patrick.net

Perhaps the housing bears can explain the following development - how come in many parts of bay area, the rent zestimate for single family homes is about $1,000 more than estimated mortgage payment for same property (this is for single family homes). Please no asinine conspiracy theories questioning the accuracy of zillow as there are some folks I know who decided to rent single family homes and their rent is extremely close to the zestimate. In other words, what is the driving force for why current rents are so much higher than mortgage payments if as you claim renting is so much better because the market is "rigged."? Thanks!

SFace says

A US company makes a sample, say a Disney Princess Doll

I don't disagree with your example figures, however there are some things that we as American's (or buyers at Disney) fail to consider.

- Your China manufacturer may use toxic materials and subject consumers to health issues (major liability concerns) and employ child labor (bad press). So now you have to spend another $1/doll testing, enforcement, and maintain PR.

- Each dollar that leaves the US is not reinvested in your consumer base. If you pay a US worker the $6 more in labor, they can go buy dolls for their kids.

The last point really irks me that more people don't think about the ramifications of what this means to the US. You make a product that you want to sell to the American people, but in an effort to make it cheap, you take away their jobs so they can't afford to buy your product. It's a downward spiral with a smaller and smaller consumer base that leads to (Apocalypsefuck usually shows up at this point in the story)

tatupu70 says

CEOs may be politically correct in public, but you ask any CEO of a manufacturing company and labor costs are a HUGE focus.

This is why all that "job creator" business is complete bullshit.

Jobs are an undesired cost for a CEO. If they could replace everyone with robots they would do so. Except themselves of course, they are indispensible!

dublin hillz says

the driving force for why current rents are so much higher than mortgage payments

Because the renter doesn't carry the debt load, the land lord does. Many people, myself included, would love to dump the property I pay a mortgage on, and rent.

It's a demand side of the equation. Also over time the rents will come down, that mortgage payment will remain the same.

Vicente says

If they could replace everyone with robots they would do so.

I used to have cold callers as well as auto dialing machines. It's a total waste of time and money employing cold callers. The machines outperformed the humans every time for a fraction of the cost and no personal problems to deal with.

gbenson says

The last point really irks me that more people don't think about the ramifications of what this means to the US. You make a product that you want to sell to the American people, but in an effort to make it cheap, you take away their jobs so they can't afford to buy your product. It's a downward spiral with a smaller and smaller consumer base that leads to (Apocalypsefuck usually shows up at this point in the story)

There was a time when it benefitted America to sit back and allow certain countries to stay in poverty. Now it's biting us back. Call it Globalization, karma, invevitability... whatever. It can't be reversed. Americans have to put down their beer and porn and get serious about success. It's kinda hard to compete with a chinaman when you've got your dick in one hand and your remote in the other flipping back and forth between the porn channel and Fox News and your biggest worry in life is that your little gun might get taken away.

robertoaribas says

Not to mention, all of the lead toddlers will get by sucking on these dolls.

There's supposed to be stickers on them that say, "Made In China Wash Throughly." But Disney removes the stickers. However, every once in a while they forget to remove the sticker.

robertoaribas says

My analysis is perfect, so any increase must be manipulated or fake

Any trend that benefits me (and none of the people renting from me) is TRUTH, and propaganda must be crafted to support this trent, not matter what! I will use my position, credentials and a housing crash blog to sell it.

tatupu70 says

Looking at the US as a whole, consumers are not broke.

Really. The average net worth in 2010 including home equity was 77,000.

Without plastic the nation would be halted.

robertoaribas says

Not to mention, all of the lead toddlers will get by sucking on these dolls.

Or paint chips from the nasty hovels you rent to the working wage slaves so you can keep earning unearned income.

tatupu70 says

That's $3,750 per hour. Or $90,000 per day. Does that put things in perspective?

$90,000 x 90 days (quarter) $8.1M direct labor costs spread that across 37M units ( produced and sold) comes down to .21 /unit of direct labor costs.

Clearly even Tim Cooks comments illustrate this...Its not price/costs...

SFace says

US manufacturer with their high labor cost can only go as low as $15 per unit ($6 material and $9 labor), save on shipping.

