My wife is very fond of those greeting cards with fold-out sections that "pop-up" when opened. And so this week she received two, one for Christmas, and one for our anniversary (#46).
As she propped them up on the table, I noticed lots of stuff on the back of the cards. "Hallmark" proudly and prominently emblazoned. Down in the left-hand corner we are assured that the cards are produced from a "professionally managed sustained growth forest."
Over in the right-hand corner we are informed that the cards cost $5.49 and $6.95; and that the Hallmark company is located in Kansas City. The bottom line informs us that the card is made in China.
Assuming that the intellectual content of the cards was generated by folks in Kansas City, that leaves a few questions.
How much can a bit of decent paper, printing, and assembly, likely by automated machinery possibly cost? Given the ~$6.00 retail price, and the obvious profit involved WHY ARE THESE CARDS BEING MADE IN CHINA AND NOT HERE IN THE UNITED STATES BY LOCAL EMPLOYEES?
How can it possibly be that there isn't enough markup margin to allow production here in the US? Are we really supposed to believe that the Chinese are sourcing their paper from that "professionally managed" forest? WHY do we support companies like this who are nothing more than parasites on our economy?
Is it just barely possible that the recent election results had anything at all to do with the total lack of loyalty to the United States by commercial interests such as this?
Comments
http://auto.howstuffworks.com/1971-1980-ford-pinto12.htm
"How can it possibly be that there isn't enough markup margin to allow production here in the US?"
Do you really need to ask?
BTW, the 49ers outsourced their laundry to China. Even back then it was cheaper than getting work done locally.
http://corporate.hallmark.com/Company
Congratulations on your 46th anniversary. I wish you and your wife many more.
I was completely unaware of the Hallmark-China manufacturing deal. It's disappointing, but common in today's International marketplace. I pay about zero attention to the greeting cards we buy and send so I asked my wife if she was familiar with the situation. She replied in the positive.
She said that she recognized the China linkage over a decade ago. Since we try to buy American, I questioned our loyalty to Hallmark. Her answer was simple: quality of product. She liked that the Hallmark cards were made from an array of different and fine papers that contributed to the card's overall appeal.
She quickly turned the table on me and asked why we buy Toyota autos. At one point we were committed to GM products. I loved my old Chevy products. Reliability was an issue. Our major policy defection is outside the house and obvious. The GM cars would run, run, repair needed, and run again. The Toyotas would just run, run, run, and run forever.
The Japanese manufacturers stole a march on the US players. I suspect that has mostly dissipated now, but we still buy Toyota products. All family members do the same. Toyota service requirements are minimal and their reliability is still phenomenal. A successful business is such because of product consistency that earns loyalty.
I understand your anger and share it. It is a sad state but common. Likely, competition forced Hallmark into its decision. In our competitive society there are always winners and losers. There is always some combination of good news and bad news.
I'm getting far too deep for end-of-year philosophizing. Thanks again for your observation.
Best Wishes.
"Employees:
More than 27,000 people worldwide work for Hallmark and its subsidiaries: 9,500 full-time and 17,800 part-time employees.
In the U.S., Hallmark employs 20,000 people: 5,600 work full-time supporting the U.S. business and 15,000 work part-time, primarily in corporate-owned stores and managing card departments in mass channel stores.
About 2,700 employees work at Hallmark's Kansas City headquarters.
About 500 artists, designers, stylists, writers, editors, web designers, and photographers based in Kansas City work on developing products.
Products (North America):
Around 10,000 new and redesigned greeting cards annually.
More than 49,000 different products in stores at any one time."
So roughly 75% of their workforce are employed in the USA which I think is pretty respectful all things considered. Granted we might all like to see that number closer to 100% but that's hardly realistic in todays world economy. Even the president elect doesn't believe in doing what he says in terms of providing jobs in the US so it's hardly fair to nail the Hallmark Company as evil. My guess is that if you're willing to pay double the going rate for a Hallmark card then those jobs could be re-patrioted but I doubt if they would be.
http://corporate.hallmark.com/Company/US-Production
If we're talking about domestic manufacturing jobs, perhaps MJG could take a closer look at where his parts are manufactured and his cars assembled. Here's Cars.com's 2016 American-Made Index. Seems they agree with Mark that 75% is a pretty respectable number, because that's their threshold for considering a car American-made. As they point out, the F-150 fell below that level.
