I was in Shenzhen and Xiamen for 2 weeks in April, and am headed back there in a month.
This time I'll actually be living on-site at one of our partner manufacturer's factory towns. It's difficult to wrap your head around the sheer scale of what has happened.
The factory town I'll be living in is 2 hours from the nearest city. Until the founder decided to build a factory there it was a tiny tropical village with population in the 100s. The air is clean. The weather in April a balmy 72F.
Today, it is home to 10000+ workers who all work for the manufacturer. Some live in company housing, but most have homes with their families in the surrounding villages. There are basketball courts, tennis courts and a running track that circles the compound.
The facility is vertically integrated - one building die casts metal molds, another uses them to injection mold plastic. They meet another truck from the PCB building and all get together at the assembly line.
The assembly line itself is a pressure positive facility - the air pressure inside is slightly higher than the atmospheric pressure so that air with impurities never gets in.
I was there for around 8 hours and I spent it in a daze. The kind of physical product development you could do with the kind of resources available there are otherworldly. I can't wait to be back.
The US used to have Trenton, NJ, which still has a huge illuminated sign "Trenton Makes, The World Takes".[1] This is about as meaningful today as "South San Francisco, the Industrial City", which can be seen on US 101 northbound approaching SF.
The US has factories which look like Shentzen factories. Here's one.[2] It's run by Flextronics. More typical in the US are huge factories without many people doing direct labor.
Blatantly false numbers in this article calls into question anything that the journalist said. Really sad, terrible fact-checking in this one. The population of SZ in 1979 was 30,000 not 300,000...that's an order of magnitude difference...you're talking about a tiny fishing village with no infrastructure becoming a world bastion of manufacturing. It's not hundreds of factories besides Foxconn, it's THOUSANDS. Did the author even go to Shenzhen? Back in the, "good old days," of 2007 when China was really cheap, wages were $7 per hour...you could rip on Shenzhen and compare wages to western countries...now it's up to over $20/day in a lot of places from what I have seen...scarily close to American minimum wage. If you want that $7/day wage you've got to go to inland China. I really don't think this author did his research, the article reads like it was rushed through and it seems like they just read a bunch of outdated articles on the topic and regurgitated them under the vice brand.
Just a nitpick with your comment but American minimum wage is $58/day and it's higher in most states. The median American assembly line worker makes $88/day. China isn't that close yet.
As a engineering student I have been very frustrated about this.
One of the main reasons why I think engineering is failing in the west is the deep separation between the math and actual production.
Software is an exception and this is why the US churns out world class software engineers.
But I think rather and throwing more billions into teachers and saddling students with more debt it would be be much better if the mid-level technical jobs existed to allow mid-level engineers to learn from experience rather than excel purely symbolicly ( in maths )
I call BS - I design in the west and manufacture in Schenzhen (and Shanghai) - you're only separated from the manufacturing if you refuse to get a passport and travel - it's a small world these days and the people a day away are friendly
The big truth here is in one of the last paragraphs of the article - Shenzhen (and China) is going through an accelerated industrial revolution - they're making many of the same mistakes the west made (don't forget the killer smogs of the 50s in London), and learning from them - Shenzhen has simply banned the 2-strokes scooters ubiquitous throughout Asia, replacing them with electric ones, petrol powered taxis incur a 3 kwai tax over the blue electric ones ....
compared to what you'd likely spend for a build in the US vs in China you'll still likely come out ahead, I'd argue that if you can't afford to go you likely can't afford your project
Isn't the contention "it would have been possibly affordable / reasonable if mid-tier manufacturing were still locally available in the United States"?
It is, you just don't know about it I guess. I spent the past 15 years working for Sanmina, another global high-tech manufacturer like the aforementioned Flextronics. Just within the US we had facilities in CA (Fremont, Livermore, Newark, Costa Mesa), AL (Huntsville, Guntersville), NH (Manchester, Derry), WA (Bothell), SC (Fort Mill), NC (RTP), TX (Allen, Carrollton, El Paso), CO (Louisville, Colorado Springs), AZ (Phoenix), UT (SLC) and more. These are factories building everything from simple injection molded plastics or PCBAs to stuff like MRI machines and military avionics. In the San Jose area we helped do DFM on Bloom Boxes for Bloom Energy, and designed & build massive storage arrays for Netflix.
Just because most people don't know about US manufacturing doesn't mean it's not still around, and in fact has hit recent peaks as the economy has recovered after the global recession (we'll see what happens now that economies are wavering again).
