Wednesday, March 23, 2011

Prohibitive cost of manufacturing

Due to the prohibitive cost of manufacturing in the U.S. the manufacturers are either outsourcing their products to other less expensive countries or avoiding the U.S. altogether. It also does not help that now most of the manufacturer’s profits are being made overseas, so it would be foolish for them to make expensive products here and ship it overseas where they would not be able to recoup their product costs. It is costs like high labor and other regulatory costs that have led to the reduction of manufacturing in the U.S. we always talk about the revival of manufacturing here but we don’t make cost benefits analysis to see how can we make a product so much competitive that we can sell it here with the same price as we are selling overseas.

Although some of the manufacturing done here is for the local market and they do recoup their costs but for the bigger companies, the cost of labor and the assorted laws and regulations to comply with is very expensive. With automation we can reduce our cost but then who is going to buy the products when the people are rendered jobless due to this automation. If and only if we can reduce the regulatory burden on our businesses would we be able to compete successfully overseas and reduce our cost of production per product.

No comments:

Post a Comment