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[Dave Stevens]

Pascal Pincosy wrote on Fri, 08 December 2006 21:37

Meyer already has their cabinets built in the Asia. The drivers and such are still build and loaded here in the US.

My understanding is that is additional capacity, with the bulk still being fabbed in the Bay Area.  The difference in this case is that LOUD will be doing everything overseas and you can bet everyone has their eye on them.  It's either going to be a landmark shift in loudspeaker enclosure manufacturing, or an absolute PR cluster.  

Dave

[John Roberts {JR}]

Kent Clasen wrote on Fri, 08 December 2006 21:45

Why is it that companies like Honda, Mazda, and Yamaha speakers can mfg. things in the US, but US companies have to "out source mfging"?  Will the investment companies/pro audio mfg. also out source engineering, service, and marketing when it gets cheaper to do that to?

Global companies need to deliver products that their consumers want at prices they are willing to pay for them.

For global US companies that often means building product in China to be competitive for the PAC rim markets and even to be competitive in the Euro zone. Building in the US for world markets in price competitive product categories is a recipe for failure. Once you tool up in China you start doing the calculations for what you could sell those for landed in the US. Then you think about what it takes to tool a product up twice and split the run volume between two fabs. Significant if you're not running heavy tonnage.

Despite the regular rants here the percentage of customers willing to pay a price premium for the same product just because it is built here is too small to influence a domestic market that embraces the price and quality they can get from offshore manufacturing. I don't accept arguments that offshore fab is lower quality, I've been inside some pretty impressive OEM factories.

Don't blame the pencil pushers in accounting. It's Americans like us exercising simple self interest. Paying more money for the same product will lower our standard of living..

I'm not trying to avoid the issue. Despite the <5% unemployment here, more of those jobs are lower paying service sector jobs. One could argue that the typical worker was getting over paid before. We have historically and still do enjoy a disproportionate share of the world's wealth. Leveling the playing field can be a bitch for those on the losing end. Lets just say the gravy train stopped running.

If we look at pay as compensation for the value we create, there is no one to blame but ourselves. We may not be able to set the exchange rate but we can work harder and smarter.

JR  

[Tom Young]

I don't see prices coming down.

I do envision a freighter (loaded up with Baltic birch plywood) suddenly recalled to Baltic port (for the freight to be off-loaded onto train) or diverted to the Mediterranean and then on to Asia, via the Suez.

Or maybe we'll start seeing Bejing Birch plywood ?

[W. Mark Hellinger]

jack owen wrote on Fri, 08 December 2006 21:40

It's still hard to believe that you can build a 200lb. speaker cabinet in China, ship it here, and it's still cheaper than building it in Massachusetts!

Shipping from China to middle America via container shipping for the EAW FR129z (for example) I'm guessing could be somewhere around $4 to $5 ea., depending of-course on the efficency of the pack, and customs duty.  On the FR129z, that would represent about 1/2 of 1% of the market price.

jack owen wrote on Fri, 08 December 2006 21:40

A big part of the problem with manufacturing in this country, besides the obvious high cost of labor, is all of the legal and insurance crap businesses have to deal with. People in China don't sue for a million bucks after getting burned from a cup of coffee. We're too bogged down in this country with frivolous lawsuits, union blackmail, political correctness, lobby groups, and on and on and on. By the time you hire a lawyer and get insurance and permits, I bet you couldn't even open up a hot dog stand in this country. Jack

A couple years ago, I briefly entertained the thought of building a covered loading area (car port) in-front of my shop... so UPS and FedEx could have a nice, lighted place to get out of the weather while they do their thing here.  It looked to be a simple enough project... until I inquired about a building permit.  Good-grief, it was just Looney Tunes.  When it became evident that the cost (and time investment) of "compliance" was going to exceed the cost of the actual structure by a 3 or 4X factor... I decided to scuttle the idea.

It was funny... When I let it slip out that my proposed car port like freight handling structure would be an addition to a commercial facility... it's like the permit lady's eyes did that "kerching"... cash register dollar sign thing, and the whole office there perked right up.

eh...

[Scott Hibbard]

Mark

Again, I speak from direct experience of the last year when I address some of your comments.  Again not trying to offend you or anyone on the board, it's a great place.  

Yes maybe a good portion of the world would rather trade places with an American (economically speaking).  However, no one handed our economic conditions to us, we earned it and at times we lost it (Great Depression).  When jobs are moved offshore, we have less opportunity to continue earning it.  

Also if you think it's easy to find a job after yours has been offshored, think again.  I watched my colleagues leave and search 6 months to find a job after 30+ interviews.  Oh, and these people are highly, highly skilled IT engineers with 25+ years under their belts.  

