We basically are doing a backwards team track with our SIT mixing facility we have. We buy the plastic in bulk and then mix it to our customers needs then ship it to them and they pay us for both the materials and the handeling of the product. We ship it all over the eastern US like that. I started asking our customers that have some of their manufactoring out of the USA if they would bring it home if this plan is passed all of them have said YES they will. Why by the time they pay shipping from China after the hikes in rates the price difference between the USA and China is now going to be less than 2%. Why so low the price of raw materials and other issues are going up in Chinca labor is going up.
The lower cost of manufactuing in places like China will be rising naturally as their standard of living rises. From what your customers say, it sounds like the cost of manufacturing in China is now very close to the cost of manufacturing in the U.S.
If that is the case, why do we need a 35% import tariff to level the playing field? It sounds like it has leveled on its own by the natural economic process over time. So why would your customers require the tariff as a condition to them deciding to move manufacturing back to the U.S.?
In the 60’s, the low cost labor location was Japan., then it moved to Korea, then China and the rest of SE Asia. The last stop will be Africa. The Chinese have been investing heavily in Africa.
In the end, everybody has more and works less. Best analogy is mechanisation of agriculture a century or two ago. More food for much less farm labor.
What manufacturers are finding out as they move plants to the 3rd world countries for their cheap labor is that the labor does not remain cheap forever. In a world of world wide communications those in the 3rd world see how others are compensated for their labors and undertake efforts to raise their own levels of compensation. You can only keep people dumb, ignorant and in the dark about the world for so long, especially when you put them in the world of modern manufacturing.
Remember textile mills moved from New England to Southern states for cheap labor, then southern labor raised their cost and the mills were move off shore, now off shore labor is rasing their cost. What’s next Antartica?
Even though the cost of doing business over there is within 2% of here the Regulatory costs of being here is over 40% higher alone. Over here if you fail to promote a what is considered a hampered person is how I will say it your company will face thousands of dollars in fines from Government agencies. Then throw in overzealous regulators like the EPA that will come in Fine you for something they Suspect your doing then when your proven Innocent of all charges they still refuse to acknowelge that you where innocent. Then throw in the higher taxes that they have to pay here compared to there China IIRC it is 20% my boss pays 35% on top of all the other taxes and fees an OTR company pays. Or as my boss says by the time he sees a dollar in profit after taxes Uncle Sam the State and County taken 60% of it first.
He wants to grow his business however with the current Regulatory climate and tax structure in this country he can not afford to do it. He would love to grow his fleet to over 300 trucks he has the customer base to do it however the rewards for going that size are not large enough for him to justify the close to 14 million dollars in capital outlay it would require to get the equipment needed. Then the task of finding 50 more drivers that can meet our requirements begins plus the extra 500 grand in health insurance 700 grand in Fleet coverage.
I’d love to see where you pulled that number from.
That is what our customers are telling me on the phone. They are basing that on total costs of Customs duties for the stuff they have to Import to China to make their goods there shipping costs to and from China via both containers and sometimes air freight when the ship is delayed due to a mechanical breakdown in the middle of the Ocean or at another port. It happens more than you realize. The labor costs the taxes and unlike us or at least not as bad greasing the palms of the corrupt government officals. One customer we have that would love to bring all his production home when his contracts run out can’t get anything out of China for less than 10k to a local party boss in an envolpe in 100’s why becuase he can and has declared his product Banned under Chinese Law and seized the entire run before. What does this man make your going to laugh your butt off those pizza box inserts that keep boxes from crushing each other. You know those little plastic ones. Well the Offical in China has in the past declared them to be Religous in nature and seized Millions of them. Yeah he thinks they are crosses.
Anecdotes are not exactly reliable. If it were not cheaper to import quality stuff from China, the market forces would not support it.
OK. Good to know the science behind your research otherwise I’d think you were just making this stuff up. Don’t worry. It doesn’t diminsh your credibility any.
Hard to imagine how those trucks can oprate under these burdens. [sigh]
Well whatever the price difference is between Chinese products and American-made products; it can be eliminated with the stroke of a pen by adding a sufficient import tariff. That ends the price difference by raising the price of Chinese imports to match our prices. So it guarantees that the price of Chinese products will match the price of our products.
However, it does NOT guarantee that the jobs that were lost to china for lower cost production will come back to the U.S., which is the whole point. THAT point depends on whether U.S. consumers will be willing to pay the new higher price for their products. Economics 101 says that when you raise your price, it reduces your sales.
Consumers are perfectly willing to cut back their consumption if prices for what they consume happen to rise. So the import tariff can easily backfire and leave us in a far worse condition than before. But wait-- the damage does not stop there. Countries hurt by loss of sales due to our tariff will try to get us to lift the tariff by inflicting pain on us. They will do this by blocking our imports into their countries.
You end up with not free trade.
That and the reduced sales in this country will make our economy worse, not better.
