Should we be optimistic about work coming back from China? We think so, and we found more reinforcing information. In our 9/11/13 newsletter, many problems were noted that should negatively affect China’s economy and thus help bring work back to the US. Another article adds to this, and points out why the US, Viet Nam and Mexico should be the primary beneficiaries.
According to this second article, “Problems in China include the rise in minimum wages, demands from workers for higher labor standards, and a rising middle class turning from cheap manufacturing jobs to employment in the service sector. The IMF believes that China will experience a worker shortage of more than 100 million jobs by 2040, something unthinkable during the peak of the “Made in China” era. Technology has replaced some of China’s cheap labor, and companies have outsourced…to 3 nations that stand to gain the most…”.
Click here to get the whole article.
Proficient Sourcing is delighted to note reasons why manufacturing should be coming back to the US. We are poised and ready to assist anyone looking for good domestic sources for custom manufacturing.
Also, if you are interested in looking at comparisons of country candidates for your manufacturing, consider the Total Cost of Ownership Estimator. This is a worksheet created by the Reshoring Initiative and is also available on our website.
The 3 nation article cited above briefly describes the advantages of each. The first is Viet Nam, and the primary reason to consider manufacturing there is really cheap labor—for now. The summary of Viet Nam is “Vietnam faces challenges that could see its jobs fleeing to even lower-cost competitors in coming years, such as …Laos and Cambodia. The country’s population is aging…and high inflation will eventually catch up [and increases wages]. For now, however, Vietnam is poised to keep benefiting off China’s losses.”
The second country, Mexico, has advantages derived from their combined worker efficiency/productivity and low wage scale. Although Mexico’s wage rates are actually higher than China, productivity makes Mexico cheaper. Of course the ability to eliminate oceanic shipments is another giant advantage.
And then there is the United States. Reshoring is gaining strength, and obviously that is very good news. When productivity is factored into the equation, the wage gap between China and the US is rapidly closing. The US worker frequently takes on better training and uses more complex and efficient tools on the job. Our advantages in high skill manufacturing are expected to continue, and we also benefit from a strong legal framework and better emphasis on intellectual-property rights.
And here is the good news article summary: “Consumers will still demand cheap products, and companies will still find ways to keep labor costs …low. China’s rising middle class and bevy of economic problems… will necessitate a shift…that will have jobs…heading for a new home. Whether that’s in even lower wage areas such as Vietnam or nations that offer higher productivity and less logistical costs, such as the US and Mexico, change is in the air. The heyday of “Made in China” has come and gone”.
Good news indeed!