Coming Home: Appliance Maker Drops China to Produce in Texas

[mahatmakanejeeves]

Source: The Wall Street Journal.

ASIA NEWS AUGUST 24, 2009
By TIMOTHY AEPPEL

HOUSTON -- Farouk Shami, a Palestinian-born hairdresser who built a $1 billion manufacturing company around a popular line of hair irons, is moving all of his production of hand-held appliances from China to a sprawling new factory here.

"We'll make more money this way -- because we'll have better quality and a better image," says the 66-year-old, who says his company, Farouk Systems Inc., spends about $500,000 a month fighting counterfeits, most of which he says originate in China. The company collects the fake products and tracks the source, and then brings action in China to shut down illegal producers.
....

"I think you're starting to see more manufacturers rethinking outsourcing," says Daniel Meckstroth, an economist at the Manufacturers Alliance/MAPI, a public policy and research group based in Arlington, Va., calling a June speech by General Electric Co. CEO Jeffrey Immelt, where he said that overseas outsourcing had gone too far and that U.S. companies needed to expand domestic production, a "bellwether of what's happening in manufacturing."
....

The move is creating jobs in Houston at a time when factory jobs are evaporating in most places. On a recent afternoon, job applicants sat in the lobby of a cavernous new factory, hoping to be one of 30 people hired daily. The company expects to have 1,200 workers when the factory is at full speed in December.

Read more: http://online.wsj.com/article/SB125107636394652753.html

[liberal N proud]

1. Bravo!

[StClone]

34. Yes but why Texas?

Illinois, Iowa, Minnesota and Wisconsin have the best-educated and motivated workers around.

[meowomon]

37. Right to Work State

No unions

[valerief]

39. And illegals. nt

[timo]

113. whatever

like all the south bound cars going into mexico at christmas are not sporting tags from yankee states!!

[kenfrequed]

140. What...

Like license plates? Please, what is your point?

[timo]

160. the northern states are full of illegal labor

I see them all trickle back home by the truckloads during christmas, and about february they begin to migrate back thru my farm heading north to pickup where they left off so dont pretend that Texas has the only illegal labor problem!!

[kenfrequed]

163. True

But it is illegal labor. Meaning against the law, which is slightly different from 'right to work laws' that legitimize screwing over your employees. Basically your comparing Anvils to Oranges.

[No Elephants]

124. And "legals" of Middle Eastern descent, including, possibly, members of Shami's own family.

He lives in Houston.

[valerief]

158. Yeah, but hiring illegal workers is still cheaper. nt

[valerief]

159. Yeah, but hiring illegal workers is still cheaper. nt

[aaronbav]

41. Minor Correction: Right to Work (For LESS) state

:)

[StClone]

43. Unions What Unions?

Twelve percent of our workers in the U.S. are in Unions 12%!! The Walmartization of America continues.

[ohio2007]

49. these are not exactly automobile jobs being created either

spin off cottage industries will also be micro sized as well. ( thats right, made in China part suppliers )

[defendandprotect]

62. I think it's only 9% or less now . . . the highest ever in US was 39% . . .!!!

[AnneD]

72. And I happen to be in one of the fastest growing unions....

here in TEXAS-Nurses!

[pauldg0]

91. It's dry and airid just like the middle east.

[Lone_Star_Dem]

101. Houston is a port city. You do realize that don't you?

Not too many of those tend to be arid. Oh, and basically arid is extreme dryness. They're pretty much degrees of the same thing. A bit redundant there on your part.

[jmowreader]

121. Houston is in the middle of the fucking desert. You do realize that don't you?

While Houston HAS a port, you have to go down 225 to get to it. It's pretty dry out there.

[Craftsman]

138. I live in Houston in Clear Lake

It is wet and humid.

[bat country]

148. Reporting live from Houston . . .

its humid. It's always humid. It will never be dry here. Why? It's less than fifty files from the coast with a navigable channel leading to the Port of Houston located in Houston, where its always wet and humid.

[kath]

151. you beat me to it - arid?? WTF? From everything I've heard, Houston is like a frikkin steambath.

[Lone_Star_Dem]

161. You're painfully wrong. Houston's annual rainfall is almost 51 inches a year. nt

[Mariana]

104. Have you ever been to Houston?

Dry? Arid?

:rofl:

[Manifestor_of_Light]

166. May I quote Barney Frank?

Houston is DRY???

"On what planet do you spend your time on?"

:rofl:

I have lived most of my life in Houston. The humidity and heat are MURDER.

People collapse from the heat and humidity in texas. The desert is out west of San Antonio.

[cui bono]

120. They're moving from China. What does that have to do with the Middle East?

:eyes:

[pampango]

130. The guy is Palestinian. The thought is that the climate in Houston is similar to that in Palestine

and reminds him of "home". Not sure if that is true or not.

[cui bono]

169. Yeah, but the factory is moving from China to Houston.

So there is no point to bringing in the owner's nationality. It doesn't follow, logically.

[No Elephants]

126. Flooding is often a problem. But, he lives there.

[Lone_Star_Dem]

98. There are unions

It's also one of the "right to work states". Texas along with Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Iowa, Kansas, Louisiana, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wyoming all have unions. They just permit more tactics which discourage their workers from joining those unions, and discourage the formation of new unions. Which explains why the average worker in a right to work state makes around $5500 less a year than in non-right two work states.

