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Balance of Power

Maybe there are a few readers who have never been to a Walmart store, but I am not one of them. Walmart has an attraction to most people for one primary reason - price.  There are always local stores such as a mens store or a paint store where the same individual items can be purchased,  but the costs will probably be higher. This is why Walmart parking lots are usually filled.

This same pricing rule has not been lost on manufacturers of all kinds. In order to be competitive today, they must keep costs to a minimum. Raw materials are in demand worldwide. This causes raw material prices to be rather similar everywhere.

Labor is the variable.  Workers in some third world countries reportedly subsist on weekly pay that American workers can earn in a few minutes.  When a U.S. manufacturer wants to find a way to lower its list prices, opening a manufacturing facility outside our country has been the best option.  

During the last few decades, U.S. manufacturing plants have closed at an alarming rate. There are many reasons why our economy declined, but the loss of manufacturing jobs has surely slowed the recovery. People without jobs have less money to purchase goods so manufacturers are forced to make less products and the whole economy loses momentum.

One of the largest benefactors of this new world economy has been Asia. They have a large  pool of labor and until now these workers have agreed to accept very low wages.  This is starting to change. Workers in Asia and India desire the same products such as cars, computers and televisions as people in the west have enjoyed for many years.  The first example of this is the increased demand for oil in Asia.

A positive result of Asian worker unrest is that manufacturers may be bringing jobs back home.  Master Lock recently announced that they have brought back 100 jobs to Milwaukee. Master Lock was, "...partially motivated by economic reasons related to increasingly higher labor and logistics costs in Asia...."  John Heppner, Master Lock CEO, further stated, "...Master Lock would bring more jobs back from overseas should the underlying economics support the move."

According to the same announcement from Master Lock,  President Obama will visit Master Lock on Wednesday, February 15th to discuss the importance of 'insourcing' jobs back to the U.S. This is a good publicity both for Master Lock and for our whole security industry.  When cheap labor is taken out of the equation, American products will always win on quality.

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