Tag: jobs

Moving factory jobs overseas indirectly resulted in 50% hard drive price increase

Massive flooding in eastern Asia has caused hard drive prices to increase by a whopping 50 percent.  As one comment in the linked article notes, the potential supply chain disruption factor is rarely ever factored into the process of pushing jobs and manufacturing overseas.  If you want another argument for why putting all of our manufacturing eggs (or indeed, any form of industry we rely on) in one overseas basket, this is it.

500GB SATA hard drives that once cost as little as $50 at retail have now jumped to $80-$90 or higher.  2TB green drives, which have been notoriously cheap around $70-$85, have exceeded the $100 mark.  That means that, excluding major computer manufacturers who have tens of thousands of hard drives stuffed in warehouses and can wait out the temporary jump in prices, everyone can look forward to paying at least $30 more per hard drive until the factories dry out.

Would we have the same disastrous price increases if manufacturers had at least a minimal secondary factory here in the United States, or at least in North America?  I doubt it.  While the units would cost more to manufacture here, and all prices in general would have to be increased to make up for it, the lower risk of supply chain disruption would be arguably worth the slight increase.

I’m reminded of the Japan flooding which disrupted flash memory manufacturing, since the vast majority of the world’s flash memory chips are made in Japan.  Here again, we had a situation in which natural disasters temporarily shut down an industry that the modern world of technology relies on heavily.  Again, the answer seems to be to stick some factories somewhere less prone to quakes, tsunamis, and flooding.

Then again, what do I know?  I’m just a guy quoting computer builds to customers and having to explain why it’s $50 higher than it would have been last Friday.  Maybe I’m clueless about how huge manufacturing businesses work, but then again, I feel like a lot of this is common sense.  How many more things have to flood or collapse in Asia before our major manufacturers start hedging their bets?