Funny phrase that. It's one of those Republican titles that really means the opposite of what it sounds like. In reality it translates to something more akin of a right to screw workers over state.

[Lucky Luciano]

108. Thise are also very rural states for the most part...so it makes sense

that with the cost of living being so much lower that the pay is also lowr - would not surprise me if $5,500 less in those states buys more than in the northeast or Cali!

[No Elephants]

128. It made sense because he was (and is) living in Houston.

[madmom]

154. I live in rural Ohio $8 an hour would NOT be a living wage here. That is why

there are two wage earners in the family now or one person holding 2 jobs. Kids suffer, families suffer, everybody suffers because all we ever do is work, no time for anything else. Don't even think about getting sick, with no benefits you can't afford the doctors visit let alone any meds you might need, and who can afford to take time off work because your pay check will be less or you will lose your job. Nope $8 an hour just doesn't cut it.

My son just started working again after being laid off since December. He is making $9 an hour, he still needs food stamps and state provided insurance for his kids because he doesn't make enough money to pay rent, car insurance, utilities, not to mention clothes and shoes for school, if those kids would just stop growing!

[jmowreader]

105. With lots of really cheap land...

and Houston has quick access both to the Port of Galveston, for ocean shipping, and to I-35, which runs straight to Laredo--which is one of the largest border crossing points for freight coming into and out of Mexico. If he's thinking globally, he's got to export and the less time and fuel needed to get to the port of departure, the better.

Even if Texas had unions, it makes a lot of sense to locate there.

[S_B_Jackson]

116. Slight correction....

Port of Galveston really doesn't handle much other than cruise ships and fishing boats any longer. Port of Houston, however is the nation's largest in terms of foreign tonnage. As for why Texas, lower labor costs, lower cost of doing business in general, lack of state income tax. With regards to union vs. non-union, what makes Texas attractive is that "closed" shops & "agency" shops are illegal.

[No Elephants]

125. Please see Reply 123.

[No Elephants]

129. Please see Reply 128.

[Manifestor_of_Light]

167. Another correction.

Port of Houston is MAJOR.

I-35 is NOWHERE NEAR Houston. I-35 goes through Austin and San Antonio. It's 200 miles from Houston to San Antonio.

Or they could go to Brownsville but that's not the Interstate, I don't think.

[No Elephants]

123. Might just have something to do with the fact that Shami lives in Houston, which has a

Middle Eastern community, grocery stores, restaurants, etc.

[Craftsman]

137. In 2008 more jobs were created in TX then the other 49 state together.

[joeglow3]

44. Ummm. I think you answered your own question.

nm

[No Elephants]

131. Albeit incorrectly.

[ohio2007]

Only his "hair dresser" knows for sure. (doubt many will catch the pun)

they are building blow dryers not next generation solar cell material

[WriteDown]

67. Link?

Motivation in Illinois, Minnesota, and Wisconsin?

[Ishoutandscream2]

76. Thank you

What a bigoted statement that was. But, this is DU.

[mamaleah]

88. Link please? What about California? Nevada? New York? Massachusettes?

Are their workers lame or lazy or dumb?

[Lone_Star_Dem]

100. Honestly, the pay scale is desireable and Houston has been known to offer great tax breaks.

There's also there's the ship channel which gives it easy access to exporting around the world.

[No Elephants]

132. And besides all that, the fact that his home was in Houston just may have influenced his choice.

[txwhitedove]

133. Farouk was already based in Houston with a home, factory, and imports.

They've had 2-3 job fairs for variety of jobs, not just factory workers. Houston is the 3rd Coast, a multi-cultural, vibrant, modern, international city.

[snooper2]

165. Illinois, Iowa, Minnesota and Wisconsin have the best-educated and motivated workers around

:eyes:

[ohio2007]

2. China's hair irons contain high lead amounts nt

[orwell]

3. I'm shocked...

...you mean outsourcing isn't always a one-way street to manufacturing nirvana?

Who knew?

[ohio2007]

5. Wonder how long the commute will be for the new employees to reach the Houston assy lines

lol

just sayin

[AlbertCat]

35. Really! Wages are probably cheeper in 3rd? 4th? world TX.

And then the goods can be shipped, not overseas, but on our socialists highways using socialist USPO.

[ohio2007]

46. SSI will enjoy the "make jobs" program success story and welcome the new source of taxpayers $$

where congress can vote YES WE CAN to the next round of bailout extentions ( oh, they'll never do that )

[ihavenobias]

84. Actually, that raises an interesting issue regarding trade policy and climate change.

I'm surprised I haven't seen an argument in favor of local production of goods, much in the same way there is a movement to eat locally grown foods, etc.

Obviously there is no 'season' where computers and clothes are ripe, but just having goods manufactured here in the US has to better for the environment when you consider not having to ship the goods overseas, not to mention different regulatory stands for pollution (and things like led tainted toys, etc.).

[jmowreader]

107. More like the socialist JB Hunt

The amount of hair care appliances this guy is going to be making, he's not shipping by the Postal Service. It would be nice if he'd build a nice fat drop yard next to his plant--I think all truckers like it best when someone preloads trailers. You pull up, drop your empty, hook up to the full one, get your bill of lading and leave--fifteen minutes, no more.

