workers is high, but because anyone can do the work, it's a buyer's (employers) market, not a sellers (laborers) market.
  • Competition for jobs allows apparel makers to pay lower wages than they already do.
  • Demand for American made garments remains about the same because there aren't more rich folks created by bringing the factories back to the U.S.
  • Fewer low priced shirts made by companies that have the profits from their low priced shirts flow to the U.S. are available in the marketplace because the makers who used to make them abroad now make them in the U.S. using significantly higher cost labor, thus moving them into the luxury end of the market.
  • American shirt makers cannot compete in the low-price segment of the market.
  • The opening in the market gets filled by low price producers from abroad, and none of the profits flow to U.S. owned companies, and none of the wages for making those garments goes to U.S. workers.
• Outcome 3: Garment companies
  • Demand for American made garments remains about the same because there aren't more rich folks created by bringing the factories back to the U.S.
  • Fewer low priced shirts made by companies that have the profits from their low priced shirts flow to the U.S. are available in the marketplace because the makers who used to make them abroad now make them in the U.S. using significantly higher cost labor, thus moving them into the luxury end of the market.
  • American shirt makers cannot compete in the low-price segment of the market.
  • The returning makers increases competition in the luxury segment of the garment industry.
  • The increased competition drives prices down.
  • The lower prices result in lower profitability.
  • In the quest for increased efficiency, garment makers replace laborers with machinery, which allows them to remain sufficiently profitable, but puts workers out of jobs, which is where the workers were to begin with. (This assumes the company has the capital to do so given that they were "driven" back to the U.S. by trade policy.)
  • The lower profitability drives all but the most efficient (lowest operating cost, highest margin) makers out of the garment industry. (Remember from above, gross margins are ~30% or lower to begin with. There's not much room for remaining in business with margins at that level and low volumes of sales.)
  • Companies go out of business and then the owners and their former workers are "screwed."

Now can one take a look at just one piece of those pictures and think it looks good? Yes, one can. But looking at the entirety of the picture, it's not so good at all. I wrote this post re: the garment industry. It's essentially the same in every industry whereby manufacturers have "offshored" lowly-skilled or unskilled workers.

 

[Wilbur Right]

But looking at the entirety of the picture, it's not so good at all.

Gotta agree with you on that observation. We have already seen and will continue to see a decline in the standard of living for millions of Americans. We have seen and will continue to see a split in society of the haves and the have lots that will continue to.grow.

We are not becoming a more highly skilled work force. We are not becoming a more innovative, industrious, motivated society.

We are what we are.

I have put three through college. A biologist, an accountant and an acturial science major. All do fine. My wife and I will leave them with assets and real estate. My kids will be the beneficiary of our hard work and a decent plan of action. I believe I have positioned my kids to be in the haves part of our society.

What more could an American parent want? Or do.

At least my kids will always be be able to find cheap grass cutting. Lawn care, America's growth industry.

 

[320 Years of History]

I can understand that it would be complex to figure out how to integrate the entire world's economies. Even more complex to make those that are suffering declines in standards of living due to outsourcing of their jobs believe in the inherent benefit of this effort.

Interestingly, I think any collegiate principles of macroeconomics class would do the trick. Even just auditing the class at a community college would be sufficient. That might actually be better for in general community college economics classes focus, more so than do four-year ones, on getting students to understand how to apply the principles than they do on making students strong at theory in preparation for majoring in economics and pursuing a career in it.

As a result, many four-year institutions approach teaching "principles" as a way to "weed out" low performers and folks who lack the commitment to really understand the subject matter. I can't say why they do that, but if I had to guess, I'd say it's because applying economics is quite interesting and fun, but understanding the theory really well is a pain in the ass. Better to dispense with the folks who only want to do the fun stuff sooner than later. If scarcity of collegiate resources were not a factor, perhaps they'd approach it the other way. But it's economics in a capitalist society and that's all about maximizing efficiency in the face of scarcity and choice.

(At many, perhaps all, four-year institutions, the application of the theory comes into play a bit later in the overall curriculum path, usually in intermediate macro and micro and in the policy-related versions of each.)