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Will future game consoles eventually be manufactured in North America again?

DunDunDunpachi

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Atari once was. Many of the influential pinball and arcade games once were. Xbox products are already built in Mexico. Certain AMD and Intel products are built in the USA.

Console manufacturing today relies on machinery. The cost-savings of cheap labor is being outpaced by the cost-savings of mechanical labor. And what do machines need? Energy. Who got the cheapest energy? Not the USA, but we're getting there.

On the flip side, electronic manufacturers are diversifying their sources and pulling business out of China, including videogame companies. Granted, they are moving business to nearby places in Southern Asia.

Curious to hear if GAFers see any merit to this possibility. Also curious to hear what impact this might have on the videogame market in terms of pricing, reliability, and availability if this were to occur.
 

Mista

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It is possible especially that “no more China” as Trump stated. Might be manufactured in Japan also but I don’t think anything coming from China will get in the US
 

Enjay

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No way. Unfortunately they're just gonna find another place with indentured sweat shop workers to make thek for the cheap.
 
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Deleted member 752119

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Hola, señor.

EDIT: though I suppose that would be "Central America", not N.A.
Other places in Asia are more likely. i.e. Nintendo just moved some production from China to Vietnam.

Manufacturing will never move back to the US in any big way (nor Europe). Minimum wages are too high relative to expectations of consumers to get things as cheap as possible. Well, maybe for things that can eventually be 100% manufactured by entirely automated assembly lines I suppose. MS I could see more in central and South American given they already do production in Mexico of course. Not Sony and Nintendo though.
 
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Boss Mog

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I doubt it. People in first world countries have no desire to do assembly line factory jobs anymore, at least not for minimum wage. Most electronics will probably be made in Africa in the future. China is already moving textile factories there. China gets cheaper labor and Africans get jobs that pay a living wage, a good salary actually for them compared to their cost of living so it's win/win plus China is developing infrastructure to support its factories and workers, such as housing, transportation systems, etc...
 
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Aurelian

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Feb 22, 2009
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Atari once was. Many of the influential pinball and arcade games once were. Xbox products are already built in Mexico. Certain AMD and Intel products are built in the USA.

Console manufacturing today relies on machinery. The cost-savings of cheap labor is being outpaced by the cost-savings of mechanical labor. And what do machines need? Energy. Who got the cheapest energy? Not the USA, but we're getting there.

On the flip side, electronic manufacturers are diversifying their sources and pulling business out of China, including videogame companies. Granted, they are moving business to nearby places in Southern Asia.

Curious to hear if GAFers see any merit to this possibility. Also curious to hear what impact this might have on the videogame market in terms of pricing, reliability, and availability if this were to occur.
Fairly unlikely just due to the nature of how technology is made.

People like to pretend that it's all about the cost of employment, but that's only partly true. A lot of it is about workforce flexibility. Sudden surge of PS5 demand? Don't worry, we'll add 3,000 appropriately qualified people to the production line in two weeks. In the US, you'd be thankful if you even found 3,000 people who were properly qualified (many are overqualified), and it's probably going to take you months to get them all in place.

There's also the suppliers and resources. Yeah, you could move Xbox assembly to the US, but many of the component suppliers would still be in eastern Asia. And like it or not, the rare-earth minerals and other raw resources needed for electronics tend to be located in -- you guessed it -- eastern Asia.

Besides, if it did come to the US, it would likely be highly automated. You'd create a whopping 50 jobs for the people overseeing the factory robots.

The conservative fantasy is that the US can turn back the clock to 1955 and make everyone work cushy factory jobs. The reality is that those jobs aren't coming back.
 
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DunDunDunpachi

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Fairly unlikely just due to the nature of how technology is made.

People like to pretend that it's all about the cost of employment, but that's only partly true. A lot of it is about workforce flexibility. Sudden surge of PS5 demand? Don't worry, we'll add 3,000 appropriately qualified people to the production line in two weeks. In the US, you'd be thankful if you even found 3,000 people who were properly qualified (many are overqualified), and it's probably going to take you months to get them all in place.

There's also the suppliers and resources. Yeah, you could move Xbox assembly to the US, but many of the component suppliers would still be in eastern Asia. And like it or not, the rare-earth minerals and other raw resources needed for electronics tend to be located in -- you guessed it -- eastern Asia.

Besides, if it did come to the US, it would likely be highly automated. You'd create a whopping 50 jobs for the people overseeing the factory robots.

The conservative fantasy is that the US can turn back the clock to 1955 and make everyone work cushy factory jobs. The reality is that those jobs aren't coming back.
Well I'm not suggesting that a ton of factory jobs would be coming back to North America, merely for the manufacturing of electronics to come back. As you pointed out, it would likely be highly automated and potentially much cheaper since we don't have to deal with shipping across the ocean.
 

Aurelian

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Well I'm not suggesting that a ton of factory jobs would be coming back to North America, merely for the manufacturing of electronics to come back. As you pointed out, it would likely be highly automated and potentially much cheaper since we don't have to deal with shipping across the ocean.
You would have parts shipping across the ocean, mind you. The question is whether the automation would make it overall cheaper, and whether that parts shipping adds complexity (instead of a few points of failure, you have dozens, for example).
 

sublimit

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China and other countries with similar cheap labor costs are much more profitable for them and they help keeping console prices on the lower side.

Just like NA Japan is too expensive for the worldwide market.
 
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EightBit Man

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It was the golden age of high quality electronics.
Definitely. Still have a SONY Trinitron television I bought in 1997. Works like a charm to this day. Can't say the same thing about things I purchased a couple of years ago, like malfunctioning DVD players, audio equipment, etc.
 

Ten_Fold

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They would have to pay workers a decent wage to do that in the US so that probably won’t happen, they just gonna choose a poor country that could use jobs, would be cool to see Microsoft build Xbox here though.
 

