Manufacturing

Some years ago, I was visiting a friend who worked for Sunbeam, in their electric blanket division.  The discussion concerned the large percentage of manufactured goods that are now made in China, and he told me an anecdote about a fellow engineer who was having problems with his Chinese suppliers.  He looked around locally, where he found a small American company that could make the electrical components he needed quickly, with better quality control and specifications, and even cheaper than those from China, especially since they didn't need to be shipped across the Pacific Ocean.  His bosses, though, wouldn't let him pursue it, for whatever "big picture" reason they had.  My own thoughts are that we need to start bringing our production back to our own country, especially with such an uneven balance of trade.  Are the injection molding machines, and molds, and copyrights owned by Atlas, Walthers, and Horizon?  Or are they the property of the suppliers in China?  If they belong to the manufacturers, can they not bring them home and build their products here?  Kadee does.  Especially since the free-market labor costs in China are increasing, perhaps it would be cost effective to make the locomotives and cars in Des Moines, or Panama City, or Reno.

Paul

Capitalism at work, the guys

Capitalism at work, the guys who own Bachmann suck everyone into their production facility.

Then tell the competitors to find somewhere else to make their competitive product.

Ahh, capitalism, Darwinism at it's best. Survival of the fittest.

Where are they going to manufacture anything in the US?

The US manufacturing base was gutted in the '90's by "vulture" capitalism, all the "moneychangers in the Temple".

I was in the injection molding business in the '90's when it was leaving, that is all gone now.

Harold

Capitalism and our Hobby

Well,

Money may not buy happiness, but if you have enough money you can build your dream model railroad.

Regards,

John

PS> I don't believe Bachmann "sucked" everybody in. The factory was a subcontractor that went belly up and Bachmann purchased the facility. Anyway the predictions and issues from this earlier post seem to be moving right along.

https://forum.mrhmag.com/post/overseas-manufacturing-12189061

*****************************************************************************************************************************************

I've read the last page of the Bible. It's all going to turn out all right. Billy Graham

What the...

Scratch building

anyone? Looks like history repeats itself.

The place I used to work at also went to China to open dealerships for their machines. A majority of the factories are along the coast of China. So the product goes from factory to ship in a short distance. As the Tri-Com workers westernize with higher wages the factories have moved in land to get cheaper labor. With that came unskilled labor and a longer distance to transport the goods thus a problem with quality and cost of transportation.

I for see that perhaps as time goes by there will be more and more manufactures bringing the base back to the US. Good example is Railflyer that is starting to due more of his own manufacturing in house because of quality work done outside.

So practice your scratch building techniques and load up on raw stock and hope for a long winter to build those models that will no longer come in RTR form.

Bernd

Thanks, Tom Tomblin

Thanks, Tom Tomblin, for the industry overview!  I appreciate the information.  I'm a newby and am still trying to find what is up and what is down.

Some of the posts to this topic have "pushed a button" so I thought I'd butt in.  I'm not trying to be controversial, just want to show the other side of the issue. 

The free market is incredibly empowering!  We are all very much richer than we would otherwise be.  As consumers we can choose what to buy, from whom to buy, and when to buy, not to mention whether to buy.

Free markets give producers a similar set of options.  If you think you can make a profit by meeting the needs of consumers better than competitors can, then go for it!  "Profits" are a sign of achievement, not greed.

The free market system is why we have videos by Fugate, chargers/RC/trucks by Stanton, RC by Ring, RC by TVD, etc.  Hell, it’s why we have MRH!  (However, since my UG degree is from IU I feel obligated to add a qualification to my Stanton and Ring references:  “even though they went to Purdue.”  ]-: )

The free market is why we no longer have dial-up telephones.  (Remember those beauties?)

When we find that virtually everything we want to buy in this wonderful hobby is produced outside the U.S., it is not because those “evil capitalists" want to screw us or because they hate America.  It is a sign that the U.S. business environment has gone sour.

Do you get that?  "Outsourcing" is not a problem, it is a symptom.  Something makes the U.S. environment less attractive for business than say, China.  And it is clearly not just labor wages, U.S. labor productivity is second to none.

A combination of factors accounts for the negative current U.S. environment:  taxes, regulation, labor costs, and uncertainty about the future.  If Americans ever elect people who understand these issues, and actually address them, then there will be hope.

Maybe it would be instructional to have a forum for North Americans—producers, distributors, retailers—to discuss their business challenges and solutions.

Having “vented my spleen” I must confess that I am a bit of a Luddite, I catch a lot of grief for using a crank egg beater, manual hedge scissors, and hammers without batteries, hoses, or magazines.  I can honestly say that I’ll never own a riding lawn mower!

Thanks again, Tom Tomblin, for the info!

