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Canadians, Chinese... any difference and, if so, should I care


wiegie
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I went to buy some new suits in Macy's last week and I noticed a suit that I liked. The initial suit I looked at was made in Canada by union workers but it was not in my size. As it turns out, the suit in my size was made in China and not in Canada. The price was the same for both suits. I chose not to buy the suit because it annoyed me that the suit company was almost certainly making a much bigger profit on the Chinese-made suit than on the suit made by the Canadian Union workers.

 

What exactly does this say about my preferences? Was this rational? Would you have done something similar?

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I went to buy some new suits in Macy's last week and I noticed a suit that I liked. The initial suit I looked at was made in Canada by union workers but it was not in my size. As it turns out, the suit in my size was made in China and not in Canada. The price was the same for both suits. I chose not to buy the suit because it annoyed me that the suit company was almost certainly making a much bigger profit on the Chinese-made suit than on the suit made by the Canadian Union workers.

 

What exactly does this say about my preferences? Was this rational? Would you have done something similar?

You are a discerning buyer. Was the Chinese suit one of those fetching gray numbers like Mao used to wear?

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What exactly does this say about my preferences? Was this rational? Would you have done something similar?

Would you have paid a higher price for a Canadian-made suit that fits?

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Here is why it doesn't matter to me. I have experience in cost accounting in the apparel industry. An advantage of manufacturing in different countries is diversifying your supply chain. You don't want too many eggs in one basket in case some unforeseen problem hinders the supply chain from a particular part of the world, i.e. political unrest in Nicaragua or swine flu in Mexico. Using that as a backdrop, the decision to manufacture a product in one country versus another may simply be a management decision intended to make the supply chain as efficient as possible. In theory, the same product (in your case, a suit) may be placed in Canada for reasons other than lowest cost. That same suit may be a best seller and the manufacturer (I'm guessing Lauren in the case of your Macy's suit) wants to or needs to manufacture in more than one country.

 

In this case, does it make sense to price the exact same suit differently because of the labor cost difference? In fact, the labor portion of total cost is probably the lowest component of the total cost (fabric on a suit is undoubtedly the most expensive component). At my company, we utilize a 'global' labor rate for products (basically taking the total planned labor expense for a particular year and dividing by the total labor hours regardless of country). Since we may manufacture in 20 different countries with entirely different labor rates (i.e. U.S. versus Mexico), it is more a function of maximizing supply chain efficiency while diversifying the manufacturing base that determines where a product is made. Using a global rate makes comparing 'standard' costs easier. If companies used actual rates to determine costs then every product manager would argue to have their product made in the lowest labor cost country to improve the margin of their products. This method averages costs of products and your margins can become an apple to apple comparison instead of all the Chinese products having higher margins than all the U.S. products.

 

In short (pardon the pun), go back to Macy's tomorrow and purchase your Chinese suit knowing that their labor rate was probably averaged with the suit made in Canada and priced accordingly.

Edited by Puddy
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Here is why it doesn't matter to me. I have experience in cost accounting in the apparel industry. An advantage of manufacturing in different countries is diversifying your supply chain. You don't want too many eggs in one basket in case some unforeseen problem hinders the supply chain from a particular part of the world, i.e. political unrest in Nicaragua or swine flu in Mexico. Using that as a backdrop, the decision to manufacture a product in one country versus another may simply be a management decision intended to make the supply chain as efficient as possible. In theory, the same product (in your case, a suit) may be placed in Canada for reasons other than lowest cost. That same suit may be a best seller and the manufacturer (I'm guessing Lauren in the case of your Macy's suit) wants to or needs to manufacture in more than one country.

 

In this case, does it make sense to price the exact same suit differently because of the labor cost difference? In fact, the labor portion of total cost is probably the lowest component of the total cost (fabric on a suit is undoubtedly the most expensive component). At my company, we utilize a 'global' labor rate for products (basically taking the total planned labor expense for a particular year and dividing by the total labor hours regardless of country). Since we may manufacture in 20 different countries with entirely different labor rates (i.e. U.S. versus Mexico), it is more a function of maximizing supply chain efficiency while diversifying the manufacturing base that determines where a product is made. Using a global rate makes comparing 'standard' costs easier. If companies used actual rates to determine costs then every product manager would argue to have their product made in the lowest labor cost country to improve the margin of their products. This method averages costs of products and your margins can become an apple to apple comparison instead of all the Chinese products having higher margins than all the U.S. products.

 

In short (pardon the pun), go back to Macy's tomorrow and purchase your Chinese suit knowing that their labor rate was probably averaged with the suit made in Canada and priced accordingly.

 

That's a lot of words to try justify your unholy alliance with Kathie Lee Gifford in those Carhartt child sweatshops. :wacko:

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Would you have paid a higher price for a Canadian-made suit that fits?

probably not--if the suits had been priced differently based on country of origin and I was unable to discern any difference in quality between the two suits, I would have bought the cheaper one.

 

Here is why it doesn't matter to me. I have experience in cost accounting in the apparel industry. An advantage of manufacturing in different countries is diversifying your supply chain. You don't want too many eggs in one basket in case some unforeseen problem hinders the supply chain from a particular part of the world, i.e. political unrest in Nicaragua or swine flu in Mexico. Using that as a backdrop, the decision to manufacture a product in one country versus another may simply be a management decision intended to make the supply chain as efficient as possible. In theory, the same product (in your case, a suit) may be placed in Canada for reasons other than lowest cost. That same suit may be a best seller and the manufacturer (I'm guessing Lauren in the case of your Macy's suit) wants to or needs to manufacture in more than one country.

