Can the US Compete with Low Wage Countries?


The adventures of Patty and Rob continue …

“No way Rob. I can’t buy this one,” shouted Phil.

“I’m telling you I did all of the calculations. I know it can work,” Rob shot back.

“No way! You’ve been hanging around The Professor too long,” Phil continued.

“Guys, you’re not arguing again are you?” Patty said as she approached the lunch table.

“Your hubby’s gone crazy Patty, why don’t you trade him in for me?” Phil teased.

Why? Is he crazy? asked Patty.

“He thinks that, if we can get uptime high enough here in the USA, we can compete with assemblers in low wage countries. He’s gone too far this time,” answered Phil.

“Hear me out,” responded Rob. “Our uptime is about 30% on our lines. Patty and I made some measurements in China and uptime there is about the same. I did some calculations with ProfitPro and I’m convince that if we can get our uptime to greater than 60% we can compete, even if they pay only $0.75/hr vs our $12.50,” Rob finished.

Rob showed the ProfitPro output and sure enough the numbers didn’t lie.

Jan Curtis chimed in, “But Rob, that is theoretical. Realities might set in that will cause unforeseen problems.”

Phil agreed, “The only way to prove it is to do it.”

“You’re right,” said Patty, “Let’s do it!”

“Whoa girl! How can we do it?” asked Rob.

“Let’s develop a plan and go to Sam the GM and ask if we can do it,” was Patty’s answer.

All agreed it was a gutsy move, but worthy, and the only way to prove the point one way or the other.

So, Patty and Rob made an appointment with Sam Watkins, the site GM. They were admittedly a little nervous about the meeting. They both agreed that Rob should speak since it was his idea.

“To what do I owe the honor of a meeting with our recently married superstars?” Sam cheerfully greeted them at their meeting.

Rob explained their idea and showed Sam the ProfitPro output. He then requested that they be allowed to manage two assembly lines at ACME to show if increasing uptime to 60% was possible.

“So basically you are asking me for permission to improve our uptime on two lines to help us make a lot more money?” Sam asked. “Do you have a plan?”

Rob and Patty proceeded to show Sam their plan, and the two assembly lines on which they hoped to implement it.

Is it possible to pay US-type wages and compete with low-wage countries? Will Patty and Rob be successful? Stay tuned for the results.


Dr. Ron

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About Dr. Ron

Materials expert Dr. Ron Lasky is a professor of engineering and senior lecturer at Dartmouth, and senior technologist at Indium Corp. He has a Ph.D. in materials science from Cornell University, and is a prolific author and lecturer, having published more than 40 papers. He received the SMTA Founders Award in 2003.

2 thoughts on “Can the US Compete with Low Wage Countries?

  1. Is it possible to pay US-type wages and compete with low-wage countries?

    Yes, it is very possible. You need to know what you can do, do what these low-wage countries can’t do, do it in the time no one else can do it in and repeat the process. You can charge whatever you want if you execute properly.

    We “can’t beat ’em” and we certaintly can’t “join ’em” by trying to mimic them.

    Customers will “buy” service all the time.

  2. enjoy the story….

    60% possible? … of course.
    Should it be pursued? .. of course.
    “Phil” needs to get with the program……

    But the question will become….. If “they” can do it, why doesn’t everyone do it?

    And if everyone does get their SMT lines to 60%… what will happen next?
    Not much room for improvement at some point.

    Just a game of who will make the improvements first?
    (the first with improvements will reap the rewards, while change is taking place)…
    This is where the world is presently… and will be for awhile (20 years?)

    With automation .. Assembly costs become less related to Labor costs.
    The assumption of “cheaper to build overseas” .. becomes wrong.

    But the rate of productivity improvements … will diminish.
    Unless something truly disruptive comes along.
    Then it , too, will become the new standard in productivity.

    Increased levels of automation…… increased productivity per capita… doing more with less.
    all are happening.
    all are inevitable.

    Deviating from the subject a bit…………………

    According to recent reports … the productivity improvements during the last 20 years… are more related to present unemployment rates than production jobs going overseas.
    Both hurt employment numbers… but productivity has the much bigger impact of the two.
    At first just the population just moves into “information tech” jobs.
    But after awhile … the productivity improvements apply to this segment also.
    (review former Intel CEO Andy Grove’s recent interview on the subject)

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