China manufacturer can quote $9 ($6 material and $3 labor ) plus another $2 for container ship. Total is $11.

$9 labor per hour.. how many do you make per hour... how about you make 10 units per hour and therefore direct labor shrinks to .90 per unit. With automation as is the case for many industries may well be even lower down to .09 /unit... how different is that from .03 /unit.. Your assuming a great deal of inefficiencies in capacity using 1 unit produced per hour... How do you make 22M or 47M units of an item per quarter as in the case of Apple below. This is why journalist fail to provide a fair picture.. it certainly doesnt escape the many Finance professions working in Business/Industry.

Apple Reports Record Results
47.8 Million iPhones Sold; 22.9 Million iPads Sold
CUPERTINO, California—January 23, 2013

thomaswong.1986 says

$90,000 x 90 days (quarter) $8.1M direct labor costs spread that across 37M
units ( produced and sold) comes down to .21 /unit of direct labor costs.

Clearly even Tim Cooks comments illustrate this...Its not price/costs...

OK--if the total cost is .50/unit, then I'd say .21/unit savings is pretty damn signicant. Wouldn't you?

The cost savings/unit is somewhat important, but what good managers look at is the total cost savings. How much extra will be added to the bottom line by moving to China.

SFace says

I doubt anyone goes to Disneyland CA Adventures, come out from a ride say radiator springs racer, go to the gift shop and say, gee that Lightning McQueen RC is made from China. That's a deal breaker.

As far as I know, even 1 yo. toddlers don't eat their toys. You know, they recognize it is not food. A slap in the mouth would discourage behavior.

I'm sure those warning labels telling you to wash before using are there for a reason. Removing the label should be illegal. At the very least it's dishonest. It was brought to my attention by a stranger who was very upset because she had kids.

robertoaribas says

you aren't getting lead based paint out by washing the thing.

It's probably for chemical residue from the manufacturing process. I was researching stainless steel pet bowls and some had unacceptable levels of radiation when coming from China. I wonder if all this is really a concern or just propaganda to get people to overpay for American products?

ELC says

There's supposed to be stickers on them that say, "Made In China Wash
Throughly." But Disney removes the stickers. However, every once in a while they
forget to remove the sticker

So, your theory is that the Chinese plant puts the sticker on even though Disney doesn't want them to--then Disney pays their employees to remove the stickers?? Really?

If Disney is paying the Chinese factory to make the toys, you don't think they could tell them NOT to put the stickers on the toys in the first place?

gbenson says

The last point really irks me that more people don't think about the ramifications of what this means to the US. You make a product that you want to sell to the American people, but in an effort to make it cheap, you take away their jobs so they can't afford to buy your product. It's a downward spiral with a smaller and smaller consumer base that leads to (Apocalypsefuck usually shows up at this point in the story)

What about the opportunity cost? You cannot do anything better with the $4 you save? (e.g. invest in nanotechnology instead of making dolls).

It's ironic how easy is hearing that Adam's Smith theories are incomplete, but at the same time people forget its most basic principles. It's like justifying on Einstein that the Earth doesn't move around the Sun

http://en.wikipedia.org/wiki/Comparative_advantage

I was in Los Angeles for a client meeting. By some dumb luck, my belt buckle was loose, and starting to fall off of the belt. These pants being a bit loose, I needed to go buy a belt.

I went to a store by this plaza on Hoover street. It was a small asian version of a thrift store. I asked the lady for where the belts were and she pointed me to a small section on a rack. There were 3 belts. One of them had comic heroes on it. The second one was a girl's belt. The last one was a thin, no frills black belt. I thought, well it's better than not having one and having my pants drop to the floor during our meeting.

I bought the belt, it was $2.25. As I was walking out of the store, I started to smell something. It didn't smell pleasant, kind of like a really strong chemical smell. I looked around, nothing around me but students, and some homeless. I figured out it was coming from the belt itself. I pulled it to my nose, and I nearly fainted. I literally got dizzy, and had to gather myself for a minute. I thought to myself, this can't be legal to sell? What was this belt treated with?