[Vidar]

4. Good for them.

[Deja Q]

102. Hey, they're selling on quality and not quantity. Who'd be against that?

:shrug:

[Old Codger]

6. Hit the nail on the head there

Better quality equates to a better image for sure, it is so damn frustrating to deal with the crap that has been coming into this country and not having any real options in what we can get. Be nice to see this catch on.

[comtec]

7. I don't know why manufacturers goto china and are surprised by counterfeits

Hell they probably aren't counterfeit, they are just made with cheaper material.
But seriously, this surprises people... really?

My company's quality has gone downhill since they started having more and more made in china, but they refuse to see the correlation.

oh well. as long as they pay me, i'll keep quiet about what company.

I do hope one day they'll come to their senses however.

[tsuki]

27. When I started in business about 30 years ago, I never received

a notice from a manufacturer of counterfeit goods or parts. In the last nine years, I have begun to receive notices almost weekly.

The trouble is that the counterfeits may contain unacceptable levels of lead and other trace metals. And, if the part is not tooled exactly, it can cause damage to the entire valve assembly. Then your limited warranty is voided.

In a buyer beware society, it is hard to shut the counterfeiters down.

I am glad to retire.

[Donnachaidh]

8. outstanding! n/t

[madrchsod]

9. my mom worked for a beauty and barber supplier for 60 years...

over the years everything was made in the usa but by the 80`s crap from south east asia was eroding us and european made products. each year the products became cheaper. some products actually caught fire during use....

another example is hair pins...the best ones used to be made in france now the chinese version is half the size and half the weight.

i`m glad to see that some business owners are moving back to the usa.

[gauguin57]

64. When I buy barrettes, I always look for "made in France" on the back. The only ones that hold up.

The little claspy-thingies on the back don't grip properly unless the barrette is from France.

[kath]

99. The "made in France" ones *are* the best -- but I can't find them anymore.

I only see the shitty "made in China" or "made in Taiwan" kind, which break almost immediately.

Any tips on where to find the good ones?

[ronnie624]

118. Walgreens. n/t

[gauguin57]

144. Y'know ... come to think of it ... I haven't been able to find any good "made in France" ones

... recently. Hmmm. I'll have to get on that. Because I just bought a couple of cheap, non-made-in-France ones, and they're just not as good.

Maybe a beauty supply place would have some "made in France" ones?

Dunno. I'll keep looking.

[gauguin57]

145. You can order "made in France" barrettes online.

http://www.amazon.com/dp/B0007UQJDU/ref=asc_df_B0007UQJDU890574?smid=A3MIN32DL19NPK&tag=shopzilla_mp_1027-20&linkCode=asn&creative=380341&creativeASIN=B0007UQJDU

Also found some by designer Marc Jacobs ... and they cost more than $70 apiece! eek! that's ridiculous.

[shanti]

96. insourcing

is the word of the day! :thumbsup:

[rucognizant]

111. I'm still........

using the purple hairdryer I bought in 1978!

[imdjh]

10. I understand little cheap crap to some degree being cheaper to make in China

But what I don't get is how a washing machine or refrigerator can be made in China and shipped here and still be cheaper enough that it's worth it to the company to have to deal with China and shit on America's workers. Yes, Chinese labor is cheap, but labor is only a part of the cost of product.

[uncle ray]

16. labor is a huge expense.

everything IS labor. even raw materials. you are not buying the raw materials so much as the labor to extract them, transport them, process them, etc. when you cut out such a huge expense by outsourcing, it seems to them to be a reasonable trade off to pay for quality issues, shipping, fighting knockoffs, etc.

[meow2u3]

20. You can save on labor expenses by bringing the jobs back to the USA

The money an employer saves fighting counterfeits and knockoffs, as well as overseas shipping expenses, is greater than the higher salaries paid American workers, especially union workers. I'm beginning to believe employers are wising up to this, but I may be a bit off base.

[enid602]

54. transportation costs

Yes, but China´s cheap labor advantage was only useful when there was cheap oil. With oil prices (and hence, transportation costs) fluctuating so much these days, China´s advantage may well disappear.

[Prometheus Bound]

75. Direct labor costs are only 5–15% of total costs in most manufacturing.

And American manufacturers can buy raw materials from the same source Chinese factories can.

It makes bottom-line sense to manufacture in the US instead of China.

[uncle ray]

119. i never said anything about "direct" labor costs.

i'm not an accountant.

i'm talking about the "true" cost of labor. which to me is what my company charges their customers for a unit of labor, direct and indirect costs included.

[tsuki]

29. Have you noticed that they are only cheaper for about 5 years?

During that time, they ship grade A products at low, low prices. In five years, when the competition is gone, they jack everything up and start sending the product they produced that was not acceptable.

I know a hardware line like that. It was okay, now it is crapola. And try to get parts. I saw people all day come in and want parts. I had to tell them that I didn't carry that line.

[ohio2007]

52. Thats China's problem now as they blame unrest on islam which the world accepts including

the biggest muslim countries ! They do not raise a united voice against it


why is that ?