Five of eight vehicles on the American-made list are manufactured by two foreign-based companies, with Toyota topping the list. (Honda is the other.) GM is the only American manufacturer on the list, with cars in the 6,7, and 8th slots.
https://www.cars.com/articles/the-2016-carscom-american-made-index-1420684865874/
Saying one is buying foreign for quality, not price, is a bit misleading. Higher quality (from a given company) entails higher cost. So if one is buying a higher quality product at a comparable price, one is buying it from a different company that has lower costs - perhaps through lower wages, perhaps through mass production (economy of scale), or perhaps through reduced profit margins.
If one really wants to buy American, there are small companies making creative, high quality cards. But one will pay up for the product.
I hope GM learned their lesson from those awful days a decade ago. My OAKBX has slowly been picking up their shares for several years and now counts GM as its largest holding. A woman at the helm now - wouldn't you know?
I'm with you guys on Toyota's and Chevy pickups, having had several of each. Of course these days most of the Toyotas are made (or at least assembled) here in the US, so that's OK with me. With respect to InformalEconomist's remarks on paper quality, I have no issues at all if a product is made elsewhere because of quality issues.
I can also understand, up to a point, the general issues regarding pricing and competition in the marketplace. The reason that I got upset about the cards is that the "competition" argument seems to me to be absurd with respect to this specific item.
Unlike many other manufactured products the markup on the cards is obviously so large that a few cents more cost to print them here certainly shouldn't be a factor. What competition? If we go out to buy a card no one checks the price on the back to choose one card over another. The only time that could happen is in the case of two identical cards- a very unlikely situation.
Thanks again for your comments and input. A good year to all!
You're right to a certain point. Most of my cards are bought at $.47 !!
Derf
Nick de Peyster
http://undervaluedstocks.info
In the past, I've recall reading articles about corporate Legal positions being offshored, accountants too. A couple ON-topic personal anecdotes: My s/o is a corporate accountant, who works here in the USA, for a Taiwan-HQ'd company. The company makes a habit of employing Taiwanese nationals here on student visas as low-paid 'interns'. These jobs do sundry accounting functions, and effectively the use of these interns displaces Americans from holding the jobs. In my day-job, I interact with acctg folks of several American-domiciled chemical-industry & other industrial companies. More often than not, the big companies have offshored much of the clerical acctg jobs offshore, primarily to India. These are NOT jobs that 'Americans won't do', as some of the lyin free-trade cheerleaders suggest. To the contrary, they are (WERE) steady jobs for high-school grads, often women who may not be the primary breadwinner, but did the jobs to supplement their household incomes.
In any large collection of people/society, a large %age will NOT be college material. By offshoring those jobs --- and by importing a bunch of illegals -- our national policy to the working class for 40 years has effectively been : "F-You!, I've got mine."
Will further note the lyin free-trader retort that: Americans who find their job offshored need to be 'retrained'. Retrained? We are offshoring lawyers. And importing people to clean toilets, build homes, and do all manner of tasks. "Retraining" is a straw-man argument, as it implies that Americans can be 'retrained' for jobs which won't be offshored, or won't be displaced by illegals. What jobs are those EXACTLY.... (crickets in the background). It also implies that somehow Americans are capable of learning some (unnamed, non-existant) tasks which cannot later be learned by foreigners. I doubt the people who spout these lies believe that. I certainly don't.
OJ
Legal work is usually outsourced. Giant companies may have in-house counsel, but most companies outsource that work on an as-needed basis. I've worked with patent attorneys, corporate lawyers, employment lawyers thousands of miles away. Location hasn't mattered for a long time.
Frankly, given the abysmal quality of the transactional work I've seen, I'm not sure that facility with the English language is a significant requirement. There is such a glut of lawyers domestically that cost isn't the deciding factor, quality is.
For your amusement, from 1985, Tom Paxton singing about a projected 1M lawyers in 1995 (there are 1.3M now)
Regarding interning - this is a common practice. At one startup, I approached a local school to see what students could work with us - we'd get well-educated but green workers, they'd get real-world experience. Legal under such limited circumstances. Independent of students' nationality.
I'm trying to figure out who is "importing a bunch of illegals" and how. "Import" is an active, transitive verb. Is someone paying for airline tickets? Is someone giving nonresident aliens infrared goggles to help them cross the border under the cover of darkness? Sure companies are sponsoring H1B visas, but that's legal.
