A Look Into Costs Related to U.S. Manufacturing
Manufacturing has been a hot topic of debate during the 2016 presidential campaign, and that surely won't slow down in the coming months, as President-elect Donald Trump has made domestic manufacturing a cornerstone of his policy. Through proposed tariffs on Chinese goods and possibly changing the U.S.'s relationships with trade partners, there could be a shakeup in how much certain items cost to make and purchase.
This week, Business Insider proposed a few examples of products that would see a price change if they were manufactured in the U.S. It used iPhones, jeans, televisions, sneakers and solar panels as examples. Though one might not think of those as staples of the promotional products industries, they at least reflect certain aspects of the industry—textile manufacturing, electronic devices and items containing lithium ion batteries.
For items like iPhones, if the components were still sourced globally but assembled in the U.S., cost would rise about 5 percent. If both sourcing and assembly were domestic, the manufacturing cost of each device would go up an estimated $30 to $40. More importantly, the U.S. might not have the infrastructure for such an undertaking.
"The thing that people miss regarding bringing something that's a high-volume product, like any phone, to the U.S. is, where are you going to get the people?" Dan Panzica, chief analyst at IHS Markit Technologoy's Outsourced Manufacturing Inteligence Service, told Business Insider. "If you take all the people at GE, GM and Ford, it's still 20 percent less than the four Foxconn factories. What city would support a factory of 60,000 people?"
Contrary to electronics, like smartphones and the like, apparel manufacturing presents a different problem: Components are cheap, and many are produced domestically, but some companies choose to outsource the labor abroad.
"If you look at labor rates around some of the really cheap areas, Vietnam is like $2.50 and Bangladesh is like $1.80 an hour," Panzica told Business Insider.
IHS calculated the labor rate in the U.S. at $25 to $30 per hour. This figure took into account more costs than just employee wages.
"So, even if there's an hour worth of labor in a blouse or a men's shirt, now you're talking about a 25 buck difference per piece," Panzica said.
Obviously, we know that domestically made products are a major aspect of the promotional products industry. So, for many, a shift toward domestic manufacturing likely won't affect those businesses much, if at all. But, for others, who outsource some or all of their manufacturing duties, a change in pricing could be on the way.
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