April 1, 2009


http://www.sinodaily.com/reports/Ethnic_strife_in_the_heart_of_China_999.html

Jul 5 2009

http://www.liveleak.com/view?i=6b1_1246887039


Han Chinese fight back against Uighurs in Xinjiang
July 7 2009
http://www.liveleak.com/view?i=b86_1247023484

[Craftsman]

149. Why is that?

I will take money for $1000, Alex.

[4_TN_TITANS]

40. "labor is only a part of the cost of product."

Labor is a majority of the cost of a product, especially here in the states. Not defending cheap made Chinese crap, I've had many customers say that they'd gladly pay more for the quality and speed of American made products.

[NuttyFluffers]

117. but labor is also the market. where you invest in labor is ideally, eventually, your market.

Chinese citizens do not have an average per capita purchasing capacity as Americans. eventually by shifting such costs you will kill the goose that laid the golden egg by moving your consumer economy outside of your already well established market with a more advanced infrastructure. China is improving yes, but it's not improving by so many leaps and bounds that it will replace America's market tomorrow, or even the next decade.

[uncle ray]

152. why is acknowledging that labor is a large part of the expense of manufacturing

taken as an endorsement of outsourcing by so many? i think we all agree that outsourcing of jobs is false economy.

[lildreamer316]

11. YAY! Great attitude!!

"We'll make more money this way -- because we'll have better quality and a better image,"
FINALLY someone GETS it.

[Gman2]

12. Used to be, order a mold from China, they made a spare.

For their own production. They wrote contracts that China retained all actual physical rights to the molds. Further allowing conterfeit. Technology is shared to Chinese businesses. Trade secrets.

Add to this the shipping and trasnportation costs, and you have some motivation for bringin them home. Better legal and logistical control helps too. Unless there is a huge amount of manual labor involved, outsourcing is not advantageous. Oh, pollution and destroying human lives is, as always, cheaper done where the people have no legal recourse. Fighting for labor rights everywhere, is the best labor action we can make here at home.

A reasonably level playing field, with slight trade taxes, and localized production schemes, with minimalized trucking, is a win win for all citizens.

[Gman2]

13. Oh, and this shows that having a patent is useless, unless you have the bucks ALREADY

to fight the 500,000 dollar a MONTH bill for enforcement. I tell people all the time, that talk about getting a patent, to forget it. Make your product as cheap and as good as possible, flood the market, sweat anyone trying to do it better/cheaper, and get out when the curve is going negative. Find a new product. Add to this the new patent rules, that allow the patent to go to the first to dot all I's and cross all T's. NOTTTTTTTTTTTTTTT the first to demonstrate that it was their idea. THAT will be the end of the USA. Large corps can snake your work, and get away with it. Small guy has brilliant idea. Large corp has team of lawyers ready to go, when their industrial espionage intelligence schemes his patent claims, and finishes their application first. THIS IS GROSS fraud and theft. Legal too.

[BlancheSplanchnik]

48. why not flood your reps and any other small business agencies with this info?

I'm absolutely not an inventor or small business owner; not even sure what agencies would be the ones involved, but it seems like a good thing to do with a valid complaint like this.

[jmowreader]

122. Some patents are fraudulent on their face

The outfit I used to work for employs a guy whose job it is to write patent applications. That's all he does. He would write applications and get patents approved for shit we had no idea how to make. A "patent" is supposed to protect the tangible expression of an idea, and not just an idea. Used to be, if you wanted a patent you had to bring in the thing you were patenting. Now? Not so--you can patent a green widget that curves to the left at 46 degrees even if you have no fucking idea whatsoever of how to make one, if no one else has patented that thing before.

You can also patent shit that's thoroughly obvious to anyone in the business, which used to not be the case. A famous patent of this nature was in the very early days of printing with "stochastic" screens--ask me later what that is. This guy patented the process of printing with stochastic screening on a waterless printing press. There are stochastic screens, there is waterless offset, and no one in the business who had one of those presses thought it was anything but completely doable to run the two processes together...but someone patented it, and now Heidelberg has to pay this guy several thousand dollars in royalties every time they sell someone a direct-imaging press because it will print in accordance with his patent.

The patent system in this country is completely out of control and they don't have the money to fix it. Sad.

[MessiahRp]

14. This type of story would be much, much more common if we had Single Payer healthcare

A lot of the companies that have moved overseas or even to Canada have done so because of healthcare costs, not so much actual payrate. We had a company in Oshkosh, Leach which made Garbage Trucks, moved to Canada because of their universal healthcare system.

Rp

[pampango]

15. You're right about that. I think that emulating Canada in other ways would help too.

With effective market regulation, progressive taxation and a solid social safety net, in addition to single payer health care, we would see a lot more of this.

[Beavker]

17. Agreed.

The smaller US companies, what the Republicans keep whining about when it comes to tax increases on the upper few percent, would benefit emensely. Sometimes the insurance by your employer is the only thing that keeps you with a job you dislike. Imagine not having to worry about insurance for your emoployees, and as an employee, not having to worry about insurance if you lose or switch jobs.

Also, isn't this guy a protectionist of sorts?

[Lydia Leftcoast]

23. Yes, Canada fared much better than we did in the banking crisis

because their banks are heavily regulated.

[pampango]

24. I read (can't remember where) that they had the best banking regulation in the world. n/t

[cliffordu]

18. I'll buy a US made appliance from this guy and give it to someone who

uses them


Outstanding.

