Question for you to ponder.Lets say company I pays their employees to mold all the parts for their cars RTR and kits.They then pay other employees to sort and pack these cars (with trucks and couplers) in boxes for shipping.Then they pay more employees to load these onto pallets and shrink wrap the pallets.Then they pay more employees to load these pallets of cars into a container.They then pay a trucking company to haul the container to a Intermodal yard,a railroad to haul said container to a port.They then pay a shipping company to ship the container to a certain Asian country where they pay workers to assemble these cars.They then pay a trucking company to return the container to port,a shipping company to ship the container back to the USA.Once again pay the railroad to bring the container back to the intermodal yard where it is transported by truck back to their company where they pay employees to unload the container and move product into their warehouse where once again they pay more employees to ship this product to their distributors.

The real question is "Why is this cheaper than paying an American a living wage to assemble ,package ,and ship this product ?"

This question brought to you by the curiosity of one old Catt.

Say... that's a good question!

Because the workers are making a fraction of the wages that American workers are, the factories that they work in have no safety or pollution controls, and 1 40 hour work week is very often not used.

Maybe it helps to explain why you are going to be charged $96.95 for an autorack - the days of the $100.00 car are coming closer rapidly!

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Let's think about this a bit. When you have things assembled off-shore, you are subjected to the laws of the land. Most lands have no laws that protect the workers, therefore you don't have to pay decent wages, give them sick and vacation pay, no FICA to pay nor any medical benefits. The bottom line is just that, the bottom line (profit) and they wouldn't do this if it were cheaper to keep the product assembly at home. We were discussing that the other day regarding customer service. Why are all the companies putting all of their answering lines overseas? All it does is tend to aggravate the customer since it's usually difficult to understand the other person since English is not their primary language. It's logical to think that if they kept these production and service jobs here, there would be more people employed that would be able to buy things. They may not all buy model trains, but the would spend their money in places that would hire more people and some of them would then buy more trains. It's a win-win. More people have jobs and more product is sold. Each unit sold may have a smaller profit margin but you make it up by selling more this way.

Another part of this to wonder about is, why are some foreign brand automobiles made in the USA, and a lot of our brands like Ford, GM and Chrysler are assembled out of the country?

More often than not, most, if not all of the parts are being manufactured and assembled in that certain Asian country. As noted, labour is cheap, environmental and worker safety standards mostly non-existent, and most consumers don't seem to be deterred by the prices. The true cost, though, as you note, is in higher unemployment rates in North America plus that fact that much of the pollution created during manufacturing doesn't stay where it was created, while much of the money does stay.
Despite what our governments tell us, free trade comes at a high cost - it's gutted manufacturing here in Canada. In my lifetime, we've gone from a country pretty-well self-sufficient (except for bananas and citrus fruit ) to one dependent on other countries for most of our consumer goods and much of our food. With "global warming", we'll soon be able to grow those bananas and perhaps by then we'll be that "certain North America country" with the low wages and non-existent standards.
As for automobiles, I believe foreign brands are allowed a greater market presence if they have manufacturing facilities here, although free trade agreements may nullify that requirement. Much of the auto industry survives here in Canada due to government grants to "create" employment.

Wayne

doctorwayne Wrote:More often than not, most, if not all of the parts are being manufactured and assembled in that certain Asian country. As noted, labour is cheap, environmental and worker safety standards mostly non-existent, and most consumers don't seem to be deterred by the prices. The true cost, though, as you note, is in higher unemployment rates in North America plus that fact that much of the pollution created during manufacturing doesn't stay where it was created, while much of the money does stay.
Despite what our governments tell us, free trade comes at a high cost - it's gutted manufacturing here in Canada. In my lifetime, we've gone from a country pretty-well self-sufficient (except for bananas and citrus fruit ) to one dependent on other countries for most of our consumer goods and much of our food. With "global warming", we'll soon be able to grow those bananas and perhaps by then we'll be that "certain North America country" with the low wages and non-existent standards.
As for automobiles, I believe foreign brands are allowed a greater market presence if they have manufacturing facilities here, although free trade agreements may nullify that requirement. Much of the auto industry survives here in Canada due to government grants to "create" employment.

Wayne

What's even more frustrating is that those people responsible for doing all this are rewarded with obnoxiously high salaries, bonuses and perks. For every dollar they save the company, they may get to take home two dollars for themselves. Then when the company goes broke, the feds step in with loans so they can keep their booty without risking anything, or doing more work or even creating more jobs.

The Walmarting of America is also killing off manufacturing in America because they wish to sell products at a certain price. In order to sell these products, companies have to go overseas to meet the lower production costs.

