What’s wrong with American manufacturing and industry

I read a disheartening story today. It’s the story of an entrepreneur, making models out of his garage and selling them. A competitor took a liking to his models and started selling crude copies of them, made in China. The competitor is so much larger than him, he can’t afford to sue.

There’s something even more sad than this story, however. It was some people’s reaction to it.The whole thing started out as hearsay on a train forum. Someone noticed a striking similarity between two companies’ competing products. Fans of the larger company rushed to its defense, and someone who claimed to know someone came in with claims about the larger company copying the smaller. Eventually the person who designed the originals chimed in and confirmed that yes, the designs were his, right down to the placement of the cracks on the sidewalk being identical.

He went on to say in very human terms who it hurt. He’s a guy in southwestern Missouri who could make more money as a draftsman, making buildings out of his home for the love of making buildings. He sells the design to another small company in Maine who buy materials, produce parts, and assemble them into kits for sale, employing a handful of Americans along the way.

And, if sales deteriorate too far, eventually he may have to go back to work as a draftsman. Which most likely means some other draftsman will be looking for a job.

Buying the crude, cheap Chinese-made knockoffs from the other company hurts the designer. But not only that, it ripples over to the manufacturer/distributor and its suppliers, all of whom are employing Americans who are just trying to earn an honest wage working for small businesses.

But the copies sell for about half the price.

To some of the people hearing this story, the end–half-priced models–entirely justifies the means. The cheap copy is, well, cheaper, and more convenient–requiring less assembly and being easier to find, since the larger competitor sells its products in more stores–so that’s all just fine and dandy. Who gets hurt doesn’t matter as long as the purchaser is happy.

Maybe the guy just likes jerking people’s chain, or maybe he really believes this, but he was painting the people who felt empathy for the designer as the ones with the problem.

Others present an easy solution: Sue. Well, he’s not stupid. One look at his models should tell you that. He looked into that. The problem is that a one-man operation can’t hope to compete with a company that sells $50 million worth of product per year. Imagine what happens if the larger company generates a mere 100 hours’ worth of billable work for the smaller company’s lawyer, at $400 per hour. That’s a $40,000 legal bill. If the kits sell for $75, their wholesale price is less than 25. That means he has to sell 1,600 kits to cover the legal bill. And in the meantime he also has to sell enough kits to pay himself enough to pay his mortgage, utilities, and put food on the table.

If that $40,000 doesn’t sink him, maybe the next 100 hours’ worth of work will. All they have to do is delay the trial long enough to make giving up look like the best and most reasonable alternative. They don’t have to be right, and they don’t have to win. They just have to make sure the other guy runs out of money first.

Now I know the majority of Americans have no interest in wood and tin 1:48 scale models of general stores. But the wonderful thing about American capitalism used to be that someone working out of a garage or spare bedroom could make niche products and sell them to the people who want them without breaking any laws. It’s one of the ways our ancestors got ahead in life.

I’m not sure my son’s generation is going to have those same opportunities. Not when a big company can come steal products from guys like Dale in Carthage, Mo. with no fear of recourse, and self-centered consumers will gladly snap them up, just because they’re cheaper, even if they know they’re buying stolen property.

People can blame Barack Obama or George W. Bush or Bill Clinton or NAFTA or unions or any of the other usual scapegoats for being the reason why jobs are hard to find. But none of those guys caused the predicament that Dale in Carthage, Mo. is in.

That’s purely the fault of the people who buy knockoff products, with a narcissistic, end-justifies-the-means attitude, and the people who tolerate it.

But it’s a lot easier to blame the politicians than it is to look in the mirror.

2 thoughts on “What’s wrong with American manufacturing and industry

  • April 21, 2010 at 1:14 am
    Permalink

    "That’s purely the fault of the people who buy knockoff products, with a narcissistic, end-justifies-the-means attitude, and the people who tolerate it."
    .
    I hope you are kidding. I use a computer and I couldn’t afford it if the Chinese didn’t make the parts.
    We live in a capitalist society. Would you prefer a society based on some of Obama’s top advisor’s ideas?
    In our system only the best survive and I wouldn’t want it any other way.

    • June 2, 2010 at 11:00 pm
      Permalink

      Not kidding at all. I’m serious as a heart attack.

      The Chinese-made components in your computer are, hopefully, licensed. At least the CPU and the chipset are.

      What’s going on with these companies is out and out theft.

      If it’s OK to steal another person’s design and manufacture it in China without paying royalties, then I don’t want to be part of this society.

      And if that somehow makes me a Democrat, then so be it. Or whatever other label you want to slap on me. I call it fair.

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