[Gormy Cuss]

78. The "Made in the USA" stamp still influences some of us purchasers

and when people see that the product is again of high quality maybe a few more people will join our ranks. :toast:

[Le Taz Hot]

139. I feature a "Made in the U.S.A." sign

when I display at craft fairs (rarely nowadays -- people aren't buying) or when I'm just making an on-the-spot sale. I remind potential clients that not only are the pieces made in the U.S.A., they're made by local artisans. It's made the difference between making a sale and not making a sale more than once. My dream is to be able to tell customers that all of the parts were made in the U.S.A. as well.

[Ozymanithrax]

19. The reindustrializtion of the USA has begun.

About time.

[proteus_lives]

83. +1

[Yavin4]

21. Un-Talented Middle Managers Believe That Outsourcing Is Nirvana

They made their bones through outsourcing and cutting costs. However, ALL outsourcing, foreign and domestic, demands careful and precise supervision. That has meant sending your own workers abroad to supervise the outsourced companies which means more expenses and other problems.

[Mopar151]

58. Bingo!

If you got no talent, the rep for the contract manufacturer will assure you that you are in fact a wise and insightful soul, and that your problems are at an end, as long as you keep cutti'n them checks. It SOUNDS a lot easier that building a factory, buying tools and machines, and hiring a crew- and it will get rid of all those old farts who keep making you look bad in meetings.

[Yavin4]

68. I Also Think That The Great Cost Savings Have Failed To Materialize

What often winds up happening is that poor communication, over-hyped quality and proficiency, and constant hands-on management and supervision is needed to make outsourcing work. With all that extra care and attention, the cost savings are not nearly as great.

[Mopar151]

115. It takes some cooking of the books, too

But anything to do with M&A, restructuring, and "shareholder relations" is a fertile garden for the chefs of the annual report.....

[madmom]

22. $8 an hour WOW how generous! Who the hell can live on $8 an hour?

I made more than that working at Walmart.

[sasquatch]

30. I know, he almost placed a factory in America

:eyes:

[AtheistCrusader]

31. It's not great, but you can probably exist on it in Texas.

You'd probably starve to death on that here in Seattle.

[niccolos_smile]

87. Costs of living...

vary across different cities, counties, and states (in case you haven't noticed). So, it is possible to live on $8/hour in some places. Houston would be one of those. Move 2 hours west to Austin, and $8/hour is not as helpful, because the costs of living in Austin are higher than they are in Houston.

And it's better than them having no job, no pay and no self-sufficiency, especially at this economic period where jobs are hard to find. This company will also help generate revenue for the state (and the nation) which can be put back into public schools, CHIP, etc.

[Deja Q]

103. So much for quality... even Henry Ford knew the best quality comes from happy employees.

And they are well paid who feel stable and secure and think they have something like... a future?

[Renew Deal]

142. What kind of skill and education is needed for these jobs?

That is a factor.

[madmom]

153. I made more than that working at Walmart, non skilled, non management!

[kath]

150. At 40 hours per week, $8 an hr earns you only $16K/yr- even in lower-cost areas of the country, that

is NOT a living wage, especially since I doubt these jobs come with any benefits.

Plus, in areas like Texas, w/ NO public transportation, a person needs a CAR to get to work -- the costs of owning and maintaining a car are significant, making it much harder to get by on $16 K than in civilized parts of the country w/ decent public transit systems.

[nolabear]

25. America's best product is its standard of excellence!

An important outgrowth of the bust just might be that we recognize that having a standard of excellence means something, not only on "moral" grounds, but because cheap and disposable isn't really either cheap or disposable. Wouldn't it be nice to take pride in quality again, in all things?

[Jester Messiah]

26. Excellent!

I see the "weak dollar" at work here. If we keep the value of the greenback low compared to other currencies, our workers will be comparatively cheaper and our exports more affordable. This is how we recover.

[progressivebydesign]

28. Awesome! I've heard that some companies are also moving call centers BACK!

They're realizing that the negatives outweigh the cost savings. I make a point to THANK every single customer service person I encounter on the phone, when I don't have to deal with an outsourced job. I make sure that they know that is why I'm doing business with them, and not the competition.

I'm planning to really downsize my life soon... and deal with smaller companies for everything soon... and dump the ones that outsource, when possible. I mean.. how do these companies think that any of us could afford their stuff if they sent all the jobs away? I'm not an economist, but even a layman could see that this would spell disaster for these companies eventually. The people who make these products overseas can't even afford them on the pennies a day that they make.

[happygoluckytoyou]

32. I am outsourcing the writing of "500 dumbest things ever said" to the REPUBLICANS ....

[YOY]

33. Please let it be a trend...please oh please...

If this happens significantly within the next 3 years...we will TRULY be on the road to recovery.

[MannyGoldstein]

36. "$8 An Hour"

$8 an hour is better than zero, I suppose.

$8 an hour is what we've come to thanks to our country's decision to remove tariffs on microwage nations. We owe a big "thank you!" to Bill Clinton and Larry Summers for this.

[treestar]

57. That's the idea though

We'd rather have the $8 per hour jobs than have them go to the Chinese for less.

