Can made in the U.S.A. tackle companies survive long term?

If you read yesterday's post, you know that the majority of bass fishing tackle in our big retailers today is manufactured overseas.  Why do companies look to manufacture their products 6,000 miles from there intended consumers?  To gain a competitive advantage that's why.  What does that mean?  Let's look at how the tackle buying system works.

All the large tackle retailers in this country have tackle buyers.  These tackle buyers purchase the product that will be displayed on their store's shelves.  They make these decisions based on a couple key points.  Is there local demand for the product?  How much can they mark it up?  Is it affordable?  Does the product have broad market reach?  Boil this down and you're looking for a product that is relatively inexpensive and has been marketed to the largest amount of people.

Labor costs, in many industries, are the largest expense that companies have.  How do we cut labor costs?  Find a country with lower labor standards and you can lower your production costs.  How much cheaper is it abroad?  Let's look at China as an example.  The minimum wage in China varies from around $90-$180 a month.  Chinese workers put in 50 hours a week or more.  200 hours a month making less than $180.  That puts the hourly wage at somewhere between $0.50-$0.95/hr.  Federal minimum wage in the U.S. is $7.25/hr.  That's a cost savings of over $6.25/hr or an annual savings of $12,500+ per employee.  Of course, the shipping costs and taxes associated with shipping the goods over seas are higher, but in the grand scheme of things it's a no-brainer cost wise.

Now they have a product that they can offer at a lower price and extra money to spend on marketing it.  Lots of extra money.  More exposure in the media = more retail locations and on goes the cycle.  What does that mean for the companies manufacturing in the U.S.A.?  It means that cost will likely not be their competitive advantage.  It means that most will need to find a place outside the "big box" stores.  It means that they will have to learn to compete with one arm tied behind their backs.  What's the best way to survive in a sea of sharks with one arm tied behind your back?  Don't try to swim with them.