Subject:
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Re: Massive Layoffs At Lego (in Enfield, CT)
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Sun, 25 Jun 2006 12:45:27 GMT
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Viewed:
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3401 times
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In lugnet.off-topic.debate, Thomas Main wrote:
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In lugnet.off-topic.debate, John Neal wrote:
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In lugnet.off-topic.debate, Thomas Main wrote:
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In lugnet.mediawatch, John Neal wrote:
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I am sad that Lego is phasing out manufacutring and outsourcing more and
more. I hate the idea of poor people living in sub-standard conditions
making a product for the wealthy living in luxury. I think we tried that
experiment before and it was called slavery then.
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There’s a difference: no one is forcing workers in China to go work for these
factories. In fact, the hierarchy in China as far as desirable places to work:
American company
European company
Japan/Korean company (a perceived step down to this level)
Taiwan company
(Mainland) Chinese company
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Would you prefer poor people living in sub-standard conditions not
working? Yeah, multi-millionaires live a life of luxury. And they sail
around in yachts. But the fact is that 1,000,000s of people make a decent
living building/serving/catoring to these people.
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Actually, I am glad that they have work, but I would prefer it not processing
raw materials for a foreign company so that people can have toys. There are
other ways they could be productive -- farming, for instance.
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Mankind has spent its existence making activities, especially farming, more
efficient. When the USA came into existence over 200 years ago, the majority of
the residents were farmers. Today, less than 3% are, yet those 3% can supply
enough food to feed the other 97%. That frees up people to do other things,
like make goods for themselves and others.
The reason farmers in China flock to the big cities looking for work, is the
same as in the US 100 years ago: working in a factory is a better job than being
a farmer. Maybe it’s pay, maybe it’s working conditions, but it’s a better job.
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Or producing
goods that could be utilized within their own economy. Just cheaply
processing goods that move out of their country has no long term gain.
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China has large tariffs on foreign goods. Foreign-made products cost 25-50%
more. Lego, for example: when I was living in China and needed a Lego fix, I
had to pay 25-40% more over the cost of the US price of a set. I remember a
foreign-made box of breakfast cereal was also about 50% higher.
The way around that is to have a facility in China that employs Chinese workers.
It keeps in China a certain percentage of the money you get from a sale, so the
government doesn’t make you pay the tariffs. (If I remember correctly, the same
thing happened here in the US with import car manufacturers, which is why Honda,
Toyota, BMW, etc. have plants here.) Not only that, but because you aren’t
paying transportation costs to import, the product is cheaper inside China.
When I was in China, Best-Lock products were dirt-cheap, much cheaper than here,
because they are made in China. Many companies that are relocating part of
their manufacturing to China, aren’t doing it wholly for cost; they are doing it
to gain wider access (through cheaper prices) to the largest market,
population-wise, in the world.
By working for a higher-paying foreign-run factory, the Chinese worker has more
money to spend; because these products are being made in China, the price is
cheaper. So they ARE producing goods that are utilized within their own
country.
(And because the goods come from a foreign company, the Chinese perceive the
quality to be better; if they can afford to spend money on it, they will. So
while Lego products are currently prohibitively expensive for all but the rich,
with this change, they will become more accessible to the middle-class Chinese.
And yes, there is a middle class in China...not to the extent there is in the US
or Europe yet, but give them time, they’ll get there.)
One more thing I’ve seen people complaining about is a possible lack of quality
by outsourcing. That’s totally up to TLG. There’s a perception that things
made in China are cheap, just because they are made in China; the fact is, you
can get a quality product there if you want it. The problem is that people who
move there for lower-cost manufacturing may also cut costs other ways, by
lowering their tolerances for an acceptable product. If TLG maintains its
standard of quality (probably the main thing that really sets them apart from a
clone), we won’t notice.
(As an example, I had an American co-worker in China who was trying to swing a
deal for his dad’s company. He hooked up with a rep for a factory in China that
sold drill and router bits. The company could supply various qualities of bits.
Top quality was what they supplied to a big-name American tool manufacturer that
usually made their products in America. Next was what they sold to off-brand
American tool companies. The next grade was what they sold domestically. The
differences in grade were based on how tight they set their tolerances on their
manufacturing equipment.)
The bigger concern, in my mind, is what Jim Hughes theorized: that this
outsourcing is a precursor to Kjeld selling off TLG. He indicated at last
year’s Brickfest that Lego would remain in private hands, so we’ll see.
Doug
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Message is in Reply To:
 | | Re: Massive Layoffs At Lego (in Enfield, CT)
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| (...) Actually, I am glad that they have work, but I would prefer it not processing raw materials for a foreign company so that people can have toys. There are other ways they could be productive -- farming, for instance. Or producing goods that (...) (18 years ago, 24-Jun-06, to lugnet.off-topic.debate, FTX)
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