I'm also trying to figure out what this 40 year national policy is. Some people might date an anti-worker policy from Reagan's union busting with PATCO, but that was just 35 years ago. Nevertheless, if that's what you're getting at with anti-worker policy, I'd date it back much, much further. All the way back to Taft-Hartley (1947) and the follow on Landrum-Griffin Act (1959).
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Separately, this a.m., I see Trump is agitating GM about moving auto manufacturing to Mexico -- for later importing the finished product back to the US. Good for him.
Althought the lyin free traders might object, as they no doubt believe auto manufacturing is just one of those jobs that Americans won't do -- and for which workers should be retrained to prepare Subway sandwiches.
Multiple sources suggest that the markup on cards is 100% to 200%. So Hallmark (as manufacturer) is getting around two bucks for that card that retails for six. Making that card is not necessarily something amenable to automation. (I and others have posted items about how difficult it is to automate some tasks, such as stitching.)
The Atlantic, Why Are Greeting Cards So Expensive
As noted in that article, Hallmark makes most of its cards in the US (at least as of 2013). It also notes that "Greeting cards require a fairly high expenditure in advertising and marketing to acquire clients ... One would need to sell many greeting cards in order to absorb the required initial marketing, packaging, and advertising expenditures."
I took a look at an American Greetings 10-K to see the cost/profit breakdown. (Better to look there than at Hallmark for pure manufacturing data, since the latter makes money with retail shops that AG doesn't have.)
There's a table there, called Results of Operations, that shows manufacturing costs (labor, material, and "other production costs") amounting to about 44% of revenue, with net income around 5% of revenue (give or take, depending on year). Figuring that your $6 card generates net revenue (at wholesale level) of $2, the total manufacturing costs are under a buck. Increase those costs by a dime (10%) and that extra cost (4% of revenue) will wipe out the company's profits.
Maybe I'm reading this wrong. It just looks to me that card manufacturing profit margins are not nearly as generous as one might expect from retail card pricing.
As to China's pollution in major cities ("And Have you looked at some of China's Cities Air Polutition? All From Factories!"), it's got nothing to do with manufacturing in several cities. Think LA. Seasonal winds off the ocean (and in LA's case, hills to the east), coupled with point source pollution (home heating, vehicles, etc.) Not manufacturing.
"As in Shanghai, the major cause of air pollution in Beijing, Hangzhou, Guangzhou and Shenzhen is vehicle emissions, which contain a variety of toxins such as carbon monoxide, nitrogen oxide and PM2.5 particles."
http://www.shanghaidaily.com/nation/Pollution-causes-identified-in-9-major-cities/shdaily.shtml
"As winter arrives Northern municipalities start turning on more coal-burning boilers for their central heating systems. The northern wind then carries these dirty emissions south. ... Another source of this winter air pollution is the burning of straw left over from the harvest."
http://www.healthandsafetyinshanghai.com/shanghai-air-quality.html
http://www.healthandsafetyinshanghai.com/shanghai-air-pollution.html
Have you heard about 'paragraphs'? They are a wonderful invention.
As to businesses having the right to offshore (I 'think' that was you point???), OK. And the sovereign govt of the USA, given its authority by the people, have every right to tariff imports, and to encourage domestic job growth. --- Which is exactly what our policy was during the 19th century, so this is hardly something new.
If Hallmark moves back and automates, great -- then American workers will service the robots.
Your other comment (again, I think its your point) has to do with uneducated American workers. That is simply B.S. Many US tech workers, with AMPLE skills are being dumped by H1b-visa types and by offshoring. Its not about the bad education system. Nor is it about 'saving companies' who might file for bankruptcy. Its about paying 3rd world wages, but then charging 1st world prices --- grabbing household income and moving that income into ever fatter profit margins.
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Score another victory for American households. Making America Great again.
http://www.nytimes.com/2017/01/03/business/ford-general-motors-trump.html?_r=0
I'm a little puzzled by your question, though: "Why has it taken you so long to figure out that the election results were about the economy and jobs, as much as anything else?"
It did take me about 3 minutes to come to that conclusion, which may not be as quick as you, but hardly qualifies as "long". Neither political party, nor any president since (and including) Clinton has done much of anything to offset the destruction of our middle class economy, all the while pandering to the large commercial interests. This has also been a major factor in the ever-widening gulf between the "1%" and everyone else.
In retrospect it's fair to say that the commercial interests were able to buy a lot more political clout for their money than the labor interests were. The voters absolutely do not "have it wrong", and I agree that "the elitists in Washington still do not want to acknowledge this grassroots uprising". Just look at the first thing out of the box this morning, attempted by our new House of Representatives: gutting the independent Office of Congressional Ethics.
