Wednesday, August 30, 2006

Made in USA? Now, Customers Choose

In the beginning, there was "Made in the USA." Then came "Made in China" and "Made in India." Now comes a different twist: "Made in the USA, China or India. You choose."

Pacific Plastics & Engineering, a privately held Soquel, Calif., maker of specialized devices for medical companies, lets customers decide whether to have their product made in California, or -- for at least 25 percent less -- at plants in India or Taiwan. Now 70 percent of PP&E customers opt for production in India or Taiwan.

United Plastics Group Inc., Oak Brook, Ill., and the Tech Group division of West Pharmaceutical Services Inc., Lionville, Pa., also offer customers a choice between costlier domestic products and less expensive ones made overseas. Mr. Podesta says between 15 percent and 25 percent of his customers opt to have items produced at Tech Group plants in Latin America; the rest choose from its plants in the U.S.

Online lender E-Loan gives consumers the option of having mortgage applications processed faster if they have it reviewed by workers in India. The company says roughly 80 percent to 85 percent of customers choose the Indian option, which saves E-Loan money on labor costs.
If you could choose where your products were made, where would you choose?

via Pittsburgh Post Gazette


crush41 said...

There is a flaw in the free-marketer's thinking. Spending more at home carries a higher direct cost, but some of that is allayed by the indirect benefit of promoting local economic activity.

If I want to have an emulator program made and can pay someone in Bangalore $50 to do it or pay my brother $60, I'll opt for the second option purely out of economic considerations. My brother's money is potentially my money if I run into a rough spot.

The same potentially falacious thinking occurs when enterprising whites hire illegal Hispanic laborers to remodel their homes or mow their grass. Yes, they are paying less directly, but they are assuming greater indirect costs. Still, if they're the only ones doing it, they're better off for it (just like if you toss your trash out the window instead of burdening yourself at the next rest stop).

Of course, the free market is terrible at adjusting for externalities.

mping said...

Thanks for the comment, Crush.

I both agree and disagree with your points.

I agree that the free market is bad at adjusting for externalities.

I also agree that if I had to choose between employing my brother or a Banglorian, I would go with my brother.

In general my trade policy is to first try and buy from people that I know, and then try and buy from the person it would help the most (which for me usually means from the poorest country). So if I had to choose between a random Oregonain that I don't know or a random Bangalorian that I don't know, I would go with the Bangalorian.

I am also not convinced that buying from the Bangalorian would have an indirect detrimental effect to my local economy. As I wrote in this post, there is research that shows that for every dollar the United States sends abroad, we get back about $1.12. So, I think spending abroad actually helps the local economy, not to mention the Indian economy.

As for the illegal Mexican, that is a tricky topic that brings up lots of issues. Let me just say that the way I would look at it would not be what is best for me, or what is best for my local community, or for the US, but what is best for the world. From that perspective it is not clear to me that it would be a bad thing.

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