There was a small piece of white paper stuck to the back of the belt, in 12 point font, probably Times New Roman, it said "Made in China."

I drove for a woman who was here from China and worked for a bicycle company. It's a huge company.

She needed an American driver, and companion for a meeting she had in Canada with her company representatives. It was a favor.

It was the most interesting couple of days by the way these people did business. I bought them coffee at a Starbucks, and they were squimish. They only wanted to buy things in the International District, from Chinese businesses. We both had a lot of questions for each other.

What I learned is that the United States has a defect quotiant for products from China. It used to be only 25% defects that were allowed, but the United States lowered it to 10%. There must be a fine system in place, I don't really know.

What I do know is that in other business meetings I've attended with Chinese, and American representatives is that the defect rate is a driving concern for American business. No business wants to be associated with bad product.

tatupu70 says

If Disney is paying the Chinese factory to make the toys, you don't think they could tell them NOT to put the stickers on the toys in the first place?

Look, all I know is occationally there'll be a sticker left on.

SFace says

Nominated.

If you are implying the difference in building an Iphone in China is an increment of .21 in costs, you're totally clueless.

ask any Cost Accountant or Financial Analyst in a Manufacturing company...

see Apple's CEO above.. costs are not the concern... as Tim Cook has stated.

SFace says

Evan Mexico, with a fraction of US wages and free trade with North America and proximity is not even close to competitive with China.

funny comments from an anonymous source... lets compare to facts..

http://www.huffingtonpost.com/2011/10/20/steve-jobs-biography-obama_n_1022786.html

"You're headed for a one-term presidency," he told Obama at the start of their meeting, insisting that the administration needed to be more business-friendly. As an example, Jobs described the ease with which companies can build factories in China compared to the United States, where "regulations and unnecessary costs" make it difficult for them."

thomaswong.1986 says

ask any Cost Accountant or Financial Analyst in a Manufacturing company...

see Apple's CEO above.. costs are not the concern... as Tim Cook has stated.

I don't need to ask--I know costs are always a concern. To imply otherwise is pure nonsense.

For you to say costs are not the concern is one of the most ridiculous statements I've seen from you Thomas. It's all about costs. Everything boils down to costs.

If costs are a concern.. there is an answer to that as well.. like our tech equipment which has been hacked by the Chinese military and intelligence agencies in order to spy and control various personal and industrial systems across many nations.

Frankly .. a US manufacturer could offer safe higher priced goods vs Chinese made lower costs goods that have security flaws and have been compromised.

Any customer in any continent would feel safer by purchasing a higher costing "Made in the USA" for those reasons. Im very sure the push back to the USA is also centered around "National Security" not only for USA but many other nations around the globe.

----------------------------------------------------------

China tech company brags: We hack U.S. telecoms
www.wnd.com/.../china-tech-company-admits-hacking-u-s-tel...
Jun 14, 2012 – WASHINGTON – A major Chinese telecommunications company has been boasting how it was able to hack into U.S. and international .

China-Based Hacking of 760 Companies Shows Cyber Cold War ...
www.bloomberg.com/.../china-based-hacking-of-760-compan...
Dec 14, 2011 – China has made industrial espionage an integral part of its .... semiconductors and clean energy, like solar power, the PwC report said

Backdoor Found In China-Made US Military Chip? - Slashdot
it.slashdot.org/.../backdoor-found-in-china-made-us-military-c...
May 28, 2012 – If it turns out the Chinese stealth stomps the F35 and can be made for less than ..... aspires to being serious competition to China in semiconductor manufacturing. ..... There are stories about hacking, and now about hardware ...

Digital Spies: The Alarming Rise of Electronic Espionage - Popular ...
www.popularmechanics.com › ... › DIY Tech › Cyber Security
Jan 24, 2012 – Foreign agents are stealing stealth technology, hacking heads of state ... And while many of these attacks are traced to China, electronic ... They made off with sensitive semiconductor, satellite, space, and aircraft technologies.