 

In this case, does it make sense to price the exact same suit differently because of the labor cost difference? In fact, the labor portion of total cost is probably the lowest component of the total cost (fabric on a suit is undoubtedly the most expensive component). At my company, we utilize a 'global' labor rate for products (basically taking the total planned labor expense for a particular year and dividing by the total labor hours regardless of country). Since we may manufacture in 20 different countries with entirely different labor rates (i.e. U.S. versus Mexico), it is more a function of maximizing supply chain efficiency while diversifying the manufacturing base that determines where a product is made. Using a global rate makes comparing 'standard' costs easier. If companies used actual rates to determine costs then every product manager would argue to have their product made in the lowest labor cost country to improve the margin of their products. This method averages costs of products and your margins can become an apple to apple comparison instead of all the Chinese products having higher margins than all the U.S. products.

 

In short (pardon the pun), go back to Macy's tomorrow and purchase your Chinese suit knowing that their labor rate was probably averaged with the suit made in Canada and priced accordingly.

Thanks for this explanation. It is somewhat interesting. But, when it all boils down to it, I don't give a crap about you accountants and your fancy speadsheet tricks. :oldrazz: I still would feel cheated if I bought the Chinese made suit at the same price as the Canadian made suit.

 

(As it turned out I ended up buying a different Canadian made suit.)

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I still would feel cheated if I bought the Chinese made suit at the same price as the Canadian made suit.

Although my explanation does help us beancounters, it really boils down to pricing the same suit at two different price points at retail. Outside of tenured economics teachers, nobody else would understand why.

 

I remember the Ford Taurus was made in Illinois and Georgia. I would bet that the Georgia plant had a lower payroll than the Illinois plant. How many folks would purchase the Taurus made in Illinois if it was priced according to labor rates (now I do realize that you would never consider purchasing an American auto :wacko: ).

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I refuse to buy anything from Canada. Why? Thirity years ago I was arrested for driving while impaired here in the USA. Canada decided I am not welcome in their country, as I am a dangerous criminal apparently. I was detained and deported. That was about 10 years ago. If the Chinese invaded Cananda, I would get a six pack and sit on a folding chair at Niagra Falls and watch the mayhem. :wacko: Canada.

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I refuse to buy anything from Canada. Why? Thirity years ago I was arrested for driving while impaired here in the USA. Canada decided I am not welcome in their country, as I am a dangerous criminal apparently. I was detained and deported. That was about 10 years ago. If the Chinese invaded Cananda, I would get a six pack and sit on a folding chair at Niagra Falls and watch the mayhem. :wacko: Canada.

 

:D

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I would have bought the suit made in China. No doubt it is put together better when there are so many people vying for jobs other than working in the rice paddies, they will make sure to keep their quality top notch for fear of being replaced and back in the paddy. The Canadian union member knows there is almost no chance of him being fired as the quasi socialist government to the north would not allow it. So like the drunk minority English teacher that can only speak in ebonics, no matter how bad they are at their job, the union will protect them and really doesn't care about the quality of the product produced.

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I always use the rule of war, of course.

 

We invaded Canada and got our ass kicked in the War of 1812. I will never forgive them for that.

 

As far as I know, we've never invaded China.

 

 

 

 

 

On the other hand, you can always use the rule of beer. :wacko:

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Atomic, here is a list of companies you need to avoid.

Delta

Home Depot

Mohawk Industries

AFLAC

Gulf Stream

Coca-Cola

Georgia Pacific (and all of their afilliates of course)

UPS

West Point Stevens

Flowers Foods

Genuine Parts

Mirant

Southern Company (and all of their afilliates)

Newell Rubbermaid

Porsche ( Their North American Operations cente ris here)

NCR

Wendy's/Arby's

 

ETA.

Link of some more companies http://money.cnn.com/magazines/fortune/for.../states/GA.html

Edited by SEC=UGA
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I'm not doing anything to ever support the economy of Georgia, after our country had to go kick their ass in a war.

 

It's the reason my car was made in Kentucky...wait, Kentucky was neutral in the War of Northern Aggression? Gawd-danged it. :wacko:

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Atomic, here is a list of companies you need to avoid.

Delta

Home Depot

Mohawk Industries

AFLAC

Gulf Stream

Coca-Cola

Georgia Pacific (and all of their afilliates of course)

UPS

West Point Stevens

Flowers Foods

Genuine Parts

Mirant

Southern Company (and all of their afilliates)

Newell Rubbermaid

Porsche ( Their North American Operations cente ris here)

NCR

Wendy's/Arby's

 

ETA.

Link of some more companies http://money.cnn.com/magazines/fortune/for.../states/GA.html

 

Thank you for identifying these anti-American rebel companies. They should be ashamed of themselves.

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Actually, Article IV, Section 4, Paragraph B of the Canadian Constitutions says: (I'm paraphrasing here) "Let no, man nor woman born under the leaf of the maple be forced to construct, sew, hem or tailor any garments intended for those known as munchkins." So they have to outsource those sizes.

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Atomic, here is a list of companies you need to avoid.

Delta

Home Depot

Mohawk Industries

AFLAC

Gulf Stream

Coca-Cola

Georgia Pacific (and all of their afilliates of course)

UPS

West Point Stevens

Flowers Foods

Genuine Parts

Mirant

Southern Company (and all of their afilliates)

Newell Rubbermaid

Porsche ( Their North American Operations cente ris here)

NCR

Wendy's/Arby's

 

ETA.

Link of some more companies http://money.cnn.com/magazines/fortune/for.../states/GA.html

:wacko: Welcome brack!

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