So, I read this story in Wired Magazine about the manufacturing troubles in China. The take-away message should have been obvious if one (like me) had put a little thought into it.
Major companies get the goodies, the production, the support, and the priority. Little companies get the remains. Consider Apple. The rumor is that Foxconn had crews working over 5 hours of overtime per day for up to 13 days straight to meet demand for the iPad release. Foxconn is the same company that has had multiple suicides.
So what’s a small/medium company to do?
Well, the small company in the Wired article, found someone a little closer to home. In fact, their new manufacturing partner is 15 minutes from their Florida headquarters.
The reasoning is simple. Chinese labor costs are increasing. The Chinese currency is inflating (meaning that a dollar here won’t buy as much in China/Taiwan). Fuel prices are increasing and recent evidence suggests that it won’t stop any time soon, so just getting the product across the Pacific isn’t as cheap as it was. Finally, the quality just isn’t there.
The company mentioned in the Wired article had multiple shipments of poor and unsellable quality product.
The giants, like Apple, Samsung, etc don’t have any problems with much of this. They are effectively tied to the manufacturing company. Some of the companies may collapse without their primary clients.
But small, nimble companies can benefit from working with US manufacturers. They timeline between product design and full-scale production is up to 1/3 the length. Redesigns are quickly integrated into the system. And more and more US manufacturers are working with their clients to design products that are easy for cheap robots to build, instead of several dozen humans of indeterminate skill and attitude.
Let’s look at a few things that are coming home:
My personal favorite: A Chinese company that’s built a manufacturing plant in Arizona.
Of course, everyone’s talking about Intel’s new facility.
Finally: Some additional information on US manufacturing and ‘on-shoring’ of manufacturing.
A lot of the issues can be helped with better education programs in the US. We don’t need people to build devices. We need people to build the devices that build devices.