My Financial Tips

Is manufacturing the best way to go for our new president to fix the economy? Should we concentrate our efforts in building more and better goods and then supplying the world with those great products? Or should we drop manufacturing all together?

In past decades the United States was a great consumer and producer. The products manufactured in the United States were desired all over the world. Should we be concentrating our efforts in finding the next big product that we can produce and export? After all the United States has great equipment, wonderful innovation, top engineering and a superior labor force for manufacturing.

Maybe we should focus on what products we can manufacture and export to countries like Mexico, China, Korea or India. Let’s take cars as an example. The United States could revamp the auto industry and export inexpensive well built auto to every single country in the world.

Can the United States make the best and most inexpensive auto in the world? Can we beat German, Japanese, Korean and the up and coming Chinese auto ? Is our labor pool that much better that we pay $20 to $30 per hour for a fully loaded employee and compete with countries like Mexico that spend $2 to $3 per hour for a fully loaded employee complete with tax, insurance and social security? Is our labor really 10 times better?

How about other business expenses like rent, electricity, phone or water? Are they more expensive or cheaper in other countries?

How can all of this translate to costing and real hard cash? Let’s just say we need to allocate 100 man hours of employee work into building our auto . In the United States the straight out labor cost would add up to $3,000 at $30 per hour with benefits, workers compensation, and employment taxes included in the calculation. In Mexico the same auto would cost three hundred dollars.

Yes, there are many variables to costs including fixed and variable. Some big variables could be in the acquisition of raw materials or transportation of raw materials and finished products. You also have to consider import and export tariffs for entering or leaving countries. Taking just the labor costs as an example might not be fair. Or is it? Well, imagine having 1,000 employees at $3 per hour or the same for $30 per hour. If you were the CEO, a member of the board or a stockholder in the company what would you do?

Is manufacturing better and cheaper products that we can sell all over the world the answer to our economic slowdown? Or even the answer to the future of our economy? Will this re-instate us as the dominating economic force in the world?

Will holding high paying jobs in the United States make our products competitive around the United States? Is building factories in a first world nation the answer in a world economy? So far it’s not looking good for United States manufacturing. We might be the best, but we’re not 10 times better than the rest.

What are the best industries to spend our time and money in?

• Internet Applications
• Space Exploration
• Hardware

Jorge Olson is an consultant, entrepreneur and keynote speaker . His new book “The Unselfish Guide to Self Promotion” can be found at Amazon.com or www.UnselfishPromotion.com