The logic for making $ 39 hand mixers in the US

An article in the Wall Street Journal (May 22, 2012) describes a decision by Whirlpool to move production of its hand mixers, that retail for $ 39, back to its plant in Greenville, Ohio. This decision was despite US wages of $ 12.40 to $ 16.50 per hour compared to $3.40 to $ 3.50 per hour in China. But the US plan has an hourly production rate 24 % higher than when the product was outsourced and generates one mixer every 30 seconds. It is also produced in a plant that makes KitchenAid stand mixers, a premium product that was always produced in the US. In contrast, a competitor, Hamilton Beach, continues to source in China. Is Whirlpool’s choice an artifact of the existence of the premium KitchenAid stand mixer plant or could it be justified even without the existing plant ? Given that many products now have a low labor content, will factors other than labor cost determine the sourcing location in the future ? Given the higher productivity required in the US plants, and the small number of resulting jobs (i.e., 25), will such manufacturing shifts be significant enough to impact overall employment levels ?

About aviyer2010

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2 Responses to The logic for making $ 39 hand mixers in the US

  1. Sue says:

    I tend to think it will also improve their sales, in addition to increasing production rates. People on baking forums weren’t comfortable with KitchenAid being made in Asia. I think it will increase people’s confidence that they are getting a good product.

  2. suezkitchen says:

    Reblogged this on kitchenaidstandmixerreviews and commented:
    KitchenAid is moving it’s mixer production back to the United States.
    I think this is a very good move on the part of Whirlpool. I’m not sure if the increased production rate of 24% offsets the difference in labor costs. But, that will also mean no shipping cost. The shipping cost must be exorbitant.
    I also believe it will impact the brands favorability. I have heard people grumbling on baking forums about KitchenAid mixers being made in Asia. Those that complained felt that the quality of the mixers had lessened when production was moved to Asia. I believe they may see a sales increase because people will have a renewed confidence in the company.
    In the current tough economy, providing jobs for Americans (who are the main purchasers of the products) will also be seen if a favorable light.
    If you would like more info about KitchenAid moving production back to the United States read “Is KitchenAid’s Mixer Quality Improving?” you can find the article here

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