Very interesting information.
I like many others thought we were on a manufacturing down spiral.
However I wonder what the labour content is in many of these products ?
Perhaps dividing the invoice prices by the number of workers involved
in the manufacture of the goods might tell an interesting story.
A friend of mine wanted to manufacture an electronic device and the
Chinese factory use price was 50 cents an hour and the Australian quote
was $25. This might well have been a labour intensive job, but it is
the basis of my above question.

Hmmmm lets see:

Left hand (Australia) $25/hr... Right hand (China) $0.50/hr. Yep.. I was totally wrong in holding up my 'BLAME CHINA' sign at the IR laws rally, and I was wrong about suggesting we TAX 'slavery' at customs...because we have now been 'liberated' from the 'SHACKLES' of protectionism...right ?

I challenge anyone to find out how much a builders laborer gets paid these days !

When was the last time Australia paid 50c an hour to a factory worker ? Probably back in the "Pounds Shillings and Pence" era when Pies cost tenpence.

"Shackles...of protectionism." I struggle with this. Some silly badly managed, stubborn industries would be inefficient, but they have gone. The only ones left, (and probably spiralling down) are as efficient as they can be I'd bet, and they are just waiting for China to look at the smorgasbord of 'Things we can make' to say ah-HAH... now 'that' looks like a good seller... we'll copy it and make it here and flood the world with it.

Because, at 50c an hour you can simply choose which industries in other countries to destroy at will. Its like ducks in a shooting gallery.

The authors optimims is not supported by reality in my view. He cherry picks a few innovative industries and declares the war over....

-Call centres (India)
-Customer service. (India & Asia)
-Sales (ditto)
-Engineering (India)
-Software design (India)
-Hi volume manufacturing. (China)
-Increasingly higher tech manufacturing (China)

CHANGE IS NEEDED.

1/ 50c an hour is virtual slavery TAX slavery at customs.
2/ DON'T allow a full deduction for overseas outsourced labor to businesses. (add a field on their tax returns for this)

The phrase "free market" is meaningless. NONE are free... only the stupid and ignorant have totally free markets because such serves only SOME interests rather than all.

Knock Knock..is Mr Rudd available ?

Very interesting article. The reality is that we cannot compete with 50c/hour labour and why should we? Sooner rather than later that number will change either from worker pressure for higher wages, or demand for labour, particularly skilled from employers. I was at the recent Manufacturing Technology in Focus exhibition in Melbourne, and was fascinated at the innovation and entrepeneurial attitude of those exhibiting. I made a point of raising the China issue and competition issues with them. The replies were illuminating... very good at the beginning when the new plant is first installed.... But, as soon as wear and tear, improper handling by low skilled workers, accidents etc. start to occur, as they do, there are not enough skilled fitters, mechanics, electronic and instrument fitters, software engineers etc. to fix them, so the whole thing grinds to a halt. And the phone calls go out to overseas to fix it, an expensive and dilatory way of operating.

We are only 20 million, but we punch way above our weight in innovation and IP, just watch the ABC's "new inventors"; we have no choice but to cherry pick niche markets in ETMs where price is not the issue, particularly price of labour. Concentrate on nanotechnology,new materials, better smelting technology, clean coal, start public backing of solar energy, where ANU and the UNSW have world leading teams. Get a handle on what the EU is doing in biomimicry research, Euro53billion, EPBIO Program. We should be heavily involved it would transform the Bush.

Richard42

Recently the Chinese manufacturer just next to me,moved back to his parents country of origin.He has spent his time in Australia learning about all our manufacturing techniques that produce quality products.He told me that labour will cost 50 cents per hour and there will be a hundred workers waiting outside the factory gates,eagerly waiting to take their jobs if they falter.

The reality is that unless China has some miraculous growth in real living standards for their masses,our living standards will continue to decline.

As far as business a goes,the Chinese have got the western world snookered.

Tim wrote "First, most focus has been on manufacturing imports not exports. But people forget that it’s a two-way street and we need both imports and exports to grow and prosper." and "In short we need to import to export." This is hardly the full or most important story.

Why do we export? Because importing goods and services which can more effectively be supplied from abroad raises our living standards. But we can only buy imports with income generated by exports. Protection of non-competitive (or any) local industries negates the very reason we trade in the first place, and lowers our living standards. The influx of low-priced Chinese goods raises our living standards, and frees up local resources for activities in which we have a relative advantage.

Fausti.... now lets deconstruct that little effort of yours :)

[Protection of non-competitive (or any) local industries negates the very reason we trade in the first place, and lowers our living standards.]

Lets look at the other side of this coin.

GUILTY as CHARGED.
If we knowingly support the inhuman and expliotative near slavery practices of other countries such as China, we are culpably guilty of colluding with them in this behavior.

SLAVE BASED PROSPERITY.
If our prosperity is based on the degrading and abusive treatment of others, we are guilty of immoral conduct.

Lets look at a couple of other terms used in your 'economics 101' lecture :)

"our" national interest/living standard etc.

Who...is 'our' ? Is it the 200 Ajax workers who are sitting at home glazed eyed just before Christmas wondering what the future holds ?
Or..is it possibly the Graziers and Miners who are salivating over the juicy sauce they will be pouring on the oversized turkey they and their families will be enthusiastically enjoying at a warm family get2gether.

Whenever Politicians use the term 'our' + National interest, they are in reality meaning the interests of those who have donated to their party and who support them politically.

So, "Protecting" is the right word to use, but the object is incorrect. It is better put as follows:

"By protecting the humanity and dignity of Chinese laborers, we can enjoy our smaller sized but still tasty Chicken and leg of lamb Chrissy dinner with a family which has a clear conscience."

TAX SLAVERY AT CUSTOMS.
How do we protect that dignity ? Simple. we TAX their products UNTIL the government legislates for better wages and conditions.

So, we are not protecting our industry we are protecting Chinese workers.