Google goggles to be made in the US: is this a sign of the great manufacturing switch-back?

Posted: April 2, 2013 in China, Manufacturing, Technology, US Economy
Tags: , , , , ,

Google Glass

Back in August 2001 the Boston Consulting Group issued a report with a pretty startling conclusion. It concerned what it sees as a great shift in manufacturing away from China, as many companies return their manufacturing plants to the US. And now it has emerged that Google is to make its goggles – products that may yet prove to be one of the most significant releases of the decade – in the US; in fact, in Silicon Valley. “China’s overwhelming manufacturing cost advantage over the US is shrinking fast. Within five years…Rising Chinese wages, higher U.S. productivity, weaker dollar, and other factors will virtually close the gap between the U.S. and China for many goods consumed in North America,” or so said Boston Consulting in August 2011.

See: Boston Consulting, Made in America again

In April 2012 Boston Consulting’s survey found: “More than a third of US based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the United States from China or are considering it.” See: this Boston Consulting press release
Last November another Boston survey found that “more than 80 per cent of US consumers and, perhaps more surprisingly, more than 60 per cent of Chinese consumers say that they are willing to pay more for products labelled ‘Made in USA’ than for those labelled ‘Made in China’. See: this release

Now it has emerged that Google is planning to have its Project Glass – that’s those glasses which will enable wearers to access the Internet, and indeed film everything they are looking at, just about all the time – made in the US.

Then again, we are not exactly talking Foxconn scale manufacturing here. The glasses will sell for around $1,500 and Google is planning production in the low thousands. Given those facts, you can see the benefits of making the product in America.

Presumably the mark-up on manufacturing is so large that it makes little difference if a few dollars can be shaved off the cost by making the product in China. Presumably, Google also feels that for products as complex and important as its goggles, it needs to be close to the point of manufacture.

One can also presume that in due course the price will fall, fall some more and then fall again – so much that these glasses, or products of that type, will eventually sell for prices low enough to give them a mass market appeal. Only time will tell where the products will then be made.

©2013 Investment and Business News.

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