Tom Leonard

Ok, I gotta ask

Ok, I gotta ask, Tom, as I get from your well thought out post that you both seem to know what's going on, and that the current government is to blame....

As outsourcing began in the 1970's and has continued unabated ever since, when exactly was the environment good for American business?  Before child labor laws? Under Roosevelt?

The points you make seem reasonable enough, but I'd wager there's been a large incentive by most of the business to maximize short term profits.

  Scarpia, Thanks for

Scarpia,

Thanks for your 22 Stories Up posts, they’re very inspiring!  I was very impressed that you could just draw lines, lay rail without special jigs, and come close to workable turnouts, etc. on your first try!

I’m not sure how to address your questions.  First, I must confess to being a recently-retired, pointy-headed, SFB marketing professor—my major area is Consumer Behavior and my minor is Research Methods. 

Regarding a short-term profits perspective: 

The short answer is that Americans are very short-term oriented.  We usually evaluate managerial performance on an annual basis.  The Japanese, in contrast, tend to use a much longer time frame.  This is a problem with the traditional American business model.

Long answer:  This is an American cultural trait—really hard to change.  Thirty years ago  Hofstede, a sociologist (I think “Geert” was his first name—makes you want to name your first-born Geert, doesn’t it?), did a noted study of several different world cultures seeking to identify the key dimensions that differentiated them (used factor analysis, I think).  His five resulting dimensions were:  individualism vs. collectivism, power distance (social distance between the manager and subordinates), uncertainty avoidance, masculinity, and long-term orientation. 

Regarding the business environment:  It is easy to trace a steady degradation of “free markets” to the early 1900’s—starting especially under Roosevelt (Teddy) and Wilson.  Going back a bit farther, look at the U.S. railroad regulations passed in the 1890’s! 

To be sure we need some regulations to protect all the free market players.  In my humble opinion, though, we’ve gone far overboard. 

I lived in Rhode Island in the 90’s.  A neighbor once threatened to report me to “the authorities” because I put a 6-foot diameter fish pond in my back yard.  Apparently, an official permit was necessary because the state is a “wetlands.”

How many N.Y. City police officers should be allocated to monitoring the sizes of sugary soft drink containers rather than crime?

Time to get off the soapbox...  Talk with you later!

Tom

PS:  How about a fun topic?  I think I'll try to draft a "Questions we have for Ring" post.

Not going to mention..

....all the factors involved here because this is supposed to be a Model Railroad forum, so keeping focused on model railroad manufacturing, it still is being done (in small scales) here in the US, and there is still a strong manufacturing base in this country (my dad works for a company that machines large gears, and interestingly enough one of their customers is a large supplier of equipment to China) but there are certain factors that if they occured which might be possible starting next year, we could see the return of manufacturing here in the states.  PERHAPS if the manufacturers would start offering kits again instead of completed models, unless the additional cost is small.  If i'm in error on that, i apologize.  FWIW,

Ken L

...

Oh really?  We can say "we're number one' all day long,but that does not make us "number one."  Once, we WERE number one, and that is why we could say "we're number one."  Alas, over the decades, the lesson has turned from "here's how to do things right" [n turn, the reason why we became number one] into "We're Number One."  We're number X on too many lists that matter, such as literacy rate and literacy level, to name two off the bat.

At this point we have too many professional Non-workers in our economy to make any claims whatsoever about the productivity of the American worker.  I am reminded of a punk kid on a Hotrod show who spent half the show talking about how hard his cutting edge design job is to do; his boss saw right through his conceit for what it was, because it's nothing more than a matter of time and training to do what this kid was doing.

Most of the boxes around here are stamped "made in China" so I'd suggest the most productive workers in the world are Chinese.  Most of my food and my landscape care is done by people of South American/Central American descent.  We have 24-hour taco stands, but none of the American stores are open past 11 or 12.  So I'd suggest these people are the second most productive workers in the world.

BS.  It is a manufacturer issue, they made their bed and now they sleep in it; some companies will not be waking up.  We robbed peter to pay paul, all the while giving the bulk of the opportunity to those who are now in charge - companies like Kader took our capital and invested it in technology, training, better products, and buyin gout their competitors.

It is a National Issue.  We held the pot, and we were foolish with it, and now we hold an empty pot.

Buy a laser cutter and in short order you'll be on par with the majority of the North American producers remaining...

Ha.  In trying to provide protection against the large, the large have adapted, maneuvered, and now are larger than ever.  And when we told them WE controlled them, they discovered the shortsightedness of their company plan and went global.  If the US shrugged off Coca-cola, they'd laugh at us and marvel in how they're doing fine even without us.  In short, Companies have become "sovereign" in and unto themselves...and their stockholders, but the only stockholders who matter are the people who meet in the board room.  Globalism is GREAT for companies but it is Terrible for countries...

