Daily Blog – John E. Johnson, Jr. – February 12, 2008: IS THE DROP IN THE US DOLLAR VALUE AGAINST THE EURO POTENTIALLY A GOOD THING FOR THE USA?
If you watch the economic measures in the world – shame on you if you don’t – you know the US dollar is losing value against the Euro dollar. Right now, the Euro is worth about 1.5 dollars USA. What this means is that all the goods we purchase from Europe, including hifi products made there, will cost more than they used to. Organizations overseas are now starting to have their dealings made in Euros instead of US dollars (I have bought several things having to convert to Euros first). It does not mean that food, water, housing, and other things that are made here in the US will cost you more (which is good, because they are expensive enough as it is), but everything made outside the USA, and brought here for consumer purchase, paid for by American companies importing the goods with Euro dollars, will cost more. Cars (lots of the parts are made elsewhere), clothes, shoes, toys, plastic goods, just about any consumer product . . . all going up.
Well, if you have shopped for just about anything, anywhere in the USA, you know that a tag somewhere on the product says “Made in China”, “Made in India”, “Made in Malaysia”, Made Wherever. This includes a lot of consumer electronics. The first factory run of our favorite Japanese electronics will say, “Made in Japan”. After that, the next ones are all outsourced to one of the above. In China and India, the labor costs are going up, so they have to raise their prices even without a Euro/US Dollar exchange rate alteration. Now, India is starting to outsource. So, we outsource to India, and India outsources to somewhere else where the labor costs have not gone through the roof, like the Philipines. Sooner or later, planet earth will run out of cheap labor, like it will run out of oil.
The bottom line is that all of the goods we like to buy are going up in price for a number of reasons, one of which is the devaluation of the US dollar overseas.
Maybe it is time to return to building things here, at home.
Leaving all the other goods alone, because this is a hifi magazine, let’s just talk about A/V consumer products. Probably 99% of the mass market electronics (DVD players, receivers, flat panel displays) consumed in the USA are made somewhere else, and the companies making them are outsourcing the manufacture of those goods to other countries with cheap labor. The reason is that American consumers focus on the bottom line. “I’m waiting for the price to come down before I buy one,” is almost a proverb in American purchasing behavior.
So, what has happened is that there comes a point where cheap labor can no longer deliver on a lower cost product, so the quality suffers. Go down to one of the superstores and look at that receiver which boasts 100 watts per channel x 5, all for $349. What kind of quality do you really think you are getting here? Do I even have to answer this rhetorical question?
I know a couple of audio companies who build their products here in the USA (in the midwest) and sell them at prices competitive with those of other companies who are making everything in the Pacific Rim. The quality is superb. All made here in the USA. I think what has happened is that the increasing labor costs of the outsourced products are finally catching up with what we can do here at home. Canada is also a good example. One of the best speaker companies in the world is Canadian. They build all their speakers there in Canada. They remain competitive in price and quality.
So, the economy is sliding, the Euro is gaining, oil is not getting any cheaper (that increases the cost of getting that overseas-built product shipped back here). USA workers are ready and willing.
For all you guys out there who make your stuff overseas to keep the prices down, we love you, we love your products, we love being able to get good stuff at good prices, but it is time for a change. You probably can do the same thing here now. Keep in mind that the economies of other countries are affected by our economy. If we do well, their stock markets are stable too. If we falter, their stock markets hit the skids just like ours. The remedy is to make our own economy stable, and the rest of the world will follow.
So, A/V companies might well think of contacting manufacturing firms here at home before they outsource all of their next models overseas. How about making even just one of them at home? Or, how about just making them on the American continent? Canada, Mexico, South America. It will save on all that oil being used for the ships across the Pacific ocean.
The time is right. Americans want to purchase products made by other Americans, and from other countries that make their products in their own countries. Do it. The entire planet will benefit. We are outsourcing ourselves to death.