[quote user=“schlimm”]
Murphy Siding
Shadow the Cats owner
That is what our customers are telling me on the phone. They are basing that on total costs of Customs duties for the stuff they have to Import to China to make their goods there shipping costs to and from China via both containers and sometimes air freight when the ship is delayed due to a mechanical breakdown in the middle of the Ocean or at another port. It happens more than you realize. The labor costs the taxes and unlike us or at least not as bad greasing the palms of the corrupt government officals. One customer we have that would love to bring all his production home when his contracts run out can’t get anything out of China for less than 10k to a local party boss in an envolpe in 100’s why becuase he can and has declared his product Banned under Chinese Law and seized the entire run before. What does this man make your going to laugh your butt off those pizza box inserts that keep boxes from crushing each other. You know those little plastic ones. Well the Offical in China has in the past declared them to be Religous in nature and seized Millions of them. Yeah he thinks they are crosses.
OK. Good to know the science behind your research otherwise I’d think you were just making this stuff up. Don’t worry. It doesn’t diminsh your credibility any.
Hard to imagine how those trucks
[quote user=“Murphy Siding”]
schlimm
Murphy Siding
Shadow the Cats owner
That is what our customers are telling me on the phone. They are basing that on total costs of Customs duties for the stuff they have to Import to China to make their goods there shipping costs to and from China via both containers and sometimes air freight when the ship is delayed due to a mechanical breakdown in the middle of the Ocean or at another port. It happens more than you realize. The labor costs the taxes and unlike us or at least not as bad greasing the palms of the corrupt government officals. One customer we have that would love to bring all his production home when his contracts run out can’t get anything out of China for less than 10k to a local party boss in an envolpe in 100’s why becuase he can and has declared his product Banned under Chinese Law and seized the entire run before. What does this man make your going to laugh your butt off those pizza box inserts that keep boxes from crushing each other. You know those little plastic ones. Well the Offical in China has in the past declared them to be Religous in nature and seized Millions of them. Yeah he thinks they are crosses.
OK. Good to know the science behind your research otherwise I’d think you were just making this stuff up. Don’t worry. It doesn’t diminsh your credibility any.
Yep, putting on a 35% tariff on the multimillion dollar pizza saver industry will definitely bring all those factories and jobs back to the USA and make America great again. Figuring that you might be able to get about 5,000,000 of those puppies in a 53 foot semi van, this would surely constitute a couple dozen trucks per year. Perhaps the railroads should be pursuing that business? [pi][dinner]
The tariff is the centerpiece of a plan to revitalize the U.S. economy, which everyone generally agrees is not growing fast enough.
I have no idea what the total plan is regarding the desire to bring manufacturing back to this country, but the following seem to be under consideration:
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Threaten a 35% trade tariff as a negotiating tactic in order to discourage companies from moving production to other countries, encourage companies that have already moved production to move it back to the U.S., and prevent foreign based companies from undercutting our country in the production of products.
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Use the power of the presidency to strong arm and bully companies against moving production to other countries.
It would seem like an easy target would be toying with the depreciation write-offs available on equipment for businesses based on origin of said equipment and whether it was available in the US. That might be a little more subtle than saber rattling and firing shots over the bow.
Anybody who has taken an introductory accounting course knows that there are three recognized methods of calculating depreciation. No matter what method is used, a generally accepted lifetime for the equipment (15 years for locomotives as an example) is used. Miningman’s suggestion sounds like creative accounting with lots of unintended consequences courtesy of the United States Tax Code.
I’m not advocating it. I’m just suggesting that there are some easy ways for politicians to mess with business depreciation rules to try and force the market to do things the politicians want. A couple years back, to provide stimulus farmers were allowed to depreciate new farm buildings very rapidly. It was almost like getting a free building. Most farmers who could, put up a building.
As Murphy suggested, and it frequently happens, Congress does tinker with depreciation rules to encourage/discourage one or another class of taxpayers. The most common method used is to shorten allowable depreciation lives for tax purposes – in some cases to 100% immediate write off or perhaps to the generation of a tax credit, which is even better.
In theory, that doesn’t change the way the asset should be depreciated on the books of the business, but it can create a complexity on the books called a deferred tax account. Many smaller business do not bother to track depreciation differences and record deferred taxes.
It is easy to blame other countries for our economic woes and loss of jobs. True, a lot of jobs have been lost the out sourcing of manufacturing. Walk into a big box retailer and a large percentage of the merchandise is made somewhere outside the US. What people forget, is that trade is a two way street. The US imports a lot of consumer goods but also exports a lot of stuff. The US exports a lot of agriculture commodities and farm products and value added products. Companies like Boeing benefit from more liberal trade deals with other countries. I do believe that Boeing sells a lot of their commercial aircraft products to foreign customers. I suspect that Boeing probably provides some good jobs that pay good wages and salaries. If Trump imposes an all out trade tariff on imported goods even if it is just China, US farmers and companies like Boeing will have a harder time selling their stuff. That in turn can mean a loss of jobs, maybe a lot of jobs. Too top it off the consumer will have to pay more for products at the store. Trade wars are a bad idea.