U.S. copper tubing manufacturing

The law of comparative advantage with regard to copper tubing is we never lost the copper tubing business. Copper tubing is relatively easy to make if you start out with the five or six million dollar investment into an extrusion press. This is glowing red copper going in, they just squirt it out like toothpaste, very fast. We had seven plants in the United States making copper pipe. Why? Because the transportation cost of shipping all that air inside the pipe was too great. Even though we didn't have the comparative advantage in terms of labor rates, we had the advantage on transportation costs.

Another externality is transportation, and it might be fairly mundane. Copper tubing — the kind we use for water pipe in homes — we never lost that business in the United States. All you need is an extrusion press that turns the copper into a tube, and then you draw it. It doesn't take a very large building; the size of the Student Center would be able to produce copper tubing. In the mid-1990s, there were five companies still making copper tubing in the United States, because you couldn't afford to transport all that air. You can afford to transport copper around the world as solid copper, but when you make it into ninety-five percent air, it's cheaper to bring the copper from Chile to the United States and extrude it here. The transportation costs kill you.

Transportation externality. Six US copper tubing plants survived 1980s–90s offshoring because the air-in-the-hole shipping cost was prohibitive. Reading Tube as the LGO thesis site.

Transportation as an externality. My example here is copper tubing. We think copper tubing is expensive, but it's not that expensive. All through the 1980s and 1990s, when all these metal-producing industries were going offshore to lower labor rates, we never lost the six factories in the United States that made copper tubing. Reading, Pennsylvania had this old plant — I had a student do an LGO thesis down there at Reading Tube — and there were six of these plants in the United States. The reason was, when you ship copper tubing you're shipping a lot of air in the hole — large volume. It's expensive but it's not that expensive — go to a hardware store and you might have to pay eighty bucks for a ten-foot length. The shipping costs were too great, and so we actually kept those industries because of the transportation costs. There are a few other industries like that, but that's one example.