WSJ.com: “For the past four weeks, a team of 45 workers in gray smocks have been doing something here that hasn’t been attempted on a large scale in America for at least four years. They’re making TVs.
The new assembly line is tucked inside a cavernous factory in this Detroit suburb that once made old-style tube televisions. Their first product: a 46-inch flat-screen model going on sale soon at Target stores for $499. The project is the unusual result of a partnership between a U.S. branding company and a Chinese producer and is as much about marketing a U.S.-made television as it is about a global shift in manufacturing costs.
“We think the economics favor this,” says Michael OShaughnessy, chief executive of Element Electronics Corp., the Eden Prairie, Minn., company that has sold Chinese-made televisions in the U.S. under its Element brand name for six years. To be sure, costs in China are going up as worker pay and other expenses, such as transportation, rise. Meanwhile, muted wage gains in the U.S. and fast productivity advances have reshaped many U.S. factories into tougher competitors.
A recent survey of large U.S.-based producers by the Boston Consulting Group found more than a third plan to or actively considering bringing work home from China. But Elements televisions also illustrate the limitations in restoring some types of production on U.S. soil. The only other domestically assembled televisions today come from a tiny California producer of waterproof models designed for use outdoors and there is virtually no domestic supply base for crucial parts, such as glass screens. The upshot: Virtually all the key parts needed to make a television today are imported.Few industries have fallen as hard as television manufacturing.
In the 1950s, there were some 150 domestic producers and with employment peaking at about 100,000 people in the 1960s. Then came the imports, first from Japan and later from other parts of Asia. TV manufacturing in the U.S. went all but extinct in the last decade. Syntax-Brillian Corp., a Tempe, Ariz.-based, company opened a production facility in Ontario, Calif., in 2006 to much fanfare—but that operation lasted only two years.
Flat screens tipped the scales even more in favor of the Far East, because as tube televisions grew bigger, the weight and size of the glass made shipping increasingly costly. That was the one thing that kept U.S. production going even in the face of imports. Flat screens, however, are a fraction of the weight and much more compact. Element says the decision to produce in Detroit hinges on savings they gained by avoiding the roughly 5% duty on imported televisions and the reduced cost of shipping final products from the heartland of the U.S. to retailers. All the parts are initially being imported—which is one reason the products can only be marketed as “U.S. assembled. “Mr. OShaughnessy estimates the average savings on duties is about $27 for a 46-inch television—enough “to account for the increase in labor costs” in Detroit. The company declined to give more specifics, but noted that production methods in the U.S. are streamlined, involving component assemblies that in China might be separate steps on the production line.
The first televisions being made for Target have 52 pieces and require 24 production steps, including testing and final packaging.Mickey Cho, chief operating officer of Tongfang-Global, the television-making arm of state-owned Tsinghua Tongfang Co., the Chinese partner, says Canton is only its first move toward what he calls global localization, making more products closer to where they are sold.”
via Detroits Wages Take on Chinas – WSJ.com.
Ironically, the US TVs are being made in CANTON, Michigan!
CHINDIA ALERT: You'll be living in their world, very soon 