Originally Posted by The HACK
Story time...
For over 50 years, the company I used to work for prided themselves on "made in America" and have had all manufacturing, machining, packaging, and EVERYTHING done here. While it was a tall order, we've always felt that American engineering is what made the company great, and American build quality is what our customers should get.
Then in the late 199X and early 200X we started seeing a bunch of counterfeit and knock-off products on the market. Our competitors would take our designs, go to China, and have them manufacture our products for cheaper and bring them over here and sell them. And sell a lot of them. It's clearly hurting our bottom line. Company had to contract, people had to be laid off, and at one point a manufacturing process that has upwards of 200 people working shrunk down to ~50.
For a while, we stand by and assume that our products are of better quality and our customers will continue to buy from us because we're made in America and are of better quality, and continue to market so..."Don't buy Chinese knock-offs! They're CRAP! 300 miles down the road it'll EXPLODE and take you and your car with it!" We ended up spending the last bit of cash and leveraged the resources heavily to borrow and BOUGHT our competitor. Then we started to look closely at their knock-offs from China, you know, before we tell them to shove off and stop making our stuff.
And we were shocked that their quality is just as good, and sometimes, BETTER than our own. The material, the machining, and the quality is just amazing, especially considering the money paid to have this produced. The VP of Operations and the VP of Engineering looked at each other and said, "why the f**k are we making this stuff here?" By late 200X, 75% of our parts were made in China and assembled here in the U.S. And the reason why they're assembled here, is we're finding the Chinese plant would make our parts, assemble it, and then sell it to a third party. So we wised up and only have them make the parts, and make them at multiple plants, without any engineering drawing as to how they all get put together.
The big picture part though, was after a few years we looked at the ledger and again was shocked, that despite moving 75% of our manufacturing to China, we were actually spending MORE MONEY on the manufacturing process when it's all said and done, since all the parts had to be assembled here...And instead of being able to enjoy a higher margin due to the lowered manufacturing cost, we were forced to deal with the Chinese manufacturing plant because, if we don't have them made there, they'll just knock off our product and turn it around and sell it for 1/3rd the price here.
So what's the lesson to be learned here? I guess none. But what I will point out is, no matter what you buy now-a-days, they're ALL made in China. 1.5 billion in workforce means sh*t gets done and gets done CHEAP. At the end of the day, companies will be stupid not to source some of their manufacturing from the largest single workforce in the world. Heck, I'll bet if you dig deeper, you'll probably find that over 50% of the parts in your BWM probably came from China one way or another, since the majority of the suppliers BMW deal with, be it Bosch or ZF or any of the tier 1, tier 2 or tier 3 suppliers, ALL get their stuff manufactured there. Maybe they do the assembly in Germany or United States, and by the time it gets to the next step, in the supply chain, nobody will be the wiser.
That, and anyone here that thinks stuff made in China is inferior? Think again. Cheap sh*t made in China is inferior. Expensive stuff made in China? They're probably BETTER made than the most skilled labor can produce here in the U.S. or even in Europe. High-end skill labor in China is BETTER than high-end skilled labor you can find anywhere. The problem with the high-end stuff for import? You can't afford to make enough to drive the cost of logistics down. Especially say, for a product that cost $100 to make? You're not importing multiple container-full of it and tying up 8, or 9 figure in cash for the inventory to make the per-unit cost reasonable for import. Where it makes sense, is if you're importing $100,000 worth of springs and sprockets and stuff that comes in several huge containers, that you ultimately assemble here yourself into thousands of units.
Like I said. If any of you wants to dig deeper, you'd be SHOCKED at how much of your BMW comes from China. SHOCKED.
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