By creating these unemployment scenarios, tax revenue goes down and government expenditures go up.

In the end, somehow this convoluted process leads to cheaper products and ultimately more money for the higher ups/investors in the company. In some cases, there may be an issue with north American countries no longer having manufacturing capability for certain products, but I think in the end the biggest issue is cheaper products = more money for corporate investors.

I've been thinking lately (almost just as a mental exercise) what it would take for me to start a small company making small volumes of some kind of hobby product, such as unique detail parts. Example: Those old MDC steam engine kits were pretty simple. It would be relatively easy to set myself up to cast specialized boilers or detail parts for existing chassis, or even a very basic kit for a relatively simple locomotive like a 4-4-0. I could sell a small volume of them to individuals who like to add details and paint their own kits. When I look into the costs of materials and tools, and weigh in my time, I'd hardly be making any money, so I'd basically be doing this as a service to the hobby community. The reality here is, the only way to compete with overseas manufacturing is to either sell a product at a low volume such that it is not worth it to manufacture overseas, or have a product line that is mostly automated (such as a laser wood kit).

The whole point behind my question was that the I company posted a picture of a open container filled with boxes of parts that were molded in their very own US factory.Now take that fact and convince me that they really saved money.By the way equating Asian wages to US wages does not really compute since their monentary system is quite different from ours.

Catt Wrote:The whole point behind my question was that the I company posted a picture of a open container filled with boxes of parts that were molded in their very own US factory.Now take that fact and convince me that they really saved money.By the way equating Asian wages to US wages does not really compute since their monentary system is quite different from ours.

True, but it's the exchange rate that counts, at the current exchange rate, they may be working for $1.00 an hour, which can save the US manufacturer a few dollars on an item. Subtract from that the packaging and shipping costs, and there still has to be a positive difference. I can see why you're skeptical since I have to wonder as well. I'm not trying to convince anyone that it's the way to go, I'm totally in favor of keeping manufacturing jobs here regardless of any extra costs. I think manufacturers would be ahead if the game in the long run, it's just that they look at short term gains rather than the big picture.

That's what we're saying, there has to be a monetary incentive for them to do it this way, even if we can't understand or see it.

Catt Wrote:Question for you to ponder.Lets say company I pays their employees to mold all the parts for their cars RTR and kits.They then pay other employees to sort and pack these cars (with trucks and couplers) in boxes for shipping.Then they pay more employees to load these onto pallets and shrink wrap the pallets.Then they pay more employees to load these pallets of cars into a container.They then pay a trucking company to haul the container to a Intermodal yard,a railroad to haul said container to a port.They then pay a shipping company to ship the container to a certain Asian country where they pay workers to assemble these cars.They then pay a trucking company to return the container to port,a shipping company to ship the container back to the USA.Once again pay the railroad to bring the container back to the intermodal yard where it is transported by truck back to their company where they pay employees to unload the container and move product into their warehouse where once again they pay more employees to ship this product to their distributors.

The real question is "Why is this cheaper than paying an American a living wage to assemble ,package ,and ship this product ?"

This question brought to you by the curiosity of one old Catt.

A heck of a good question. Personally, I don't see how it could be. Shoot - I'd assemble them in my garage for a minimum wage just to be part of the hobby, and I suspect there are others who feel te same. 8-)

You would probably be fired for thinking so logically , Catt .

Here's how big business works ...real example !

Here in Canada , Target is closing ALL of it's stores by May . In about 2 years Target has reportedly LOST a mere couple of billion . Each of the 17, 600 regular employees will get a buyout of a modest amount BUT , the genius head honcho of Target Canada is reportedly getting the total amount that all those same 17 ,600 employees are getting .!!!

Not much point in trying to turn a profit if you will be richly rewarded for failure .

"Another part of this to wonder about is, why are some foreign brand automobiles made in the USA, and a lot of our brands like Ford, GM and Chrysler are assembled out of the country?"

Only Ford and GM are American, Chrysler is now a product of Italy. Besides all the other reasons mentioned (like wages, no EPA or OSHA, ect.) there is the tax structure. Over there they don't pay capital gains or inventory taxes and darn little income tax. America is now the most heavily taxed and regulated "free" country in the world. The question isn't why do companies go overseas but why any company would even consider doing any manufacturing here.

I have a follow up Question. How does Kadee make cars as highly detailed as Athearn Genesis, Intermountain, Walthers Gold Line, etc; but all of the pasrts, as well as the assembly of their rolling stock is 100% made and assembled in the U.S. Now the kicker is that their prices in my local hobby shop are very much competitive with the other manufacturers mentioned!