Wednesday, 29 March 2017

CHINA TO MOVE SOME MANUFACTURING TO THE USA

Cheap Energy & New Technology: China Sees A Manufacturing Future — In AmericaThe Wall Street Journal, 21 March 2017

Andrew Browne
 
DONGGUAN, China—Glen Lin is struggling to keep his shoe company competitive on the world’s factory floor in southern China. Wages are shooting up 15% each year. Taxes are high. Shipping is exorbitant, and slow. So, as fast as he can he’s automating production, while planning an escape to his largest market—the U.S.

The vice general manager of Dongguan Winwin Industrial, a Taiwan-owned company, is scouting for a location in America to move his newest machinery that turns out high-quality sneakers and casual shoes. Most likely, he’ll end up near one of his main customers: Skechers, based in California, Crocs in Colorado, or Nike in Portland, Ore

In global manufacturing, fortunes are starting to shift in America’s favour.
That’s despite Donald Trump’s angry election rhetoric about China “raping” the U.S., and his threats to forcibly bring home manufacturing jobs by slapping across-the-board tariffs of 45% on Chinese imports.

The trends were clear well before Mr. Trump started rallying his blue-collar base with alarmist messages of protectionism. In fact, China’s trade challenge peaked years ago: Exports to the U.S. surged in the immediate aftermath of the country joining the World Trade Organization in 2001, throwing several million U.S. assembly workers out of a job, but they have since flattened out.

Nowadays, the exit of U.S. factory jobs from the country is roughly matched by posts coming in, according to the nonprofit Reshoring Initiative, which encourages companies to bring production back to the U.S.

Job-creating investment from China is booming in particular. Last year, it tripled to $45.6 billion from a year earlier, according to the Rhodium Group.

Chinese social-media sites were abuzz last year when the auto-glass tycoon Cao Dewang announced he was moving part of his production empire to Ohio. Some commentators denounced him for “running away.” He insisted he could make more money producing for the U.S. market from Ohio than China.

Although U.S. wages are still higher than those in China, the gap is rapidly narrowing. Andy Gu, vice president of international business for Midea, a massive home-appliance maker also based in southern China, says a competent engineer now demands up to $50,000 a year. Ordinary workers get about $600 a month, with food and lodging on top.

Moreover, industrial land in the U.S. is often cheaper than in Chinese coastal cities. The shale-gas revolution has dramatically lowered U.S. energy costs.
But the real key is technology: Advanced manufacturing is leveling the playing field.

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