DU will make that clear if you keep reading it. It's better to have a manufacturing job here than it is to outsource it, period. I'm not sure why that is the case but it is. It's that American should have jobs, and Chinese should not have them. Period. Chinese people do not deserve jobs, even if they will do the same job for less than that and even if there will be a resulting need for more immigrants to the U.S. :sarcasm:

Well, no, there should be no immigrants. Just open jobs so Americans can choose the one they want. The $8 jobs should just stay open and go unfilled unless Americans need them. :sarcasm:

Then when the economy contracts and people higher up the chain lose their jobs, at least we can proudly say that the Chinese don't have jobs either!

[quaker bill]

92. The alternate idea

is the notion that we do not actually need these jobs, that we can become an "information economy" and outsource the manufacturing jobs to lower wage economies to gain "comparative advantage". It ignores the painful and unchanging reality that half of our population, by definition, has a lower than median IQ, and actually needs gainful work and a reasonable way to support themselves. The problem with entire economic sectors crossing borders is that the population cannot follow the jobs. When jobs move freely and people can't, you have economic displacement.

[amandabeech]

155. The Chinese are welcome to jobs in manufacturing,

but they need to abide by fair labor standards, union organizing, safety regulations and anti-pollution regulations.

They also need to pay their workers enough so that the workers can actually buy the stuff that they are making. Henry Ford's theory applies everywhere.

The purely export driven national economic model may not be a "forever" economic model.

[No Elephants]

134. And they are in Obama's administration, Summers, literally and Bill by proxy.

(And no, I don't mean Hillary)

[burning rain]

38. Texas has a better image than the People's Republic of China?

Where--in Waco?

[Subdivisions]

42. Of course they are. Here's how it works:

1. Send all manufacturing jobs off-shore.
2. Get the American people to over-extend themselves with easy credit and cheap houses.
3. Allow the credit market to collapse and cause American people to default their credit obligations.
4. Allow economy to sink into depression.
5. Credit collapse causes massive job losses.
6. Move manufacturing jobs back to America.
7. Pay American people a fraction of what they were paid before collapse.
8. Pocket profits.

Objective: Lower Americans' standard of living.

Corporations win. You lose.

Objective complete.

[BlancheSplanchnik]

45. Congratulations and thanks to Mr. Shami

It's not easy to make a big change like that, even when it's for the better (change scares people, as we know).

Once one person leads the way, others begin to catch on.

Thank you again, Mr. Shami. This is a hugely positive sign.

[kestrel91316]

47. Fine, as long as he hires AMERICANS or people with valid green cards

[ohio2007]

56. or maybe newly arrived immigrants willing to pay taxes

If he's an ex palestinian, maybe he is willing to bring family over to get the buisness rolling.

Seems he knows more about the american spirit of free enterprise then the natural born citizen that has come to ask what his country can do for him.

[kestrel91316]

59. As long as they are either citizens, or here legally with green cards, I don't give a damn.

[treestar]

61. Would it be better he stayed in China if the people he hired here were

undocumented aliens?

Is it worse to employ illegals and keep the factory here (with some jobs for legals) or to have the whole thing in China to avoid that?

[Romulox]

82. Yes, it's worse to employ illegals here, as doing so creates "EXTERNALITIES" for everyone else

Such as increased costs for social services. :hi:

[closeupready]

50. And if I am in the market for one, I will buy his, not the fragile, flimsy product made in China.

You know, the products "Made in China" that are made of cheap plastic, and don't last six months.

[benld74]

51. Outsourcing NEVER made business sense, EXCEPT for their bottom line

I learnt that mu firstist day in my MbA clasess!!!

BUT that is the ONLY thing CEO's are looking at!

[treestar]

60. This guy is not, he admits he is eating $2.50 per hour

He is not raising the price of the product. Long term he expects it to pay off, though.

A business has to look at the bottom line. It will be interesting to see if he in fact does not eventually have to raise the price.

[FarCenter]

71. On Amazon, a $190 list model sells for $67.18

Looks like he doesn't need to raise his list price!

I wonder if he is raising his average selling price to retailers.

[kath]

147. Not eating $2.50 per HOUR, but $2.50 per ITEM of product - but admits there will be other

savings, IIRC.

[treestar]

53. He's an immigrant

:rofl:

I mean, he's American, but it seems ironic he did not start out as one.

[pampango]

77. One immigrant that will create jobs for Americans. We rarely hear about this side of immigration.

Good for him. :)

[No Elephants]

135. Why is it ironic that he was not born here?

[Mystayya]

55. Mr. Shami just got my business.

The next one I have to buy will be from here

http://www.farouk.com/contact.asp

[blue neen]

97. I checked the website you posted, and I have heard of these products.

I'm with you. This company will be getting my business. :thumbsup:

[chasitynola]

63. That is great

and, I don't care what state it's located in, manufacturing in the US is a good thing. Let's not pick it apart, shall we? I use the products from his line. I am happy that he made his decision and is hiring many people in our neighbor state.

We want people to stop outsourcing and then so many of us in this forum want to dictate where he puts his factory?? Why? People of Texas don't deserve jobs...only people in 'better educated' states?

:shrug:

[CanonRay]

65. Great. Why the f... Houston?

Most miserable city in this country, for my money. Bad weather, bad traffic, bad cops, bad pollution. Houston's got it all.

