As China costs rise, technology lures U.S. factories home

[ErikTheNorwegian]

Fro

[SeanB]

Locally BELL makes excavators locally, with local steel cutting, welding and assembly. Imported engine and drivetrain, with local hoses and hydraulic assembly.

[saturation]

Of added interest:

https://www.eevblog.com/forum/general-chat/the-end-of-cheap-chinese-goods-labor/

While the discussion is about the US, the trend is for the return or growth of manufacturing to their respective continents, US to US, EU to each EU nation or alternatives, Vietnam, Mexico and Thailand.  Its easier to ship as a one time expense the robots for a factory, but not keeping enduring recurring shipping fees and taxes, not to mention other intangible loses like IP theft and outright inventory theft.

[Crush]

Keep dreaming.

Even at minimum wage there are healthcare plans that need to be paid out and other insurance. China isn't that cheap anymore, but after taxes, electricity, regulations, and healthcare plans, it's no way possible to compete with China in a realistic world.

A call centre is one thing. It's often illogical to outsource a service. But when it comes to manufacturing, are you going to buy the machinery for China or the US? Considering that Asia will soon be able to purchase its own goods.

An investor is going to likely fund to put their money into a future emerging market (Asia) so they can get a solid return on investment. We pay taxes to civil servant union pension funds. Those fund managers invest in Asia because it's most likely to offer return on investment. You obviously won't invest in a country that *discourages* business and manufacturing.

I do believe that it's possible to manufacture for cheaper or similar cost, but it's going to take the new generation of investors and talented accountants to start to 'believe' in ourselves again and innovate efficiences. Also the fascist price fixing of raw materials like lumbar and steel has got to stop. China certainly doens't pay world price for things like silver, steel, wood, etc. That's another issue where the problem lays with us as being the problem.. not them.

[Bored@Work]

Once a year or so you can read such a report. And every year the journalists of course find CEOs stating they want to move back. What they don't point out is that such statements are

a) intended to keep the folks at home happy (cf. this thread)

b) threaten their Chinese outsourcing partners to continue to be cheap, or else ...

c) threaten their Chinese outsourcing partners to get their quality under control, or else ...

There is no mass exodus from China. And in the rare case a company leaves China they are likely to just move to another low-cost country.

[T4P]

"Where are they going to next? India!" - Heard this earlier today

[Bored@Work]

And all this You can back with some quotes, sources ?

Why should I? Just keep your eyes open. Until this time next year you'll have read the next "production is coming home" piece or maybe even a few.

Oh, and by the way, election campaigning is gearing up in the US. Surprise, surprise that this piece is published now.

[ejeffrey]

It isn't like China doesn't have problems, but these stories get overblown for all the obvious political reasons. Outsourcing got a lot of political noise starting around 5 years ago when unemployment in the US started going way up.  But overseas manufacturing didn't start 5 years ago.  It took decades for China to build up their manufacturing economy to world dominance.  Even if they have peaked, and even if the US (or whatever former industrial powerhouse you are attached to) manufacturing economy is entering a revival it will take decades to rebuild.

[saturation]

Discussions about companies moving out of China have been going on for many years, even before elections. 

I have personal senior contacts with several manufacturers in other industries, I've heard the pull out discussions nearly every 3-4mo since 2005. 

The biggest reason recently has been legislation in China is creating a hostile environment for foreign companies, add to it rising costs, and the never ending IP theft.

http://www.telegraph.co.uk/finance/china-business/7197087/UK-businesses-threaten-to-pull-out-of-China-over-protectionism.html

http://english.peopledaily.com.cn/90778/7883689.html

[Bored@Work]

So, just ranting then.. IC..

Since YOU are to lazy to do your homework, just spreading the FUD, why should I?

But here we go. The current round of "production is coming home" was sparked by President Obama himself, when in May he claimed in front of a crows in Albany that "it’s now starting to make sense to bring jobs back home.". Since then US media is running crazy with the idea. Remember, it is election campaign time.

The 40% figure they give was actually from a poll, and it was not 40% but 37%. Conveniently rounded by journalists who don't take figures too serious. The poll was done by Boston Consulting Group online. That is all, a non-scientific online poll by a consulting company very active in reshoring and nearshoring consulting. And we don't know who payed them for this isolated poll.

The question was if business leaders think or do moving jobs back. The key part here is "thinking about it". Oh sure, business leaders think about a lot of things. Doing it is a whole other ballgame. By lumping "thinking" and "doing" in one question they loaded it to get a better result.

"Now starting to make sense" Yeah, sure. It now starts to make sense to have dinner, too. Obamas administration then, low and behold, pointed among others to GE for building a new fab with 450 employees.

First, 450 employees are like a fart in a hurricane. That's nothing. Second, 450 jobs are what is planed once, if ever, the production is fully ramped up. That could take years. 450 jobs are just a plan. And third, this is the most interesting part, two month later the Reuters journalists still have to use GE as an example. Either they couldn't find a better example, or were just to lazy to look for one, and instead copying the statements from the politicians.

Realistic figures (Hacket Group) say at the current rate it will take the US more than 25 years to regain all the jobs lost. And only if the new low-cost countries like Indonesia, Vietnam, Thailand don't rise. Which they are about to do. And, only if the jobs still exist at all. Automation in factories has made many obsolete and they simply don't exist any more. But "jobs" is a magic word in US election campaigns.

So now it is time for you. You either use the opportunity to learn something and start to critical rethink journalist articles or you just continue with fingers in your ears.