My hunch is that electronic goods from China and the Far East will become virtually unobtainable soon, and get very expensive, probably 100% price rises before this is over. Quality and reliability are going to be king now, which will also drive prices, as I see a push to aviation and military specs for this sophisticated equipment too prone to failure.
In order to reopen western economies I see a forcing of return to home manufacture for multiple reasons.
We are just at the beginning of this round of price rises.
100% home manufacturing of consumer electronics would easily take ten plus years to achieve and require a massive importing of skilled labor. Everyone I have talked to has told me that won’t happen. There is no will to make it happen.
the more likely scenario is an expansion of other eastern Asian manufacturing outside China.
in America we have a number of barriers to returning CE manufacturing in full. We currently do not have the ability or capacity to take on the manufacture of the IC’s or beans and it’s not a simple task. We’ve never made many of them so it isn’t like restarting mothballed sites. It’s all new and the expertise all exists in China for the most part.
there was a push to start this with Foxcon but that seems to have failed. In fact, from what I’ve been told, then never intended to bring large scale manufacture of the electronics here. It would have been for some assembly work and R&D.
our labor costs are much higher, our environmental protections are much better, and our colleges are not setup for this kind of society. It all makes it hard to bring things back.
one other thing I was surprised to learn is that China essentially vertically integrated entire cities around the manufacturing and distribution of specific goods. So if an area makes a lot of the worlds smart phones, they optimize the entire city to support that effort. They have the most efficient logistics systems in the world. We don’t do that here, it isn’t how our economy works. I’m not advocating for a socialist or communist approach, but pointing out that in this case it is giving them an efficiency leg up. I think you could argue that the problem with this approach is that it’s not very lean. The moment things change you are stuck with an entire city and local society dedicated to doing something that is no longer useful. That would devastate the community.
I would love to see us restore some capacity to manufacture consumer electronics from Raw material to finished good. However to do that requires massive changes. We need to change how we educate our workforce and fundamentally change our trade schools. China and India are very good at this and it’s something we would need to look to in changing how we do things. It would have to be part of a public-private partnership to work.
I had some exchanges with the CTA and it was my impression that there was no real effort being made toward this goal. Nobody is lobbying for it. Nobody is trying to do it on their own. If anything, I just see a lot misleading or dishonest claims about American manufacturing. Many audio goods claimed to be made in America are basically a bunch of Chinese made guts and Chinese made chassis that are only final assembled here. There are exceptions but they are expensive and rare.
