The price breakdown on a running shoe

[saevel25]

http://www.solereview.com/what-does-it-cost-to-make-a-running-shoe/

A really cool article on how the cost of the shoe is broken down. 

For a $100 dollar shoe, 46% of if covers Freight, Insurance, Customs, Marketing, Other Expenses & Overhead, Taxes

[boogielicious]

8 hours ago, saevel25 said:

http://www.solereview.com/what-does-it-cost-to-make-a-running-shoe/

A really cool article on how the cost of the shoe is broken down. 

For a $100 dollar shoe, 46% of if covers Freight, Insurance, Customs, Marketing, Other Expenses & Overhead, Taxes

If the price of oil was high, they would make these close to the selling site, a.k.a, here!

[saevel25]

32 minutes ago, boogielicious said:

If the price of oil was high, they would make these close to the selling site, a.k.a, here!

When you can pay a Chinese worker a fraction of a US Worker. You'd need the oil prices to be very high to make up that. 

[boogielicious]

4 minutes ago, saevel25 said:

When you can pay a Chinese worker a fraction of a US Worker. You'd need the oil prices to be very high to make up that. 

China is starting to trend higher for labor. Vietnam is starting to take over. There comes a balance point to Traffic and Distribution versus Total Direct Cost to determine sourcing sites. At some point even cheap labor doesn't offset the T&D. If you include Tariffs, etc, it can be a real challenge.

Running shoes are light, but there is a lot of air in the packaging. Companies don't like to ship air.

[saevel25]

33 minutes ago, boogielicious said:

Running shoes are light, but there is a lot of air in the packaging. Companies don't like to ship air.

It depends also on how many shoes they build for the China market. As more people get better jobs in China they can afford more luxury items. 

I believe it was just a few years ago, but GM sold more cars in China than in the USA. If they move back the US, then they have to ship more cars to China versus here. Even if the wages are very similar, if more products are sold in China its probably better to keep the jobs over there. 

[jamo]

12 minutes ago, saevel25 said:

It depends also on how many shoes they build for the China market. As more people get better jobs in China they can afford more luxury items. 

I believe it was just a few years ago, but GM sold more cars in China than in the USA. If they move back the US, then they have to ship more cars to China versus here. Even if the wages are very similar, if more products are sold in China its probably better to keep the jobs over there. 

Or they could split manufacturing. It's unlikely that the same exact products do well in the US and in China anyway.

[newtogolf]

39 minutes ago, jamo said:

Or they could split manufacturing. It's unlikely that the same exact products do well in the US and in China anyway.

I'm not sure if the same would be true for running shoes, but in the case of cars there is a big difference between the cars produced here and in other countries.  Cars oversees (especially in China) tend to be smaller and more utilitarian.  

[mchepp]

9 hours ago, boogielicious said:

China is starting to trend higher for labor. Vietnam is starting to take over. There comes a balance point to Traffic and Distribution versus Total Direct Cost to determine sourcing sites. At some point even cheap labor doesn't offset the T&D. If you include Tariffs, etc, it can be a real challenge.

Running shoes are light, but there is a lot of air in the packaging. Companies don't like to ship air.

I'd say Vietnam has already taken over in terms of labor. The labor cost between a factory in Vietnam versus China is eye opening already. The only difference now is that the government in China offers big subsidies in terms of tax breaks and paying some of the utilities and any building costs in order to make your factory make sense cost wise. 

[boogielicious]

13 hours ago, mchepp said:

I'd say Vietnam has already taken over in terms of labor. The labor cost between a factory in Vietnam versus China is eye opening already. The only difference now is that the government in China offers big subsidies in terms of tax breaks and paying some of the utilities and any building costs in order to make your factory make sense cost wise. 

Good points. I wonder how long those subsides will last? They removed the requirement that the government own part of foreign businesses a couple of years back. But labor costs have kind of slowed the influx for new companies coming in.