Wage (Photo credit: ElDave)
There’s a neat post on just why manufacturing has been leaving the U.S. to other countries in drove. Why is this? Is it cause of wages? High costs? Perhaps excessive regulation and cronyism has something to do with it.
My host, a NASA engineer turned Silicon Valley entrepreneur, has just conducted a fascinating tour of his new clean-energy bench-scale test facility. It’s one of the Valley’s hottest clean-technology startups. And he’s already thinking of going abroad.
“Wages?” I ask.
His dark eyebrows arch as if I were clueless, then he explains the reality of running a fab — an electronics fabrication factory. “Wages have nothing to do with it. The total wage burden in a fab is 10 percent. When I move a fab to Asia, I might lose 10 percent of my product just in theft.”
I’m startled. “So what is it?”
“Everything else. Taxes, infrastructure, workforce training, permits, health care. The last company that proposed a fab on Long Island went to Taiwan because they were told that in a drought their water supply would be in the queue after the golf courses.”
So begins my education on the hollowing-out of the American economy, which might be titled: “It’s not the wages, stupid.”
Read more: America’s Dirty War Against Manufacturing (Part 1): Carl Pope
We are rapidly reaching a point where the only people that will have the ability to understand all of the rules and regulations regarding starting a business. Are people with a masters degree with a high income that can figure out all the complexities of starting a business or have enough money to hire or pay for advice from lawyers and consultants concerning their business adventure. Their is an excellent website called the institute for justice the web address is ij.org They are a organization that helps small business owners deal with all of the impediments that the state federal and local governments put in place to make it difficult for anyone that wants to start a business. I like the video on their website why chuck can’t get his business of the ground.
Agreed! All of this crap can be borne by the big businesses, but imposes real costs on the smaller businesses to the point where some of then cannot enter the market, or they can no longer compete.
I work in pharma where we routinely site multimillion dollar investments in plants and equipment. Tax, landed cost are big issues too. It depends on the business. But in the US and EU, we are shedding fixed assets (people) quickly. Legacy costs, healthare and regulation don’t help.
I sometimes worry about technology outsourcing, but from what I’ve seen it’s still very difficult to outsource high-quality work.
Another good point: Would it have been possible at all for the western world to have built up the capital that gives us a relatively high standard of living under all of today’s onerous regulations? Hard to say! Maybe not!
What about the financial burden of worker’s unions? I imagine that might be an issue in a number of cases.
I agree that voluntary unions have the right to exist, but not at the neck of the taxpayer or the owner of a business. Public unions are a gun loaded to the head of the taxpayer. Private unions had their place in history, but today they are just another side of crony capitalism.