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Honda may have red-lighted, jumped the gun even, on moving manufacturing back to their home island. Shipping those big bikes back here, their main market for them, will be costly in this day of sky-rocketing oil prices. During the 1990s, cheap energy made outsourcing manufacturing to lower labor content facilities very profitable. When oil was cheap, it was easily justified to send materials halfway around the world for construction, and then send the finished product back to consumers. As oil increases in price, it is hard to justify the transportation of goods to overseas producers.

Of course many of the Goldwing parts came in totes and were merely assembled in Ohio, so the only difference is shipping the assembled product where most of the loose parts and subsystem assemblies once logged passage.

Most recently the Chinese economy benefit from producing outsourced goods. Products and materials have moved to China to be put together where they are then shipped all around the world. Oil’s recent move to $100 per barrel makes outsourcing no longer as profitable or profitable at all. Since most of Chinese production is for goods that will be sold on foreign soil, their near term manufacturing outlook is not too rosey, at least until our Congress here gives Chinese consumers a $600 tax break!
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