[CivBase]

> I’m not surprised that manufacturing thousands of extremely expensive phones in the US is possible. I would be a lot more surprised if they had managed to manufacture millions of reasonably priced phones in the US.

I'm pretty naive on the subject, but in this case why would cost of local labor affect which product is manufactured at any given plant?

Lets say employees A and B are payed $50 and $20 respectively for each product they manufacture. If employee A manufactures product X, which is sold for $100, and employee B manufactures product Y, which is sold for $50, the company makes a net profit of $80 ($150 revenue - $70 manufacturing costs). If employee A makes product Y instead and employee B makes product X, the net profit is still $80. Is there something I'm failing to take into account here?

[jolux]

I don't quite follow the question you're asking, but the argument I was making is one about economies of scale. Manufacturing small quantities of expensive products is comparatively easy, at the extreme end you could have a single craftsman building every phone and selling them for $5000 each. If you need to manufacture a million phones though, you're going to need more than one guy, and the facility is going to be radically different as well. The reason phones aren't manufactured in the US is not because nobody in the US knows how to make a single phone or even thousands of them, it's because factories like Foxconn which employ over a million people to churn out millions of phones and other products just do not exist, and there might not even be enough excess labor capacity to build them.

[CivBase]

I must have misunderstood your point. I thought you were arguing that manufacturers who produces a variety of products with plants in the US and Taiwan can only afford to make their expensive products in the US because only those products have the margins to offset the relatively high US labor costs.

But from your response (and on re-reading your original post) it sounds like you're actually pointing out that high-volume manufacturers with thin margins have more trouble justifying high US labor costs - in contrast to low-volume manufacturers with high margins.

[detaro]

I'm not sure I understand the question: What are the two products you are swapping between the employees?

Problems with scaling production also are more complex than just labor cost, especially when starting up.

[CivBase]

The question was basically "If you have a fixed pool of employees at fixed compensation-per-output (ie fixed net expenses) and a fixed product throughput with fixed values (ie fixed net revenue), why does it matter who makes what product since the net profit will be the same?"

Although it sounds like that question may have been borne out of my own misinterpretation of the post to which I was responding.