It would have been much easier to have made labor-protective course corrections along the way before the major job-loss damage was done. What can be done at this point without destabilizing the entire world marketplace is a really hard question.
Th next four years are going to be interesting, for sure.
OJ
The history of free trade which you describe is quite accurate IMO.
However the unfairness in which free trade manifested itself was NOT by accident. IMO, there was an unspoken (at least in public) intent with “globalization”, namely:
To allow other countries to develop economically by giving them a)access to US markets and b)increased incomes by the offshoring of USA’s Middle Class jobs. In other words, the hollowing out of the Middle Class was not an unforeseeable result, nor an accident, but instead a quite predictable result of US govt policy. – I’m not saying the policy makers wanted this to happen – rather they viewed it as likely and “acceptable” consequence of their policy goals. In effect for +30 years the lives of Middle Class families have been sacrificed in the interests of “global development”.
I doubt there is any “smoking gun” document which supports the above, in plain language. Of course, the elites and the owners of capital (corporations, the 1% types) all understood what this meant. -- Corporate profit margins were an immense beneficiary, as the import-export model meant that MNCs could pay 3rd-world wages, then import the stuff to the USA and still charge 1st-world prices.
In effect, much of Middle Class incomes over the past 30 years has been “re-allocated” to a)MNC profits and b)foreign corporations – with a smidge going to 3rd –world workers.
As an anecdote, I’ve always found it ‘interesting’ that the really big wave of offshoring did really pick up steam until AFTER the fall of the Soviet Union. Why? -- The Soviets were of course demagogues re “Labor” and “workers”. If MNCs had been permitted to do this offshoring crap in the 1970s/80s – the Soviets’ propaganda about “evil capitalists” would have probably resonated much more successfully, and may have threatened the elite power structures here.
As it is, the big wave of offshoring ramped up in the immediate wake of the collapse of the competing ideology of the “Worker’s Paradise”.
Here, among many dozens such, is just one clear short book from 10y ago that points toward many of the variables and complexities of the subject:
http://www.cgdev.org/sites/default/files/9781933286099-Moran-harnessing-fdi.pdf
Yet its the 1%-types who have disproportionately benefitted from the offshoring trends and its the Joe Six-Packs who have been disproportionately harmed. Did the 1% types -- the kind who Barrons caters to --- just accidentally, by pure, unpredictable happenstance, benefit? Econ 101 is that increasing the supply of anything has the effect of lowering that things price. The ramp-up in offshoring (along with the invasion of illegals into the US) radically increased the supply of labor, thus keeping a lid on wages.
The US Chamber of Commerce and all manner of industry groups have uniformly lobbied to erase trade barriers -- even when our trade partners maintain non-tariff barriers -- keeping the trade arena perpetually tilted against US workers. These are not "imaginary business titans" or make-believe "elites" -- they are the lobbyists of the richest companies in this country, and they have lobbied -- and largely succeeded at policies which naturally favor their constituencies -- and economically harmed Joe Six-Pack.
You can keep the air-quotes.
No, not just you; others here are fantastical too, and need to read up.
The studies you suggest how Joe Six-pack is better off working at the local Subway, but able to buy cheap China-made imports, rather than holding a well-paying job at a local manufacturing plant, I place no credence in. I doubt their their accuracy, and am convinced of their pre-existing biases. Given enough money, I can hire a think-tank to produce a report which says anything. The US Chamber of Commerce has that kind of money.
As for "sophisticated support" for those harmed, well, I support a "playing field" & rules of the game which are helpful for our citizens -- especially those who are unable to hire lobbyists. Especially our citizens who are willing to work. The elites --- whose line on globalizaton you seem to buy in to -- have lobbyists and pols in their pockets. So the laws get written to favor them. Joe SixPack has no such lobbyists, and consequently bears the costs of the laws written by the rich/powerful. The pols are supposed to work for the citizens --- not just the billionaires & their apologists, David.
I also will have to hit up my brother for some serious moneys.
But given your eloquent arguments that trade deficits only help economic development, perhaps you could explain to Communist China why its in their interest to begin running massive deficits with the US, so that their people can graduate from their manufacturing jobs to food-prep work at the corner to-go restaurant, "livin large" on cheap imports from the decadent West.
I am sure they will soon see the error of their ways, lo these past 40 years, and promptly embrace the evangelism of running trade-deficits as an economic development model.