We went astray some where back in the sixties/seventies and then we made things worse by trick-thinking ourselves into bad economics.  Oops...

Not going to happen.  The US consumer has a whole closet full of kits.  Twenty years of RTR, it's not going back.

The Laser Cutter

Benny,

I'm just a guy with a little experience and a small amount of education, but I have noticed you sure are proud of that laser cutter. I guess it is the best thing since chicken soup.

The nay sayers are always there. They will give you a infinite number of reasons why this or that can't be done. I guess a lot of things are like starting a model railroad. The job will have obstacles and problems. To ignore that is foolish, but so is never starting.  It is a big job and it you don't get started it will never happen.

I would agree that we have a problem with labor, we tell our kids from Kindergarten on up that college is the only gate to Oz. Then the ones that go to college all want to be business majors. Don't get me wrong we need college graduates and business majors, but a few more technicians and engineers would be a good thing. Our technology is so much fun, nobody is learning how it works.

Regards,

John

*********************************************************************************************************************************************

I told him, 'Son, what is it with you. Is it ignorance or apathy?' He said, 'Coach, I don't know and I don't care. Frank Layden

Ecclesiastes quote

Scarp:

The Ecclesiastes quote posted as a contrast to "survival of the fittest" means the best don't always win. Sometimes it's just dumb luck. I think Solomon must of been having a bad day when he wrote that - but it's one of those things that's often truer than we Americans would like to admit. I've even heard biologists say "survival of the luckiest" is closer to how Darwinism it often works.

Yes business is tough. But if you recall, Model Railroader, Railroad Model Craftsman, and Walthers were all founded during the depression. John Allen inherited 1900 dollars during the depression and invested it and 10 years later was financially independent.

Conrad Hilton birthed his hotel empire just before the depression and just about lost it all during the depression. But he hung on and look where the Hilton is today - it's become "the name" equated with lodging excellence. Not that tough times were easy, but Hilton hung on and as a result prospered greatly.

Those who see tough times as an opportunity tend to be the ones who prosper the most in the next boom. If you can invest during a bust time, the next boom will often see you make it big. And there's always those who have "dumb luck" - they're just at the right place at the right time and their "fitness" for succeeding had nothing to do with it.

There is no such thing as

There is no such thing as luck or coincidence. There is some factor that causes the "luck".

"Fittest" doesn't mean the "strongest". It means the variation that best suits the circumstance.

The one that wins is the "best".

Harold

Bring it back home?

Very doubtful. Why? First the average American is use to a certain level of pay not to mention minimum wage. Second, we want stuff cheap. To cover the first part, Our U6 unemployment numbers are north of 20%, meanwhile we are still having a large influx of cheap immigrant labor which may/may not be illegal. Instead of settling on anything to try and support their family, some people expect the government to take care of them. You think if a plastics molder open a facility and paid $3/hour, anyone would want to work there?

Second point is a price calculation I had made within the past year or so. This assumes "current" prices and is close enough for approximation. Here is the post as made:

Assumptions & Domestic Manufacturing

Stogie,

I admire your cost analysis, what prompted you to do this?

You are looking at a limited run product. Even with a limited run, some of the parts are standard, trucks, wheels, couplers. Some of the parts could be used on other products, frames, doors, brake wheels. the higher volume on these parts could be used to lower the cost. 

A large portion of the market is not limited run. I would point to Bachmann as an example. This type of market could be well served by the innovations of mass manufacturing. Interchangeable parts, Reduced product engineering and improved production technics. If your parts don't change ever production run, then you can make a profit on parts sales.

We get back to the requirement of short term goals. If the goal is a long term steady profitable product line, then  many of your assumptions change. When your initial engineering and setup cost are covered then the costs go down.

There are niche markets for smaller manufacturers. The need for flex track is an opportunity for a small manufacturing company. Yes the initial setup and molding machines would be expensive, but then establish your product and just make track. Cork roadbed would be an even quicker niche market.

Domestic manufacturing can still use overseas parts, such as motors. These parts should be sourced from multiple venders. That way a problem from one  supplier would not stop production.

One of the questions on my list is> Did the Chinese A factory go belly up because their quality dropped and the rework and scrap production killed their bottom line?

Regards

John,

*********************************************************************************************************************************************

Action is a great restorer and builder of confidence. Inaction is not only the result, but the cause, of fear. Perhaps the action you take will be successful; perhaps different action or adjustments will have to follow. But any action is better than no action at all. Norman Vincent Peale

Better than chicken soup...

I'd liken to the day I discovered Campbell's Chunky.  One bite.

All in all, between my laser and the 3D printers coming down the pipe, I believe we'll just go right ahead and re-write the road our way.  From here we should expect better Cnc, cheaper mill/lathe kits, and wider access to downloadable files with all that clever engineering and research built right into it.

