All Articles Tagged "manufacturing"
Good Economic News This Morning From the Stock Market, Facebook
AP Photo/Alexander Zemlianichenko, pool
If you took a look at stock news yesterday, you saw lots of financial reporters doing a major freak out about the steep decline in the markets. When we posted this story, the markets were tanking even as we got a little positive news about gas prices. The Dow Jones index closed down nearly 250 points.
But today, things are looking much brighter, thanks in part to Facebook. The social network announced its earnings after the closing bell, showing a 32 percent rise in revenue for the quarter ending in September to $1.26 billion and improved performance in the mobile arena. CNET quotes Facebook CEO Mark Zuckerberg, who says the company can introduce new products and increase engagement on mobile devices. This morning, media has been crowing about the spike in Facebook stock, up 24 percent.
That news, coupled with a positive financial report from aviation company Boeing and news that manufacturing in China has declined at a slower rate than months past is sending the stock market into a happier place. We’ve also got news that the sales of newly-built homes in the US in September was up 5.7 percent to 389,000. The media price for a new home was $242,400, down from $250,400 in August.
Business Incubator Coming to Harlem
Image: NYDailyNews.com
City College of New York’s (CCNY) Grove School of Engineering is using a $1 million grant to create an incubator program that will bring together engineering and entrepreneurship. The grant came from Irwin Zahn, philanthropist, founder of the company Autosplice and class of 1948 CCNY graduate. Zahn sold his company some years ago and founded The Moxie Foundation, which pursues opportunities to support education and entrepreneurship.
The school is also getting a $400,000 grant from the office of Manhattan Borough President Scott Stringer, which will finance a laboratory. The program will open its doors next month. Students will use the facilities to build prototypes of their ideas and learn to market them. Small businesses in the Harlem community will also have access to the center. The focus will be on creating products in the “devices and manufacturing” areas.
FYI, if you’re in New York, have a product and would like other resources for promoting and selling it, check out Made in NYC.
Why Jeans Cost So Much: Premium Denim Makers Justify Markups
By Alexis Garrett Stodghill
Huge price tags on designer jeans are commonplace, a sign of an era in which high-end denim is worn to communicate individual style. We can all remember when paying $50 for a pair of Levi’s was the average, and the vast majority of today’s market still consists of denim priced in that range. Yet, of the $13.8 billion jeans market, an elite 1% of customers are willing to shell out hundreds of dollars for what used to be considered workman’s threads. These jeans consumers — known as the premium denim market — might be interested in knowing what goes into designer brands like True Religion and Gucci that can cost them $200-700.
In exchange for their steep investment, fashion-conscious men and women receive jeans with runway-inspired designs manufactured in the U.S.A. In addition to the higher overhead required to produce clothing in the United States, manufacturers add a tremendous markup to the costs of producing their lines — as much as 260%. The Wall Street Journal reports:
It costs about $50 to make a pair of Super T jeans, True Religion’s best-selling style with oversized white stitching, estimates founder, chairman and chief executive, Jeff Lubell. The wholesale price is $152, he says, and the average retail price is $335. Of course, plenty of these jeans sell at substantially less than full price. [...]
As with all fashion, a big part of the price of luxury denim is in the multiple profit margins taken at each level of production. Most any piece of clothing contains parts and services from potentially dozens of providers: from fabric and button makers, to designers and seamstresses, and wholesalers and sales agents. After all this, designers and retailers say the typical retail markup on all fashion items, including jeans, ranges from 2.2 to 2.6 times cost.
The detailed stitching on fancy pockets and funky metal rivets added by many premium jean brands are also rendered by hand in America or Mexico by workers paid far more than their Chinese counterparts. But don’t feel sorry for luxury denim manufacturers. They pass the cost of stylish embellishments right on to consumers. The result? Luxury jean makers receive a 40-50% margin of return on each sale, compared to 20% for regular jeans.
Of course, high-end denim sales are such a small fraction of the overall market that the larger profits garnered might seem necessary. The design expertise, expensive ad campaigns, and hand-rendering of details have to be paid for — and 1% of the market wouldn’t otherwise cut it without huge profit margins built into the prices.
But still, there is some evidence that premium denim makers are using the gullible desires of fashionistas to seem hip to turn a quick buck.
True Religion is planning the release of an even more expensive model than it typically produces called the Phantom, which will retail for as much as $375. At almost 400 bucks, the Phantom will actually lack all the involved embroidery of their best-selling jeans, costing more money even though the labor will be less. It is true that costs like raw luxury denim, which is produced in the United States by well-paid workers, might be a factor in such a steep price. But the fact is this company will be charging consumers more money to do less than it usually does for a similar product.
True Religion knows people will buy these jeans, because they are cool and new, and a fat price tag just makes them cooler to brand-conscious people. Exploiting that fact to make more money points to pure greed. And in America, greater profits are always their own justification.
How to Get a Prototype Built
(Entrepreneur) — You’d probably need to get the prototype built before you go to a manufacturer, unless you have a previous relationship with a company who is willing to work with you. There a lot of opportunities overseas for these types of projects, and you can also find “freelancers” who could take on the project. You can go to elance.com and see how that portal can match your request with people who are willing to take on these types of jobs. Before you do that, however, my question would be: What’s your overall plan for your product? How is it competitively different than products that already exist? Is there a market for it? Who’ll buy it?
