Callaway restructuring, will add Mexico facility

[zeg]

Much like the demise of Detroit, Michigan.... we can thank the Labor Unions.

That's part of it (though don't forget the enormous good that has come for which unions deserve credit), but the truth is that it is happening because there are places in the world that have standards of living and income that are so far below our own that it's cheaper to outsource than to pay a living wage in the U.S.

This problem is not helped by the fact that we have fairly strong regulatory system, which also makes it more expensive to operate here. However, it's hard to seriously argue that these should be removed, since protecting worker safety, the environment, etc, are extremely important goals. It would be better to increase these protections elsewhere; the crude approach would be to instate protectionist trade barriers, but that's a dangerous thing to do. Better might be requirements that imports come from places with similar protection laws to our own, to level the playing field without halting all trade. All of this is very difficult, though, because the net result is that production efficiency will go down and prices will go up. Right now the US is living on a bubble based on artificially low production costs available (relative to our economy) thanks to the developing world (plus China and India and similar countries that don't quite fit into "developing" but which nonetheless have cheap production costs for various reasons). In the end, that's the problem. We want to have the jobs producing these goods, but we (as a nation) are unwilling to pay the prices that it takes to sustain ourselves. There is no such thing as a quick fix to this problem, because we're fighting the very basic forces of economics, trying to stay at the top. Eventually China, India, and the developing world is going to catch up, and we're going to run out of places to outsource to.....

[zeg]

Do your own research. Wait 3 months for a MRI? Getting drugged up instead of a knee or hip replacement? Politicians coming across our borders for operations? Most of my family is from P.E.I. and Newfoundland. I know what they go though.

Right, because everything is better here. Everything. Don't have insurance or the money in your pocket for the MRI? It's going to be a lot longer than 3 months for you... but at least you can work your way up to affording it, or something.

My wife and her family are from Canada, so I have first-hand experience as well. Neither system is perfect. If you're upper-middle class or higher, then it's probably in your interest to be down here. If not, it's a lot murkier... And none of this has anything to do with Callaway or Mexico, so let's knock it off.

[2bGood]

Saying Canada (or the US) does not have a good health care system lacks an incredible amount of perspective. Canada has a great, albeit not perfect health care system.

Just like (fill in blank of top 50 world ranked golfer) is "crappy". Really? only in the top .1% of the best in the world? Real crappy.

[Judah Ben-Hur]

I wonder if you're going to be allowed to use callaway clubs in Arizona, now?

Better keep the receipts in the bag so all the papers are in order in case your pulled aside along nine.

[clubchamp]

Better keep the receipts in the bag so all the papers are in order in case your pulled aside along nine.

At least it would have papers...

[Judah Ben-Hur]

At least it would have papers...

We all know its coming, your out eating ice cream with the family with your Callaway driver by your side. The first cop that drives by is going to pull you over and ask for the papers without any provocation whatsoever.

[shades9323]

LOL........... your a idiot. Ever buy mexican chrome parts???? I have. Its about the same quality as Canadian health care.

lol, YOU are the idiot. It is assembly that is being moved to Mexico. Callaways heads will still come from China.

Do your own research. Wait 3 months for a MRI? Getting drugged up instead of a knee or hip replacement? Politicians coming across our borders for operations? Most of my family is from P.E.I. and Newfoundland. I know what they go though.

So you are saying that BFE Canada is representative of the whole of Canada's health care system?

[plugged]

I would be interested to know how much Callaway is saving per set of irons with this move? If we are talking less than $200, than that is less than 5-6 rounds of golf.

[Fat Slice]

I bet a good number of Callaway's assemblers in the US are illegal Mexican immigrants with forged docs. Moving the assembly to Mexico might get them the same labor pool, only cheaper.

[pittpanther]

That's because people don't want to pay for quality anymore. Everyone just wants everything for nothing. I see it every day at work.

Wait a minute... How did this become MY fault?

I think everyone on this board, and most semi-serious golfers, DO pay for quality. Almost every golfer you see has graduated from the Wal-Mart WIlson clubs, to one of the name-brands. And, by the way, I have Callaway clubs (and so do you, I notice). That being said, paying for quality doesn't mean I'm going to throw my money away. If Callaways were significantly more expensive than the other brands, no one would buy Callaway - because they don't differentiate themselves so much as to justify a huge price difference. What's interesting is that I never knew that ANY club were manufactured in the US - I assumed they all were foreign made. Callaway should have stood up and said "Proudly Made in the USA." Too late now...

