Economy 4.0

Cowboy boots, made in Mexico (by the Chinese)

Stan Alcorn Jan 17, 2012

Last Thursday, David talked about Joey Sanchez and the custom cowboy boot business, CABoots, that’s been in his family for four generations. He mentioned they’ve been doing better at the high-end – $10,000 orders for alligator boots – than the mid-range— $500 cowhide boots.

But there was another trend Sanchez told us about that we didn’t have time to discuss on the air. About a year ago, the price of black cowhide went through the roof. The cause, according to Sanchez: Chinese companies buying up factories in Mexico.

Why would Chinese companies buy factories in Mexico? It may be for the same reason Sanchez did: “Mexico has universities built just for training people to make footware. America doesn’t.” His Mexican factory is actually more mechanized than the El Paso factory, and by drawing on local labor pool, Sanchez doesn’t need to spend years training Americans how to use those machines.

It’s an intriguing example of how outsourcing isn’t just about labor costs (though those obviously matter, too), but also about skills. In America, as Sanchez said, “Nobody goes to elementary school and have the teachers telling them, ‘When you grow up, you can stitch boots for a living.’”

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