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So I'm sure this has been asked before, but is there a power tool company out there that isn't made or has materials made in China. With all this tariff stuff going on, I'm sure that everything made in China will increase in price. I'm invested in Milwaukee, and I know they're made in China, but if a company can rival Milwaukee in quality and is made anywhere but China, I'll consider buying some whenever the Milwaukee tool need replaced.

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I’d say you’re probably hoping for too much. Pretty much everyone manufactures considerable amounts of their products in China because it’s flat-out the smartest way to go, and the tariffs aren’t at all likely to increase the production costs enough to change that equation.

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On 5/13/2019 at 7:09 PM, Bmill25 said:

So I'm sure this has been asked before, but is there a power tool company out there that isn't made or has materials made in China. With all this tariff stuff going on, I'm sure that everything made in China will increase in price. I'm invested in Milwaukee, and I know they're made in China, but if a company can rival Milwaukee in quality and is made anywhere but China, I'll consider buying some whenever the Milwaukee tool need replaced.

Maffel, some festool, some metabo, some bosch

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14 hours ago, Jronman said:

Maffel, some festool, some metabo, some bosch

 

Maffel? As in, across the board? It’s not a surprise if a few tools from a few companies are (at least mostly) manufactured with zero contribution from China, but for the entire product line at every step is something special. Albeit less surprising for a premium company.

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I’d say you’re probably hoping for too much. Pretty much everyone manufactures considerable amounts of their products in China because it’s flat-out the smartest way to go, and the tariffs aren’t at all likely to increase the production costs enough to change that equation.
I'd argue that point from working in tons of manufacturing plants and seeing the Asian experiment go really wrong. First off if it is labor intensive and "ships well" as in not too bulky or too dense, that's the ideal case. But modern tools aren't that way. If it's an automated assembly line, labor costs become secondary to raw materials. And maintenance costs dwarf production. Under that circumstance cheap labor doesn't matter anymore and the considerable cost of shipping becomes a major factor. Think about if you have an automated assembly line. Since that stuff is stocked or made in advanced countries like Germany or the US you can't even find it in China, often even if it's made there. And the expertise doesn't exist either. So almost anywhere in the US when a big assembly line breaks down costing thousands of dollars per hour they can get technical support there in hours even if it requires a plane flight. In China it's at least 24-36 hours. Once that guy gets there and identifies the problem, it's another plane flight and another 24-36 hours or more to get the part and get running. So days of production are lost compared to hours. Automated production has made labor costs basically a dead argument. By way of an example a very large portion of the outdoor power equipment sold in the US is made in a huge complex of plants in Norfolk. Stihl owns it but they contract manufacture for everybody, even European brands. Snapper is another.

Second issue is that in the US in particular we practice seller beware. Unscrupulous business practices run afoul of the courts and sometimes the police. China has virtually no protections on anything. Even if you are dealing with a reputable Chinese company and they tend off their nonreputable competitors you still have tons of quality control and translation issues. You have to pay people big bucks from the US to go overseas to live there or get screwed over and over. Case in point is US Pipe took the plunge on fire hydrants. They went cold turkey and shut down US production before the Chinese parts arrived. So by the time the first hydrants arrived they were out of US inventory and there was already 3 months of inventory on the ocean in shipment. They chose not to pay inspectors expatriate and trusted all would be well. Turns out it got lost in translation and none of the hydrants fit. So they had to scrap 3 months of production and wait another 3 months for the right parts to arrive with no inventory on hand.

Another case was Engelhard bought into an Asian manufacturer making a tin solution in 55 gallon drums. The company had a big warehouse full of the stuff and random samples all tested good. So they paid for the initial inventory and then paid ongoing to backfill the warehouse as they pulled from it. But it turns out all the new barrels were nothing but water so once they turned over all the inventory once their supplier skipped town with an entire warehouse of payments.

This doesn't even touch on outright intellectual property theft or documented cases of inserting military spy hardware onto computer motherboards. I'm just going to summarize by saying every single manufacturer I've ever worked for that did deals with Chinese companies got burned over and over again. Or found that their cheap costs were not so cheap.

Now looking at it from the Chinese perspective they have two fundamental problems themselves. The first one is that just like Japan before them as their economy grows so do wages and standard of living. China isn't so cheap anymore. Coastal regions are now subcontracting to inland areas or other Asian countries because they are now too expensive. Which again means moving production to China probably isn't a smart move long term. Japan was all the rage in the 80s. Now they're just as expensive as the US (more if you factor in shipping) and Japan has had a recession stretching back for decades with no end in sight.

The second is a consequence of command economies. So for instance district A gets a tubing plant and starts making lots of money making tubing for refrigerator coils and such. So now districts B through Z want in on the action. Pretty soon they build 10 times more capacity than the entire world demand and nobody makes money on tubing as they fight each other to the bottom. This actually happened with tubing and many similar products. So this is the "smart money" case but really everybody loses, particularly as wages inevitably rise.

So sorry but it is not at all obvious to me that it's the smartest way to go. On a case by case basis there are situations that work. Overall I think the biggest driver was when corporate taxes were the highest in the world. With that brought at least closer to parity the incentive just isn't there. SBD is already making moves back the other way.

Sent from my SM-T350 using Tapatalk

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What we're likely going to see is more production moving to Mexico, it's actually a pretty good solution. Some companies have done it in other industries and it's soo much faster to get things done and shipped, access quality control...and best of all, things are rarely lost in translation. It's worked for Proto(now that plant is owned by Urrea).

 

They might even be able to get away with "Made in America" for several years. I've seen some Canadian companies use it, including a hockey glove company called MIA(Made In America) that is now owned by New Balance (under the Warrior name).

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Paulengr I appreciate the thought-out post and numerous examples, but all these tool companies based in every corner of the world didn’t all arrive at the same solution in a vacuum. China isn’t automatically merely “cheap” anymore and hasn’t been for a very long time...they have made tremendous advancements in expanding their manufacturing quality and control and can do things at prices corporations marketing tools and everything else would be foolish to not utilize. Where else in the world can you reliably or even feasibly manufacture 4K TVs, cell phones, etc with such levels of accuracy, reliability, and quantity at prices remotely reasonable to bring to the market? The simultaneous existence of less-impressive business practices also found in China doesn’t negate all that any more than it does when we talk about shady used car salesmen in the US who happens to sell a few F150s.

 

Although I completely agree things will change just as you suggest as China becomes wealthier and their labor becomes more expensive. But that’s a separate issue from these tariffs. China outsourcing production elsewhere in Asia in recent years has everything to do with their increased domestic production costs and essentially nothing to do with any tariffs.

 

On that note, I do agree with BMack37’s take that increasing manufacturing in Mexico among other countries south of the US border could come around to making a lot of sense. I even think it would be smart politics but that would delve into...well...politics.

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