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by runako 429 days ago
> Maybe local production will get cheaper once more people start keeping their money in local communities.

Is the thinking here that increased scale would allow production to get cheaper? How would this account for the fact that production was scaled here, but was not cost-competitive when it was operating at scale? What's different now?
1 comments
buzer 429 days ago
Let's say currently it costs $15 to make thing 1m units of X in China and $50 to make 10k of them in the USA. USA could be scaled to make 50k of them for $40 and 100k for $30. 1m could cost like $25. There are people for who are ready to pay more for local products so the current production volume makes sense, but majority of people will go for cheaper option when given the chance so it doesn't make sense to scale up the production currently. If the import cost of the item goes above local production cost and there is still enough demand for the item, it can make sense to scale up that production even if you cannot compete with the China made things internationally.

Of course that assumes your own costs (like raw materials) do not increase at least on the same scale and that you can rely on the situation being long-term thing (i.e. will last years rather than weeks) as costs include your CapEx on things like new machines.

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runako 429 days ago
> say currently it costs $15 to make thing 1m units of X in China and $50 to make 10k of them in the USA. USA could be scaled to make 50k of them for $40 and 100k for $30. 1m could cost like $25.

So here we are assuming that we could get a 50% reduction in cost by scaling to 1m units of a thing. The problem with this logic is that many product categories currently made overseas were produced domestically at scale until relatively recently.

This assumption also appears to imply that the goods in question either have a very low labor input or are produced using automation that is not available to Chinese manufacturers.

Reframing my initial question, what advantages would a US manufacturer have today that they didn't have in e.g. 1990 that would allow them to manufacture for only 66% more than the same manufacturing in China?

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