I saw this article in The Wall Street Journal, Flextronics CEO Sees Hope for U.S. Tech Production by a James R. Hagerty. There are some interesting things to note in the story.
Take this excerpt, for instance:
The difference in labor costs is narrowing and local officials in America have been giving more financial incentives to companies setting up plants in the U.S., Mike McNamara, chief executive of Flextronics, said in an interview Friday. Mr. McNamara said he could even imagine some smartphones being made in the U.S. eventually. But he cautioned that the return of manufacturing to the U.S. is likely to be a “slow and evolving process” rather than a flood. Many obstacles remain, including relatively high U.S. taxes, health-care expenses and regulatory costs, he said.
Labor costs are seldom a make or break factor in profitability. I think even the MBAs have figured out that logistics costs caused by manufacturing far from markets is expensive and cumbersome. It is true that many countries handle health-care costs instead of passing it along to businesses as we do in the US.
Then there are these notes:
“In Asia, if I want to get something done, we just go and get it done,” he said. An Asian plant with 5,000 employees could be set up in 90 days, he said, but it takes much longer in the U.S., partly for regulatory reasons. Flextronics has plants in 30 countries, including the U.S.
Asian plants typically have more flexibility to set up new production lines quickly, which is important for products with short life cycles like smartphones. Still, as products become more customized and companies try harder to keep rivals from copying technology, Mr. McNamara said, some phone makers who want to make products to order for local customers eventually may produce certain types of smartphones in the U.S.
I will defend regulations in general, but not necessarily the bureaucracies and craziness that sometimes accompany them. After all, I appreciate having manufacturing around where I live. But I also appreciate clean air and water, efficient traffic patterns and safety in the workplace.
I have also found that flexibility and ability to move fast is just as often a function of good management. Instead of whining, Mr. McNamara could say that we are so good and have such great engineering that we will beat the competition by being flexible and efficient.
It would be great to see Flextronics move some manufacturing back here. It would be doubly great to see them do it right.