Lastly, the American jobs in which I speak do not pay 100x (as you mentioned) more than the Indian jobs.  In fact, the difference in pay was less than 20% in many cases.  YES 20%.  I know...I've lived it for the last 365 days and wouldn't wish it on anyone.

Whether EAW prices go up or down, I could care less.  I'd be willing to spend more on an EAW speaker to keep the jobs of Americans here (within reason of course).  I won't pay the same for an offshored EAW speaker so the President of EAW can put more $$ in his pocket.

EAW was a leader, now they just one of many followers.  It's ok really, there are plenty of other high-end speaker manufacturers from which to purchase product. Unfortunately my upcoming spring purchase of 12 new cabs won't be EAW.

Happy Holidays to all,
ScottH

[Mike {AB} Butler]

Mark Schwartzkopf wrote on Sat, 09 December 2006 01:01

There are a lot of problematic issues with moving production to Asia, many of which have been addressed in this thread. However, Americans losing jobs just isn't one of them. It's really hard for me to feel sorry for any Americans because of their economic condition. The majority of the world's population would gladly trade places with the poorest American. If I lose my job to an Indian, it is easy enough for me to find another job that may not pay as much as the last, but still pays literally 100x more than the average Indian makes.

I disagree. You cannot equate economic status with skills. They are different. I have seen the Hi-tech industry steadily dismantled here in the states over the last 5 years, as companies get lured over by enticingly cheap starting salaries.. but inexperienced people.. that do take time to train and get up to speed. In the meantime, the guy they replaced does what he can to find contractor stints, temporary work, and such. You can say what you want about the American Standard of living, but it's the fact that the better qualified worker is not utilized.. because their skills were DISPLACED TO ANOTHER COUNTRY.
EAW may well be having a long, uphill fight (like the 2 companies I worked for that did this move; both China and India) in trying to overcome  cultural, experiential, and economical issues. Just ask the numerous companies that are trying to use India as a helpdesk.. and ask those customers that have had to call into that system! China is even a fair bit trickier to communicate with.. but their tech people are generally pretty good at assimilating the technical knowledge. So.. pick your struggle..
Anyway, say what you want to about the overinflated US worker.. but the skillset is NOT easily 100% replaceable.
Regards,

[Michael 'Bink' Knowles]

Quote:

...Shipping from China to middle America via container...would represent about 1/2 of 1% of the market price...

I read that the cost of shipping is artificially low right now (has been for a long time) and that there might soon be a market correction tied to fuel oil prices. I wonder how much correction and when... And if.

-Bink

[Mike {AB} Butler]

Tom Young wrote on Sat, 09 December 2006 07:36

Or maybe we'll start seeing Bejing Birch plywood ?

You're too late, Tom. That happened already.. quite a while back.    Why do you think the prices on BB have tumbled so much? The chinese made stuff isn't the quality the Russian or Finnish birch is, either. More voids, outside boo-boo's, etc.
Anyway, it's just amazing what is being fabbed over there now..  
Regards,

[Michael 'Bink' Knowles]

It's interesting in the interview that Ken Berger sidestepped the question of how he feels personally. I've seen a bunch of company VIPs deal with hard questions (lots of corporate Q&A sessions) and the best ones are fairly open about their personal feelings--they figure people can sense their unhappiness at an animal level. They acknowledge it and move on to the bit about how it's good for business.

Uncle Kenny has to be pretty unhappy about this.

-Bink

[Douglas Johnson]

The other question this move raises how a move like this might cause a domino effect in the industry.  If there is now a top company building high quality cabinets in China, the next move could be for the major raw frame speaker manufacturers to shift production of their higher quality drivers to China.  This in turn might help to encourage other cabinet manufacturers to shift production to China.

From a business stand point it does not make sense to a company to drop the price of a item they are now making overseas at a lower cost.  Their attitude will always be if the quality is the same, why should we charge less.  The whole point is for the company to make more money.  This is compounded by the fact that there are now more cheap (lesser quality) knockoffs of their products which; a. increases the value of the better quality of the original product to the consumer that cares, and b. they now (claim that they)need to make up for the market share they have lost to the knockoffs.

While I don't prescribe to the idea that the shift of manufacturing overseas is inherently evil and of lesser quality, I do see it causing a  major problem for the smaller end of the industry that I think gets overlooked.  The current oversea production model is based on large scheduled production runs and deliveries.  This has caused a state of perpetual backorder for many products in our industry.  This makes it difficult for a business that can not afford to stock  quantities of a product to compete, increases lead time, and decreases customer satisfaction.  This is especially true if the customer can walk in a see the item they are waiting for from the local retailer or installer on the shelf at the local big box retailer who is able to purchase and warehouse a large quantity of the product.
In the case of a professional type product such as a KF series product, this maybe less of a concern as larger purchases are usually produced to order, but it may result in a greatly increased lead time on product orders.

doug j.

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