It will then come down to the designs, because everybody and their mother will be theoretically able to print/plot/pick out whatever they want from a digital design catalog.

Now you may think your design is worth thousands, but boy will you be brought down to earth when three hundred people run by you with a very similar design [because they worked from the same prototype as you did] and they couldn't care less how much they get back for their "investment."  AKA, competition will finally be brought to the previously closed loop research and development sector.  That alone will bring costs [aka wages] WAY down!

Until we learn our worth, We're not going to see it come back.  You must remember the first people in the busienss took it as "If I pay the bills, and the rent [breaking even], I'm doing ok.  They didn't plan on "retirement," because they never really stopped working.  Nor wanted to stop working, because as soon as they did, they'd die only soon after.  It's a different slice of the "work to live" mantra...

We have so much good old material in this country, if all the new manufacturers stopped, our hobby would be OK for at least a couple generations so long as we had our sources for motors, gears, and such.

Making Stuff

Benny,

When we can all make anything with nothing, then how are we going to make money to buy the raw material for our machines? I'm just not sure how many people can eat by just selling digital designs.

Regards,

John

*********************************************************************************************************************************************

I've learned that whatever hits the fan will not be evenly distributed. UnKnown

Services...

You'll make your living working for somebody else who has a large stack, doing whatever they want you to do - as it is now.

And Benny just summed up what

And Benny just summed up what happened to the American economy. The more people you put out the cheaper it is! Everyone loves the idea until they're the ones put out. Services alone will not drive our economy.

Voluntary National Content Labels?

Wow, Stogie, I'm blown away by your estimates!  Thanks for the insight!

So...  Here's a question:  How much "extra" would one be willing to pay for a domestically-built boxcar?  $5?  $10? I realize that I'm being a provincial pig here, I'm just trying to explore possibilities.

Should there be some "certification agency" that investigates and certifies claims about "nationality-content?"  If there is perceived value to buyers for goods produced in their country/continent, then there will be funds available for certification activities.

Just a thought.

Tom

PS:  Incidentally, I get an average cost per unit slightly under $25, using your numbers, Stogie.  I've probably screwed up something.

Resin Kit Producers Are a Great Example of Products Produced In

The US, for those concerned about local content.  Take a look at the resin kit producers, they have extremely well detailed kits that make into beautiful models.  Most of these companies are run from their homes, many of the castings are created by folks with very small production facilities that can product runs of 25 using a single mold before a new mold must be made to run the second batch.  Most of the price I am seeing for Turn of the Century product run in the $20 to $30 range.  In my case I am looking for specific cars of selected railroads that have been documented to have run over my home road in 1895.

The biggest surprise to those of us modeling this era was that the majority of cars in use at this time were products of three major car builders across the nation.  (It counts as three only if one considers all of the Pre-AC&F companies as a single organization since they all used common designs for their products. 

It turns out that many of the resin kit producers for the TOC end up with users of a single car being from the Mid Atlantic, New England, Midwest, Rocky Mountains, West Coast and Southwest.  Happily the needed decals (many decal producers are also home industries) are also available for the many users.

Looking back...

I don't remember how all of the costs broke down, but I did notice that there was nothing allocated for waste from startup/purge or mistakes. I also did not factor in "standard" parts which would likely be restricted to trucks, couplers and maybe some brake linkage and air lines. I believe the difference in cost between what Tom came up with and what I have listed may be for padding that would have included standard parts or a profit margin.

I am also involved in two industries per se. My primary job has be designing large industrial components. My secondary job allows me to have some more freedom in what I may want to design. The secondary job is model kit design, and I have produced designs for both KenRay Models and St Charles Model Works. Being an industry insider, I also talk to a number of owners or officers from larger companies that do production overseas. The original discussion that started the analysis was asking why companies do not do more limited production runs and developed into making the models in the USA.

If everyone is interested, I can take a second look and flush out the analysis for a better estimate tonight. I know there are a number of other listings under overhead that were not covered.

Moment in humility...

You are only worth what the market will bear...

Thanks!

Stogie,

Thanks for the clarification. With you experience and insight, I trust what you are telling us. We do live in a world market, and we will adjust or be left behind. I remember when the cheapest products were made in Japan, Then the best products were made in Japan. A joke in the 70's was that Sony was an acronym for Soon Own New York.

We will learn to be a viable part of this changed world or we will be owned by it. I believe that changes are taking place that could allow us to stay in the race and maybe even improve the US economic situation.

I cannot justify a fleet of $35.00 freight cars. I guess the old cars will get new wheels and couplers.

Regards,

John 

**********************************************************************************************************************************************

Son, we'd like to keep you around this season but we're going to try and win a pennant.  Casey Stengel