Yeah, but if your factory is down a flight of stairs, and you have daily face to face meetings with your Manufacturing engineers, who get involved with the product at the first meeting, it's a whole lot easier.
deep separation between the math and actual production.
This has nothing to do with engineering and everything to do with management.
Take Tektronix, for example. They used to have world class engineering and manufacturing in Oregon. Then they got bought by Danaher, a conglomerate that exists solely to acquire and "monetize" companies, while not investing sufficiently in future R&D.
Now Tek is a hollow shell of itself. The remaining engineers travel often to China, where all the production is.
But a lot of non-technical people got very very rich in the process. So I guess it's a good thing. Right?
But it's also a yin and yang thing. Tek wouldn't have been scooped up by Danaher if they were able to succeed on their own. But maybe they would be even worse off if Danaher hadn't bought them? That's the eternal lifecycle of most companies. Scrappy startup -> successful -> ossified -> bankrupt or merged away.
Or is it merely one of the unintended consequences of a largely unregulated financial market that doesn't have the patience for research and development?
I keep thinking about acquisitions like Tek's and the incredible value that was accumulated over decades that's being destroyed in favour of a quick return and I keep thinking that 'market efficiency' doesn't lead to a lot of wealth.
Unless you manage a hedge-fund, I guess. Even then, though - they'll only be able to pick the meat off of the bones of western industry for so long - sooner or later the corpse will be picked clean and all of that wealth and technology will have migrated east. And no one in the east is so tolerant of that sort of selfish wealth-destruction and corporate vandalism as we are.
The large unregulated financial market has plenty of patience for R&D by Amazon, Google, Facebook, Uber, etc. They just don't have patience for R&D by Danaher.
Assuming you were investing, would you personally be more likely to park your money in Danaher or Uber?
Amazon, Google and Facebook have protected themselves from the "limited time horizon" of the market. They have either small floats or class B shares, guaranteeing that the long term vision of the company is grounded on effective control by the ones steering the vision.
Managing future value is challenging. It's easy to say that the market is thirsty for value now. However, if you submit to a golden "invest in the future" strategy, your company may be inefficient (from an investor's perspective): Returns will be lower than what you can get elsewhere, meaning that the company should release funds to investors instead of investing internally. On the other hand, if you submit to maximizing local (in the time axis) returns, you'll surely forego disruptive jumps, their gains on efficiency and the future profit they entail.
The "protection" GOOG/AMZN/FB have may prevent hostile takeovers by Wall St if share prices drop, but it can't keep share prices high.
Given a choice, you have $10k to spend on either Uber, Facebook or Danaher shares. Danaher will continue to invest in the future, rather than being gutted.
What are you suggesting? That companies be required to invest a portion of their earnings in r&d or be delisted?
Market efficiency leads to a massive burgeoning of wealth - for investors, producers and consumers. Look at everything around you. All produced by market efficiency ruthlessly killing off poorly managed, run or outdated products and companies.
The siren song of 'dem markets done me wrong' is a pleasant place to submit to - nothing soothes the soul like a blame-figure to pin the ills of the world on - but I would suggest thinking it through a bit further.
For a start, hedge funds have nothing to do with conglomerates acquiring businesses and failing to understand that business.
What are you suggesting? That companies be required to invest a portion of their earnings in r&d or be delisted?
What I'm suggesting is that the cost of entering and leaving a position in equities is now so low that it's become difficult to be an income investor, especially when there are so many growth investors seeking positions. And its only income investors who want R&D - growth investors carry axes to shareholder meetings.
Market efficiency leads to a massive burgeoning of wealth - for investors, producers and consumers. Look at everything around you. All produced by market efficiency ruthlessly killing off poorly managed, run or outdated products and companies.
I know that 'creative destruction' is a popular valley trope, but everything around you was actually the product of a whole lot of expensive R&D which is difficult to do now in 2015 unless you own a market and can tell your own investors, blindly demanding quarterly price growth, to go fuck off for a bit.
We have equity markets filled with investors all maximizing their portfolios by selling mom's and dad's silverware and china. Maybe Tek's name and reputation really is worth more in the next 5 years than the company itself. Fire the engineers and run lean until the market passes you by and you close up shop. But is that actually creating wealth? Killing off 'poorly managed companies' isn't creating wealth - it's a crude form of arbitrage. Real wealth always comes from new technology.