Chinese intelligence operations in the United States - Wikipedia, the ...
en.wikipedia.org/.../Chinese_intelligence_operations_in_the_U...
The Chinese operate in ways that take advantage of U.S. laws to avoid prosecution. ... These items may include computers, semiconductors, software, telecommunications devices, and .... During this time, Smith made classified documents available to Leung, who was .... More journalists have their email accounts hacked, ...

tatupu70 says

For you to say costs are not the concern is one of the most ridiculous statements I've seen from you Thomas. It's all about costs. Everything boils down to costs.

your examples of costs are faulty.. when applied to mass scale operations.. $20 of hourly labor gets absorbed and applied to product costing across large number of units...

under your example... every unit labor burden is the 1 hourly rate.. regardless of home many 1000s of units produced within that hour.. Clearly... YOU ARE WRONG!

Dislike (1)  

your fucking welcome.. LOL!

thomaswong.1986 says

your examples of costs are faulty.. when applied to mass scale operations.. $20 of hourly labor gets absorbed and applied to product costing across large number of units...

under your example... every unit labor burden is the 1 hourly rate.. regardless of home many 1000s of units produced.. Clearly... YOU ARE WRONG!

I am most definitely not wrong. I really can't believe you are even an acccountant. You lack a basic understanding of cost accounting.

My example showed you the difference in total labor cost. The difference in unit labor cost is not really important--companies don't pay their employees per unit, they pay them per hour. If you want to calculate the total labor savings, you look at total labor cost in the US vs. total labor cost in China. Not unit labor costs.

SFace says

Evan Mexico, with a fraction of US wages and free trade with North America and proximity is not even close to competitive with China.

OK, I posted an incomplete comment this morning because I was late.

The point in China is to employ as many people as possible. When we think of a factory here in the United States we talk in city blocks, in China they talk in acres.

China has thousands of people employed in factories, and if they don't have enough people to meet demand they ship people in.

The reason the defect rate was allowed to go down for China is the promises of quality control. China did an admirable job in a short amount of time to respond to the new standards.

Where it would take the United States ten years to comply with higher standards of manufacturing, and an Act of Congress, the Chinese simply went into factories and made the changes.

You don't get that in South America, or Mexico, there would be cries of unfair trade practices; in China they just did it.

As far as the cost of labor, it is rising, fast, and even with the rises in labor costs the Chinese are happy to have the work.

When I say Chinese, I mean that the government is there to do all they can to keep businesses hiring.

When you meet with Chinese business people you meet with a government representative at the same time. I used to think it was so the Chinese could control the business sector, but the facts, to me, have shown that when you tell a Chinese business owner they need to do something, it gets done.

What a concept that the government of China is interested, and responsive to the needs of business.

robertoaribas says

I've never been to a more moronically run or less efficient country ever.

For a shipping company? and your girlfreind didn't tell you you need to pay taxes, and black money to boot?

Come on, grow a pair. It's the cost of doing business.

However, if you are a big employer, I mean a million person employer, the government listens.

robertoaribas says

i just went along for the ride.

It's the cost of doing business the same as there is a cost of doing business anywhere.

The people who complain about the red tape are the one's not involved in the Chinese culture.

I don't do business in Asia, but my bbrother has for thirty years, he has the same complaints you do, and I know he's not making much money.

If your girl freind's boss wanted to wire the money instead he could, and pay the bribes to get the taxes paid. It was cheaper to give your girl freind the car, and a day off. What did her time with the car cost again, I mean as long as we are talking about the cost of labor in China?

If I wanted to compare that the the good old USofA, I can easily, because I have to go pay a frigging payment to our City government in person tomorrow for taxes I have already paid for last year, but the frigging system the City of Seattle has is so backward they can't keep any records straight. So I'm going to go down in a couple of hours, in person, to pay $384.60 that the City claims I owe, on an account I know is closed. They called me today to threaten me. So, I have one day to get it paid or I pay fees, and penalties, and maybe go into collections.

See, I go and pay, then while doing my taxes I add up my payments, and hey! I'm right they are wrong, but hey! I'm going to owe them money any way, so we will work it out later the same as we have for twenty years or more.

It's the frigging cost of doing business.

Did you really say total, and utter bullshit?

Don't get me started on small business, because it is tough all over.