Obama: Job Training Plan Will Jumpstart Manufacturing
(Christian Science Monitor) — Who’s going to build and maintain the high-tech cars of the future? As the skill base shifts for workers in American manufacturing, training needs to keep pace. President Obama rolled up his sleeves Wednesday morning at a hybrid-car repair lab where students can earn gold-star credentials from the National Association of Manufacturing (NAM). He toured the automotive training program at Northern Virginia Community College’s Alexandria campus before announcing an expansion of initiatives to boost the manufacturing workforce. The new partnership between private-sector manufacturers, community colleges, and NAM aims to provide 500,000 community college students over the next five years with industry-recognized credentials.
Is Motor City “Running on Empty” Or Are Reports of Detroit’s Demise Greatly Exaggerated?
by Steven Barboza
Has Detroit reached its tipping point? Is the implosion of the American auto industry a kind of man-made Katrina for the Motor City? Or will Detroit rise up from its ash heap of urban devastation and round a corner as adroitly and smoothly as a newfangled gas-electric hybrid?
Whether this city, once our most prosperous manufacturing hub and the fourth largest city in the nation (now it’s the 11th), ultimately will make a comeback is anybody’s guess. But to borrow a phrase from Mark Twain: Reports of its death are an exaggeration.
Detroit is still headquarters of the nation’s auto industry, the largest single manufacturing and retail business in the country. City leaders just need a better roadmap.
“To put it bluntly, Detroit has to become relevant,” said Robin Doyle, an urban planning professor at Wayne State University. “Detroit is a major city within a major region that has lost its relevance because it lost its centrality. The city has to be made more attractive to visitors, to investment and development. That’s what the city is trying to do. It’s struggling, but it is trying to move in that direction.”
A major problem, as Boyle has pointed out, is that Detroit remains quintessentially a 20th century model of industry in a world that has marched into the 21st century. People aren’t buying Detroit products like they used to.
As a result, much of the city has become a mausoleum, with abandoned auto plants, burned-out homes and forlorn residents.
“There are many areas of Detroit that have maybe one, two or three households on a block,” Boyle said. “The houses themselves may be in reasonable condition, but the neighborhoods have disappeared.”
Detroit has fallen apart at its seams. The murder rate has soared. The unemployment rate skyrocketed to 28.9% at one point (today it is at 21%). The city can’t afford to provide services to many neighborhoods. And at one point, listings of tax foreclosures in Wayne County, which includes Detroit, went on for 137 pages in the Detroit Free Press. The school system is ailing with the state of Michigan approving the closure of half of the districts schools, leaving Detroit with only 72 public schools by 2014.
Residents want to pack up and leave – and they have. The city’s population has fallen from a high of more than 1.85 million in 1950 to 912,000 in 2008.
As the city shrank, so did property values. Residential units that went for $98,000 on average are now a steal at $12,400. And still, no one wants them, so an estimated 102,000 housing units stand vacant, nearly 28% of the city’s total.
Detroit’s once bright life has deteriorated so badly that a reporter who grew up there admitted that his first inclination upon returning was to weep.
Ga. Manufacturers Urge Sales Tax Break
(Atlanta Business Chronicle) — Lobbyists for heavy manufacturers asked Georgia House lawmakers Monday to support legislation exempting their industries from paying sales taxes on the energy used to produce their wares. “We create jobs,” Lee Lemke, executive vice president of the Macon-based Georgia Mining Association, told members of a House Ways and Means subcommittee during its first hearing on the bill. “We simply want an even playing field so we can compete in this global marketplace.”
Read more: Ga. manufacturers urge sales tax break | Atlanta Business Chronicle
Technology Bumps Workers Off the Job Line
(Newsweek) — Looking out at the mammoth factory floor where Samsung Austin Semiconductor assembles microchips, Cyrus Bavarian realized there was one thing missing: people. Bavarian, a 24-year-old process engineer hired last spring fresh from the University of Texas, Austin, had imagined the dust-free assembly floor would be crowded with workers wearing “bunny-suits,” those white booties and hair coverings that make the employees look like surgeons. Instead he saw only robots. “There is just nobody out there. You hear the whir of machines, and you see the lights but these tools are almost just operating themselves,” Bavarian told NEWSWEEK. “It’s like The Matrix.”
Manufacturing in New York: Decayed, but Still Important
(WSJ) — A new report on manufacturing in New York tells an interesting story, and it’s not just the tale of job loss and contraction that we’ve come to expect from the sector. While the image of New York might not bring factories to mind, the sector has a sizable footprint in the state economy.
Yes, the state’s factories have fallen far from their heyday. In 1950, at the peak of the industrial employment in New York, more than two million people earned their living in manufacturing. Last year, however, just 477,000 workers remained in the sector.
Atlanta Down 69K Manufacturing Jobs
(Atlanta Business Chronicle) — Metro Atlanta lost 68,700 manufacturing jobs this decade, the ninth most of the 100 largest metro areas in the nation.
An analysis of federal data shows nearly 69,000 local manufacturing jobs were lost from May 2000 to May 2010. That equates to metro Atlanta losing 33.2 percent of its manufacturing jobs in a decade.
Buffalo Business First, a sister publication, analyzed employment by the manufacturing sectors in the nation’s 100 biggest markets. Click here for breakdowns for all of those metro areas.
