Wednesday, August 1, 2012
China and Model Railroad Manufacturing
Foreman says these jobs are going boys, and they ain't coming back . . .
That lyric, from Bruce Springsteen’s song, My Hometown, came to mind when I read a recent post from Jason Shron, owner of Rapido Trains, about why model railroad manufacturing has moved to China.
Jason wrote the post in response to criticisms about why jobs in that industry have left the U.S. (or Canada) for China, and calls to “bring production” back to North America.
While in China recently, he went over some numbers. To make one model of the new VIA Park Car, he concluded, would take about 7.5 hours of work, from start to finish.
“The factory pay is roughly 11 RMB (the currency in China) per hour, including labour-associated costs. That means that to make that Park Car it cost, in labour, about 82 RMB. This equals $12.90 CAD. That does not include tooling costs, material costs, or overhead costs. That is just for labour.
“Now let's take that 7.5 hours of labour and bring it over to Canada (where Rapido Trains is located). In Ontario, a non-unionized assembly worker who has the skills to paint, print and assemble a model of this complexity would cost a minimum of $17 per hour. ($16.91 U.S.) Many of the same people who also want to "bring our production back to the USA" have also told us that the jobs should be unionized like the "good old days." That would add to the cost.
“Let's say that the jobs are not unionized for the sake of argument. At $17 per hour, that HO scale Park Car would cost $127.50 for assembly and decorating.
“Now we have to add in: overhead (which is much higher than it is now as we need to have a whole factory here), engineering, all the production machinery, everyone else's salaries, tooling, advertising, travel, and don't forget profit.
“You are probably looking at a retail price of around $400 or more for that plastic HO scale Park Car, which of course would mean we'd sell 12 of them.
“So, if we want to bring production to Canada, our options are as follows:
“1. Make a barely-detailed model that can be produced in about an hour. The trouble is, then who will pay $99.95 for it?
“2. Make a kit. But we would never sell enough kits to even cover our tooling costs. Despite the prevalence of many skilled modelers, most model railroaders do not buy or build kits.
“If 3D printing continues to advance to the point where it better resembles a replicator on Star Trek: The Next Generation, then we can bring production back here. It will happen, just probably not in our lifetime.
“For now, it is simply too expensive to produce a ready-to-run model of Rapido complexity and quality in Canada (or the USA!).”