[WriteDown]

66. Possibly due to the fact that it has more Fortune 500

companies than any other city except NYC. :shrug:

[madmom]

74. Including cheap Mexican immigrant labor ?

[Romulox]

81. cheap labor. nt

[Xenotime]

170. Much of texas is rethugs. Worst possible area in the country.

[davidwparker]

69. "because we'll have better quality and a better image" -without a doubt

Think local, national, and boycott products from communist China.

[tjwash]

70. "...spends about $500,000 a month fighting counterfeits"

That's why when I worked at INTEL in the late 90's, that we refused to move any manufacturing or FAB work to China. They all but admitted that if we did, they were going to steal the technology and flood the market with knock-off chips.

Oh well, I guess some places had to figure that out the hard way.

[Go2Peace]

106. Intel will have to find out the hard way too, they have been building plants in China since 2001

[greengestalt]

73. End the false economy!

Outsourcing has always been a false economy.


For whatever "Savings" the Death Camp wages provided, it was more than made up for by other factors. Piracy of the literal and the intellectual type, like the same sub contractor using the same equipment to produce knock-offs for extra money. The police chief's third cousin coming in randomly and getting $1000 in bribery ("Tea Money" they call it) like it's candy. And last but not least, the cost of transport, which even in the 90s made up for the wage difference.


The reason so many companies outsourced was that they could take for granted, thanks to Bush, Clinton and Dubya that they'd not only not face tariffs (thanks to Nixon and Reagan) but they'd actually get "Tax Breaks and Subsidies" to ensure a profit.


I think this guy's sensing that Obama might just do something he's obviously trying to avoid doing, despite it being a campaign promise. But with health care reform handed back to him after being chainsawed, he'll have to do something. And, unlike his health bills, he can do most of the work with his pen at his desk and there's little if anything other branches can do to stop him.


This should actually be very inspiring. End the false economies, there will be so many jobs coming back to the USA even the illegals can't fill them all. In the meantime, use the depression fear to mobilize the populace to force governments and police to crack down on illegal employers. Won't mention or encourage any 'extralegal' actions, but we can legally write anonymous (but polite) letters promising to go on jury duty and "Nullify" crimes in protest of ignoring illegals, including perverts and cop-killers. We can use the Jury as protest, and it's time to tell a lot of people that, especially our "Right Wing Friends", since they'll listen this time.


So, if we diminish illegal aliens and the false economy of "Outsourcing" at the same time, the sheer lack of supply to demand will force wages sky-high and create tons of opportunities for those wanting to get in business. Heh... I'm a "Leftist" I guess, but I'm arguing if anything a "Free Market" approach! (versus a rigged, illegally false market)

[David Zephyr]

79. K&R.

There are a lot of things that would spur manufacturing here in the U.S. and with union shops, too.

[Romulox]

80. Bet he won't be paying a living wage. How many of his employees will be on public assistance?

Ala the other great "jobs creator": Walmart. :shrug:

[amandabeech]

157. You're right--there are plenty of programs for the working poor

that subsidize low-wage jobs.

The worker likely won't have health insurance, but his or her children will be on a highly subsidized SCHIP plan at the least. WIC for the children and food stamps for the family would also be available.

At the greatest, the worker and his or her love interest won't marry so that the mother and children will receive AFDC (or whatever it is called), Section 8 rent subsidies and Medicaid.

I don't begrudge low wage workers the help that they get, but I agree with you, Romulox, that higher wages and company paid or subsidized health care would be a lot better for the dignity of the family and the body politic.

[proteus_lives]

85. Bravo for Mr. Shami!

This is good for Texas and good for America.

End outsourcing!

[Juche]

86. China isnt' cost competitive anymore

Several years ago you could save about 10-20% of cost by manufacturing something in China vs the US. But that gap is narrowing rapidly, and disappearing altogether because about a half dozen factors are making Chinese goods more expensive. Which is good news for US manufacturers.

[mistertrickster]

90. What are those factors? Energy costs? Just wondering . . . nt

[Juche]

93. Various ones

1. China's currency is increasing in value while the US currency is going down.

2. The cost of raw materials is going up. Raw materials make up a large % of cost for manufacturing (maybe 60%) and due to shortages prices are going up. So whatever labor savings China might offer are starting to be offset by the fact that raw materials are making up a bigger % of the cost of manufacturing, and labor a smaller %

3. Wages in China increase at 10-15% a year, in the US they go up about 3% a year. So Chinese wages double maybe every 6 years, in the US they double every 25 years. Chinese workers may make $1-2/hr, US workers may make $8/hr. So the labor gap is going down.

4. China has had alot of unrest about environmental problems and labor. So China is starting to enforce environmental regulations and allowing workers to form unions. They are also implementing higher quality control standards due to consumer backlashes. All will increase the cost of production.

5. Oil prices are going to go back up, and shipping goods and materials to and from China is not cheap when oil hits $100/barrel or higher. Whatever minor labor savings you can get from outsourcing will be offset by shipping costs.


Those are the ones I know about. There may be more on top of that, but China really isn't some manufacturing paradise anymore for employers from what I understand. The savings are minor and there are quality control problems. I think savings from outsourcing back in 2004 were only 10-20%, and that was assuming you saved anything. Savings now are lower due to the reasons listed above. The article the OP posted talked about how the manufacturer said he saved $2.50 for every curling iron he made in China vs the US. But the irons sell for $130-170, so you are saving maybe 2% of the retail cost by building them in China vs the US, and you are running quality control risks by saving that 2%. Plus he said prices may go down domestically soon if he can get bulk purchases of raw materials. So the manufacturer who moved his production to Texas may have only been getting a 1-5% cost savings by building in China, and over the next few years even that will disappear due to the reasons I listed above.

