Manufacturing is a ladder. You use the previous generation manufacturing to create the new. Once you lack certain manufacturing processes by moving it over seas you are in a sense kicking your own ladder out from underneath you. The trade wars now are a response to realizing large pieces of the ladder are gone.
I remember a few years ago reading how Dell had lost the ability to make their own computers gradually over time. On the face of it, every bit of manufacturing and design they moved out of the US made sense, but all of it added up over time meant that they had effectively lost control of the computers they were selling.
It was an interesting story that but my google-fu isn't strong enough to find it.
At some point, your manufacturing partners in China are going to realize they control the means of production and can capture the added value by developing their own front office to market and sell the goods they already manufacture.
At what point do places like Dell become just licensing operations?
I thought Dell has always been reliant on ODMs. Were they at any point manufacturing components themselves?
Dell was still building PCs from off-the-shelf parts in the 90s so much of what they have was developed in the last 20 years. I've got to imagine they still have people in house who know how to setup manufacturing.
Even most of the assembly is overseas now. Eventually Asian companies are going to just market their own brands instead of letting Dell be a supply chain manager and marketer.
You might say the same thing is happening in software. As everything is outsourced to specialty services, eventually you aren't building or running anything but the glue. If a service goes down, and there is no replacement, you can find yourself in a position where you don't know how to rebuild your own product.
I recall that article and also can’t find it. The punchline for me was the chairman of their Taiwanese partner, who said something like “Americans are happy with their ratios. (ie reduced inventory) I am happy with cash.”
Actually US businesses were doing fine for the most part, except for those trying, and failing, to compete with the ladder replacements that moved overseas. There is a militarily strategic reason for keeping domestic production of your full supply chain, but most businesses don't care because (and this is a shocker) corporations aren't Americans, nor are they Chinese or any other nationality. They are greedy and self-interested and don't give a hoot about their country of residence.
Caring about the market, and not societies, is the kind of capitalism, that the US has been heavily promoting for quite a while. But seems like young people are starting to catch on to this social-democracy thing..
You might be interested to know that your notion of a successful macro-economic policy has been thoroughly tried throughout history, and has been deemed a colossal failure, see e.g.: https://en.wikipedia.org/wiki/Mercantilism
Right. China using slave labor, in dangerous, polluted, deadly manufacturing hell holes, to make ladders 10x cheaper than the USA with human rights, polution controls, unions, etc. etc.