[Clambake]

It disturbs me greatly when people assume that just because something is made in China, Mexico, or (fill in other country here) that it is inherently of lesser quality than if it was built in the US. Mexican chrome isn't worse than US chrome - cheap and poorly done Mexican chrome is the same as cheap and poorly done US chrome. Cheap Chinese steel is no different than cheap US steel. The fact is that quality is a function of worker selection, training, product design, materials sourcing, production line processes, and the management of all of the above. Wiht emphasis on the "management" function.

Another fact is that we do live in an increasingly global economy, with strong economic benefit for everyone. The fact that we can buy a 46 inch HD TV today for the same price as a poorly perfoming 25 inch TV from 20 years ago is a simple example; there are countless others. Companies such as Callaway operate in this global economy and simply have to optimize their operations globally as their fiduciary duty to their shareholders, and sometimes for the simple survival of their company.

The complexity and restrictions of doing business in many parts of the US is another fact that is terribly limiting to many businesses in this country. I happen to work in a company in Carlsbad, where Callaway is based, and can attest to the many restrictions and difficulties imposed by the municipality. For those who operate businesses in Southern California (and probably much of the rest of the US), there is a dizzying array of regulatory, environmental, taxation, and legal restrictions to comply with. While they each had a good reason at one time, those reasons have often been lost over the years and their cumulative affect can be oppressive and stifling to business expansion. A quick example: a number of years ago I participated in a forum with the Los Angeles Mayor's office on business growth in LA, and one little fact was that if someone wanted to start a little mom & pop business like a donut shop you had to deal with 39 different governmental agencies, each requiring extensive paperwork and lengthy approval processes. 39! Now imagine the complexity of trying to run a high volume manufacturing plant! This problem is far too complex to be easily dismissed as "those #$% unions" or a similar unreasonably simplistic argument.

A few years ago, the company I was running needed to greatly expand our manufacturing and we ended up building two factories in Kunshan, China. Our efforts to expand in the US were met with innumerable obstacles and difficulties presented by federal, state, local municipal authorities. We never got far enough to find out what our union challenges were going to be. In contrast, one meeting with the Mayor of Kunshan resulted in property being made available, government-assisted recruitment of workers and government-funded training of those workers, suspension of local taxes, government support to use the local free trade zones to reduce VAT and shipping. In less than 6 months we had an operating factory; in the US we wouldn't even had early approvals for our plans. And with the selection of good workers, extensive training, and hiring of strong local management well versed in Quality manufacturing, we ended up actually having a higher quality product than those produced by our US contract manufacturers.

Callaway did not have a simple problem to deal with, and trivializing it with speculations of undocumented workers, union bashing, etc. just does a disservice to the complex decisions that companies like Callaway face on a day to day basis. While I am sorry to see that Callaway was not able to meet their business needs staying in Carlsbad, I applaud their efforts to maintain their overall competitiveness.

[double_j]

I have no stake in this game since I don't play any Callaway products.

That said, I'm willing to bet that most of us won't see a difference in quality. Callaway has their own rigid set of manufacturing specs that have to be met regardless of where it's done. Not to mention that it sounds like it will be a Callaway-owned facility and should operate under the same manufacturing/quality protocol, etc. as they use in the US.

[GaijinGolfer]

Nearly every other good company is leaving except for the Big 3 autos... though "good" can be debated there.

Even they are leaving. The Ford Fusion is made in Mexico, as is the Dodge Ram 2500.

[shades9323]

What's interesting is that I never knew that ANY club were manufactured in the US - I assumed they all were foreign made. Callaway should have stood up and said "Proudly Made in the USA." Too late now...

Callaway haven't been made in the USA is quite some time. They were just assembled in the USA. Ping was the last hold out of the major manufacturers and they are now in China.

[kafka01]

I dont think that outsourcing will have much of an effect on quality, on any of the major manufactures, because the quality and the standards they produce by is really really low already. And for all you guys who think that buying a 400 USD driver will get you a top quality product, no it doesnt. And if you think each club has the same characteristics - nope (be it the head/be it the shaft quality). So it becomes more of a lucky draw, if you hit jackpot with the clubs you just bought (aka good quality) or some "piece of junk". But most of us will never realize that, cuz our swing is way to inconsistent to figure it out, so the club manufactures really dont have to worry about it, and can just keep producing to no standards at all and charge you big bucks for it (after you just sold your last clubs on ebay...).