Country of Origin Comparitve Cost

[ringzero]

The topic of "country of origin" regularly arises on MTO - often resulting in controversy, heated exchanges between members, and locked threads.  ;>

It's not my intent to stir up trouble, so please keep politics out of this thread.

The following is excerpted from a post by Sal over on the Spyderco forums, who is someone with first hand knowledge of the relative cost of manufacturing in various countries.  Sal wrote this in response to someone complaining about the relative cost of a Japanese FRN Dragonfly versus a Chinese Tenacious.

Begin Sal Excerpt:
***********************************
$1.00 in the US:

Costs $1.35 to make something in Europe as the Euro is valued higher. Add shipping, duties, tooling costs, etc. which increases the cost.

Costs $1.20 to make something in Japan.

Costs about $.75 to make something in Taiwan.

Costs about $.30 to make something in Chnina.

There are in fact quality differences as well as material cost differences that make the cost equation more complicated.

The US, Europe and Japan produce very high quality blade steels.

We ship US steel to Taiwan.

China produces it's own steel, but as yet, it's not exotic chemistry, though they produce some good steels and they are improving.

Our margins are relatively fixed. Because we might be able to "get more" for a product does not mean that we do. We feel that "to to charge as much as the market will bear" is not best.....for us.

The Tenacious could probably command a higher price. The Dragonfly is probably a better deal based on our costs. The maker that makes the Dragonfly has already proven over time that his quality is very good and the knife will perform for a very long time. The maker that makes the Tenacious is very good, but we've not had the time element yet to tell long term quality.
***********************************
End Sal Excerpt.

We often hear generalizations and stereotypes, like:

"Manufacturing costs in China are dirt cheap because workers are virtual slaves suffering in sweatshops."

"Companies farm out manufacturing to Japan because it's cheaper."

"Stuff made in Taiwan is no better than stuff made in China."
 
Rather than relying on stereotypes, MTO members may find it intersting to look closely at Sal's figures on compartive cost of manufacturing.

Note that making knives in Japan costs 20% MORE than making them in the U.S.

Note that manufacturing in Taiwan commands a HUGE 150% increase over manufacturing in China.

Note that European manufacture is even more expensive than Japanese.

Very intesting stuff here.

.

[DaveK]

It really is a no-brainer isn't it?

Much of the upset over this issue is / was based on quality (although some was based on xenophobia), and there's no denying that there has been some real rubbish coming from those countries!

The relative costs don't surprise me at all, as I have some experience in business with the labour costs in some of those countries. What did surprise me however was that Spyderco ship US steel to China! And even then it's cost effective! Wow.

I think Spyderco seem to have the best approach to this "outsourcing" matter tbh. Good for them.

[mhhanson]

I wish it was that easy.

The production costs for many items are very close given the same quality.  Labor for many products is not the key.

It is the other overhead costs that drive up the costs more in other countries.  Ok that is a nice way to say regulations.  The second is fixed vs floating currencies.

There are exceptions for small high hand labour items and location of resources.

There is places in the world that each item is best made, unfortunately global politics prevents that from happening.

[ringzero]

What did surprise me however was that Spyderco ship US steel to China! And even then it's cost effective! Wow.

Spyderco ships U.S. steel to Taiwan - not to China.

Taiwan must do a much better job of manufacturing than China, given that Spyderco is willing to pay 2.5 times as much to have knives made in Taiwan rather than China.

.

[Gadget Guy]

 

[ringzero]

Very contructive addition to the thread, GG.

Really elevates the level of discourse.

.

[Mike, Lord of the Spammers!]

Gentleman

[DaveK]

What did surprise me however was that Spyderco ship US steel to China! And even then it's cost effective! Wow.

Spyderco ships U.S. steel to Taiwan - not to China.

Taiwan must do a much better job of manufacturing than China, given that Spyderco is willing to pay 2.5 times as much to have knives made in Taiwan rather than China.

.

My bad - I meant Taiwan.

Which Spydies are made in Taiwan - do you have any examples to hand?

I know my Byrds and Tenacious were made in China, but the only thing I have that's made in Taiwan is the Spyderench.

(I'm wondering if it's the complexity of the product that they'll pay extra for maybe).

[Gadget Guy]

Very contructive addition to the thread, GG.

Really elevates the level of discourse.

.

You're the expert here!

[Benner]

Mike tried a subtle hint.  Please don't make me make a bolder one.

[ringzero]

What did surprise me however was that Spyderco ship US steel to China! And even then it's cost effective! Wow.

Spyderco ships U.S. steel to Taiwan - not to China.

Taiwan must do a much better job of manufacturing than China, given that Spyderco is willing to pay 2.5 times as much to have knives made in Taiwan rather than China.

.

My bad - I meant Taiwan.

Which Spydies are made in Taiwan - do you have any examples to hand?

I know my Byrds and Tenacious were made in China, but the only thing I have that's made in Taiwan is the Spyderench.

(I'm wondering if it's the complexity of the product that they'll pay extra for maybe).

Don't have that info at hand, because I'm certainly no Spyderco expert/fanboy.

IIRC both models of Sage, and maybe Cat and Chicago are made in Taiwan.  Others too IIRC, but don't know for sure.

.

[DaveK]

I think this could be a good discussion, but will admit I edited my post a couple of times before submitting to steer clear of the politics.

We can't ignore the fact that Spyderco are using China, Japan, Taiwan and the US to make their stuff, and without even wanting to debate the rights /wrongs / politics, I'm genuinely interested to see what drives the decision to pick a particular country or facility to make each product.

It clearly isn't just price, else everything would be made in China!

[ringzero]

Very contructive addition to the thread, GG.

Really elevates the level of discourse.

.

You're the expert here!

Thanks for participating in this thread, GG - eagerly awaiting your further contributions.

.

[Mike, Lord of the Spammers!]

Very contructive addition to the thread, GG.

Really elevates the level of discourse.

.

You're the expert here!

Thanks for participating in this thread, GG - eagerly awaiting your further oontributions.

.

OK one more word and it get's locked!

[Gadget Guy]

Very contructive addition to the thread, GG.

Really elevates the level of discourse.

.

You're the expert here!

Thanks for participating in this thread, GG - eagerly awaiting your further oontributions.

.

[youtube] http://www.youtube.com/watch?v=I0e1kWPGT4k&feature=related [/youtube]

[DaveK]

This is gonna get locked now isn't it?

[Mike, Lord of the Spammers!]

This is gonna get locked now isn't it?

I'd say that's probably a safe bet

[Benner]

Not if people play nice and get back on topic real quick.....

[ringzero]

This is gonna get locked now isn't it?

I'd say that's probably a safe bet

Reward the blatant little troll by locking the thread.

That was the intent of the troll right along - to suppress an interesting discussion by getting the thread locked.

.

[Grant Lamontagne]

Comments like that really aren't helping.  As my mother used to say, it takes two to fight.

Def

[Gadget Guy]

This is gonna get locked now isn't it?

I'd say that's probably a safe bet

Reward the blatant little troll by locking the thread.

That was the intent of the troll right along - to suppress an interesting discussion by getting the thread locked.

.

You have something to say to me you come to CA and say it to my face!  

[Benner]

Well that lasted long.

[Mike, Lord of the Spammers!]

Well that lasted long.

And it's a shame as this could have been an interesting and worthwhile topic