For a start, hedge funds have nothing to do with conglomerates acquiring businesses and failing to understand that business.
Hedge funds are a symptom of the same problem, which is that no one wants to be an income investor when there's more money in selling mom's and dad's house.
The financial markets have patience for R&D that actually pays off. Look at how much money companies like IBM and Intel are spending on shrinking design rules. Heck, IBM does a lot of research in a lot of areas.
"mid-level technical" - This is the position that has disappeared most rapidly in the last 20 years. It has been replaced by software in CNC machinery. The present and future mostly will rely on high-level engineers that are able to manage a large amount of machines and non-technical machine operators.
>One of the main reasons why I think engineering is failing in the west is the deep separation between the math and actual production.
It's not that. It's just not economically viable to manufacture in the west when western currencies are kept artificially high, Asian currencies are kept artificially low and Asian manufacturers face less stringent environmental and labor regulations.
Get a job or internship at the right company. I work for a hardware startup and recently spent two weeks overseas at our manufacturing facility along with two of our interns. The opportunities are out there if you're looking for them.
> And before China, it was Designed in California, Manufactured in Japan.
Was it? I wasn't around for that time, but I was under the impression that in the pre-glory days of "Made in Japan" it was still designed in Japan by Japanese companies (which is how Sony, Toshiba, Panasonic got their starts). They didn't have the global manufacturing outsourcing we have today with "Made in China".
Whereas these days, any startup Chinese brands have to compete with international brands who can still enjoy the same cost of Chinese manufacturing
If the pattern keeps repeating, I speculate the end result is more consistent quality of living around the globe, labor costs would be a much less important differentiator. Country after country that used to be suitable for cheap manufacture has, as it grew & developed, become less suitable than some other country.
In the end, quality of living will increase world-wide until the cost of manufacture is roughly equal in all locations.
This is perturbed by a variety of costs that make it more expensive to pay an Elbonian worker $10/hr than an American worker $10/hr if the goods are to be sold in America- but it could close the gap dramatically.
Recently I've been buying small electrical parts for hobby projects (e.g. little rf transmitters and receivers), mostly finding stuff on amazon and ebay. Most of those parts arrive with an origin address in Shengzen, usually something along the lines of:
unit {big number},
building {big number},
sector {big number}...
Just based on these addresses I'd formed a mental picture of some dystopian industrial megacity.
Arduino is a toy, with strange design tradeoffs I can only guess at (ethernet on USB???). I don't own a single one, but I think it's great that lot's of people are doing lots of interesting things with them. It just doesn't meet my needs and considering how many other options you have at the same price point I don't see the point.
The facilities seem rather cold. Aside from one guy in a T-shirt, everyone is wearing jackets or wollen tops, tanktops, or both. It is currently tropical summertime in Shenzhen.
I saw some of the photos some time ago in a different article and now recognized them. It seems they are from different place/time or for some reason workers want to show the nice jackets they have.
looks like these workers will be jobless when the robots begin to replace them or the outsourcing hub moves to even a cheaper labor source, perhaps even Africa in the future.
I think if China could transform these very workers into consumers, it would be unstoppable.
"It’s impossible to shake the sense that the young workers here lack not just a sense of control and self determination, but also a certain carefree innocence many of their Western counterparts take for granted."
It surely isn't an easy life [0], but what always gets to me is the old people who are poor. At least the young has hope, especially in anomalous city like Shenzhen. Who knows what is going to happen in 5 or 20 years. It might even show itself to be one of the best places in the world to be born right now.
This time I'll actually be living on-site at one of our partner manufacturer's factory towns. It's difficult to wrap your head around the sheer scale of what has happened.
The factory town I'll be living in is 2 hours from the nearest city. Until the founder decided to build a factory there it was a tiny tropical village with population in the 100s. The air is clean. The weather in April a balmy 72F.
Today, it is home to 10000+ workers who all work for the manufacturer. Some live in company housing, but most have homes with their families in the surrounding villages. There are basketball courts, tennis courts and a running track that circles the compound.
The facility is vertically integrated - one building die casts metal molds, another uses them to injection mold plastic. They meet another truck from the PCB building and all get together at the assembly line.
The assembly line itself is a pressure positive facility - the air pressure inside is slightly higher than the atmospheric pressure so that air with impurities never gets in.
I was there for around 8 hours and I spent it in a daze. The kind of physical product development you could do with the kind of resources available there are otherworldly. I can't wait to be back.