Honestly, it may soon be cheaper to make things in the US than China. I wouldn't be surprised if that start happening over the next 10 years. Plus the US has better quality control, so that will be an added incentive.

[Deja Q]

110. And the US government and the ability to repay the national debt (tax revenue and more employment).

[mistertrickster]

89. Interesting. The main motivation is China's refusal to enforce anti-knock-off laws.

In other words, Mr. Shami moved his factory to the US because of a lack of government regulation in China.

Surprise, surprise.

[madmom]

94. Let me get this straight, people are praising this guy for bringing a factory to a

right to work (for less) state and paying $8 an hour while at the same time people on this board condemn walmart. I know for a fact walmart pays more and chances are real good since there are no unions there are no benefits at this company. Sometimes I just got to walk away:banghead:

[Deja Q]

109. I'm on the fence. At least it's not an electric fence while suffering from "overactive bladder"

:shrug:

[DatManFromNawlins]

162. Yep

But I bet you'd flat out fucking love it if (a) it were a northern state, or (b) those people remained unemployed.

[madmom]

164. Yup I just love to see people suffer! What is wrong with some one wanting better for other

people? I want better wages and benefits and union would be good I don't give a flying fuck where they are. I'm just progressive like that, how bout you?:shrug:

[grahamhgreen]

95. Now can we get out of NAFTA and WTO and GATT, and increase tarrifs, and bring the jobs back!!!

[lonestarnot]

112. Just in time for the appliance rebate!

[texastoast]

114. Farouk is a very nice man

Our children have known each other since they were little. I'm very happy he did this here in Texas. And many posters on this thread have jumped to a bunch of uninformed conclusions. May he start a trend that spreads across the nation and maybe, just maybe, we won't have to lose so much of the Piney Woods to make way to house all those poor out-of-staters coming down lining up for our "low-paying" jobs.

[1776Forever]

127. I want to thank you for the post - And thanks to the owner for moving back to the USA!

I have a step-son and his fiance' in Houston and he is looking for a job. I am passing this on to him. I hope he can find a job there!

:hi:

Check this out!

...........

http://www.farouk.com/generic/press/details.asp?Date=7/24/2009

FAROUK SYSTEMS CELEBRATES THEIR GRAND OPENING TO ITS NEW "MADE IN THE USA" FACILITY AND HAS CONFIRMED THEY WILL BE HIRING OVER 1,000 PEOPLE THIS YEAR

7/24/2009

July 30, 2009, Houston, TX – Farouk Systems is celebrating its Grand Opening and Ribbon Cutting Ceremony for CHI USA. The event will provide the public with a Job Fair, while enjoying a TX BBQ, entertainment and guest speakers including dignitaries and celebrities. Our guest invitees include President Barak Obama, Governor Rick Perry, U.S. Department of Labor Secretary Hilda Solis, Mayor Bill White, Senator Kay Bailey Hutchinson, Sylvester Stallone, Willie Nelson, Beyoncé Knowles and more.

..........

Why didn't the "news" have more on this?

[No Elephants]

136. So far, I like this guy. Moved his operation to his adopted home town, makes

more environmentally friendly products and gives back constructively to Palestinians, too.

"Shami's ammonia allergy led to a lifelong commitment to develop products that are safe for hairdressers and the environment. He collaborated with NASA scientists to create CHI, a product line that includes blow dryers that emit considerably less electromagnetic fields than regular dryers. And through PetSilk, Farouk Systems also offers chemical-free products for pets.

Shami is using his success to give back to his homeland.
"Because of Israeli occupation, Palestine is dependent on donor countries," Shami says. "But there are many Palestinians with the means to help, and we need to share our success with our people." In 1999, Shami opened a science high school for girls in Beit Ur. And in 2009, in partnership with the United States Agency for International Development (USAID), he sponsored an infrastructure project that includes sidewalk and road electrification projects for the benefit of Beit Ur’s 5,000 residents and 20,000 people from the surrounding communities who regularly pass through the village. The project will create an estimated 4,500 job days for approximately 70 workers.

"When I meet Israeli business counterparts, we eat steaks in fine restaurants. But nearly 80 percent of my relatives are unemployed because of Israeli travel restrictions," Shami says. "I don't know much about politics. But I know that we deserve our rights and our freedom just like people everywhere."

http://imeu.net/news/article006752.shtml

More than I've done.

[BobRossi]

141. Kudos to Farouk!

And a thank you too!

[Overseas]

156. +1

[gtar100]

143. I hope it's a trend

[KansDem]

146. This is what capitalism is all about...

...hairdresser who built a $1 billion manufacturing company around a popular line of hair irons...

I don't use hair irons, but apparently someone else does. And a lot of "someone elses" to boot!

However, education, energy, healthcare, and the environment should not be in hands of capitalists...

[Nikki Stone1]

168. So now that our salaries are lower in real dollars and our unions are busted, now they come home

How generous.
:sarcasm: