Made in America: Trend against outsourcing brings jobs back from China

[cal04]

http://rockcenter.msnbc.msn.com/_news/2012/01/14/10156162-made-in-america-trend-against-outsourcing-brings-jobs-back-from-china

The United States may be on the verge of bringing back manufacturing jobs from China.

Harold Sirkin, along with Michael Zinser and Douglas Hohner (all experts from the Boston Consulting Group – a leading business advising firm), says that outsourcing manufacturing to China is not as cheap as it used to be and that the United States is poised to bring back jobs from China. The three consultants first reached this conclusion in a recently published study titled “Made in America, Again: Why Manufacturing Will Return to the U.S.”

Many companies, especially in the auto and furniture industries, moved plants overseas once China opened its doors to free trade and foreign investment in the last few decades. Labor was cheaper for American companies – less than $1 per hour according to the BCG report. Today, labor costs in China have risen dramatically, and shipping and fuel costs have skyrocketed. As China’s economy has expanded, and China has built new factories all across the country, the demand for workers has risen. As a result, wages are up as new companies compete to hire the best workers.

“The tilt is now getting lower,” Sirkin says. “We think somewhere around 2015 it’ll look flat and may start to tilt in the U.S. favor at that point in time.”

[Vincardog]

1. Great they are saying that in 3 years the Chinese factory worker will be better paid

than the US factory worker. Race to the bottom Mission Accomplished.

[TheWraith]

6. No, they're not.

They're saying that external costs are rising to the point where it no longer makes sense to move production to China from a purely economic point of view. That's not to say that the $400 a month the Chinese factory workers are being paid is comparable to US wages.

A big part of the value of Chinese manufacturing has always been how cheap it was to ship stuff across the oceans. With oil prices the way they are, that becomes less and less true. Combined with the added value that a "Made in the USA" tag brings to a brand--or particularly to customer service--you also have factors that have to be counted against the relative value of outsourcing.

[unlawflcombatnt]

8. Yes, they are.

They certainly ARE saying that it is due to increased Chinese wages.

They're saying that due to increased Chinese wages, combined with decreasing American wages (like the new $14/hour wage negotiated in the new UAW contract for newly hired workers), a very small number of jobs will trickle back into the US.

In fact, the Boston Consulting Group states that
"Wage and benefit increases of 15 to 20 percent per year at the average Chinese factory will slash China's labor-cost advantage over low-cost states in the US, from 55% today to 39% in 2015, when adjusted for the higher productivity of US workers."

Furthermore, the actual article states that China will still remain a mecca for production of goods that have a high labor content, and that some of the loss of Chinese jobs will be to even lower wage workers in other countries.

The original Boston Consulting Group is nothing but a load of propagandistic mythology.

Chinese wages as a percentage of their GDP is actually declining. And a 15-20%/year increase will not bring them up to US levels in the foreseeable future when wages are starting out at only $1/hour. At that rate their wages will not have even doubled by the year 2015, which will still make them much cheaper than American workers.

[TheWraith]

11. No. Try understanding the words.

"Increasing Chinese wages" does NOT mean the average Chinese factory worker will be better paid than the average American. If you believe that to be the case, you're welcome to travel to China to try and get one of those jobs, where they're having employees threaten mass suicide over working conditions. What you cite there at the end is actually supporting my point: it has nothing to do with wage parity between the US and China, but that that's one small factor making manufacturing in China less profitable.

[Zalatix]

12. Plus there's the Yuan:Dollar exchange rate making everything in China cheaper.

[Zalatix]

2. Whoops. I once said that this was coming. K&R!!!

[southernyankeebelle]

3. American made products are made the best in the world. Lets hope they come back sooner.

[SirRevolutionary]

4. Yup, that was the plan all along

Lower the American worker's wages and standard of living, break unions, chop up any consumer protections, squash education and healthcare, and sooner or later we'll all be working for $1 per hour. The 1%ers are turning the rest of us 99% into a big third world labor force destined to toil forever building their psychotic dreams while we lose ours.

[Jazzgirl]

5. Bingo!

n/t

[Fawke Em]

7. I've been saying this, Randi Rhodes has been saying this, Thom Hartmann

has been saying this, yet almost no one I know hears it.

Sad, really.

[Phlem]

9. When I surmised this myself

I thought I was being crazy.

Things are totally insane now and am sure will get much worse.

Man do I hate republicans.

-p

[Initech]

10. Vulture capitalism at it's finest.