Cynn

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If robotics become cheaper than third world labor then yes, there’s certainly a chance. American workers will never be cost effective at mass but automation can be.

There’s also the consideration on how big a market North America is and the savings of shipping would also stack up.

I miss when consoles came from Japan and were rock solid.
 
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TheShadowLord

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I don't really care where they are built. It's not like the quality of it would be any better (or any worse) if it was built in the USA..
 

Azurro

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Hola, señor.

EDIT: though I suppose that would be "Central America", not N.A.
Mexico is geographically speaking North America, you are looking for the Latin America tag (cultural). It's a petty thing, but I admit it irks a bit to see that label because when Americans say "Central America" they usually mean "underdeveloped shitty place".

In any case, manufacturing will always be done in the cheapest places. Mexico can be cheap, but setting up places in Vietnam, Bangladesh and India is way cheaper, so it's almost impossible any mass manufacturing will ever return in full to your country.
 
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LuvOfThaGame

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Considering my state just passed $15 minimum wage, no thanks to $5000 consoles just to pay my fellow spoiled American assholes. Lol. In a dream world, I would love for more US made products. It's just not practical.
 

JG07

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I absolutely wish that we could all pay for the true cost of items, but most people are very happy with supporting slavery so that console prices stay as low as possible. I'm typing this on my iPhone, so #partoftheproblem, but I would gladly pay $2500 for this same phone to be made by people in America, Europe or Japan.

The only way these jobs come back to countries which frown on child labor is if robotics take over.
 

newtypepilot

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only if they want to sell them for $2000+. The labour costs are just so much lower in those countries
 

Rest

All these years later I still chuckle at what a fucking moron that guy is.
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Nope. Manufacturing is moving away from China and into other southeast Asian countries and into Africa. US manufacturing is still dead.
 

SoulChamber

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Highly doubtful. Nintendo moved their production to Southeast Asia for that very reason.

Sony & Microsoft will most likely follow suit, if they haven't already.
 

mr_kittycat

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Jan 9, 2019
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I think if we get Trump for another 4 year we're very likely to see them made in the USA again. Hopefully anyway
 

Trimesh

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Jun 8, 2019
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Atari once was. Many of the influential pinball and arcade games once were. Xbox products are already built in Mexico. Certain AMD and Intel products are built in the USA.

Console manufacturing today relies on machinery. The cost-savings of cheap labor is being outpaced by the cost-savings of mechanical labor. And what do machines need? Energy. Who got the cheapest energy? Not the USA, but we're getting there.

On the flip side, electronic manufacturers are diversifying their sources and pulling business out of China, including videogame companies. Granted, they are moving business to nearby places in Southern Asia.

Curious to hear if GAFers see any merit to this possibility. Also curious to hear what impact this might have on the videogame market in terms of pricing, reliability, and availability if this were to occur.
I don't think there is even the remotest possibility of it.

You also have to realize that people are only "sort of" moving production out of China - it's basically doing enough to ensure that the end product qualifies as being "made in <some country other than China>", but that's it. The reason comes down to the way electronics works - most products contain a huge number of parts, and a significant part of the cost is logistics - getting all those parts to the final assembly location. Due to the way that most electronics manufacturing is concentrated in southern China, the supply chains are typically very short, and as a result you don't have to carry much inventory. Moving the production away from the area means that you have to carry more WIP inventory because the delivery times are longer. Obviously, this costs money - CMs aren't charities, and any request you make of them that results in them incurring extra costs will end up with those costs being passed on to you (normally with a markup on top).

So, let's assume that someone like Foxconn or Flex is building a console - they are shipping it to multiple places around the world, including the US. Overall, the cheapest option in terms of the cost out of the door is to make it in China - but if you do that with product that's destined for the US it gets hit with a 25% tariff. The obvious solution is to keep all your existing supply chains in place, make the product that's going to anyplace BUT the US in China and also build up (generally SKD) parts kits that you can then ship to some place like Vietnam for final assembly so they don't count as "made in China" for import purposes.

Note that this still involves additional costs - the parts have to be delivered to China, then fed through IQC, kitted up, packed, shipped to Vietnam and then finally assembled - but as long as the incremental costs are less than the tariffs, it still makes sense to do this.

You could, in theory, move the entire production process to some place in SEA, but in practice nobody wants to do this because the support infrastructure simply isn't there. If one of your $750k SMT lines goes down then you want to get it back into production as soon as possible - if you are in Guangdong, then they will normally be able to get an engineer onsite in a couple of hours and resolve the problem - if you were someplace in rural Vietnam, then it would probably take at least a day to get someone on site and your production would be stalled for that period. This provides a strong incentive to only relocate the relatively low technology parts of the operation where there is less to go wrong.

For the specific issue of getting this sort of manufacturing back into the US, there is another problem - which is that in most cases the import duty on finished products shipped to the US is charged at a lower rate than the import duty on the parts in them, which always seemed insane to me and an active disincentive to US based manufacturing. Another (non electronics related) example of this is that there are now 25% tariffs on Chinese steel - so if you are making (I.E.) refrigerators in the US then you have to pay this extra 25% on one of your major cost drivers. But if you are a based in say Canada, you don't have to pay it - and the resulting refrigerator can then be exported to the US on a duty free basis, which once again provides an active disincentive to US based manufacturing.

Sorry for the wall of text...
 
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Mr Nash

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I'm not sure about wholly manufactured. That would require chip makers to press their wares here as well. Best case I could see happening is the various components getting sourced abroad (CPUs, memory, storage, etc.) but the console itself is assembled in the US. Even then, I don't think that will happen until automation gets cheaper. Would be interesting to revisit this in a decade, though.
 
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