Tag Archives: USA

Manufacturing Sees Shift from Asia Back to USA

Ironic Economics

In what some analysts see as a bit of economic irony, there is a slow but steady in the manufacture certain products away from Asia and back to North America.

“What you’re starting to see is the economics shifting more into the United States’ favor regarding sourcing from the United States versus sourcing from a low-cost country,”

said Daniel Meckstroth, chief economist at the Manufacturers Alliance/MAPI, a Washington trade group.

The irony is that it is precisely because the US is going through a slow economic period and China and India are experiencing brisk growth as their emerging economies surge that help US manufacturers to minimize the cost gap between them and their Asian rivals.

Wage Gap Closing

According to one consulting group it is even possible that by the year 2015 labor costs in China and the US could achieve parity. If the present Chinese inflation rate of 5.5% continues while the US maintains the lower 3.6% rate of inflation, and if Chinese wages continue rise at the present 15- 20 percent, then wages in the US and China could very well be indistinguishable.

Efficiency Helping US

In Milwaukee, at the Master Lock factory, the shift back to “made in the USA” is already happening in full force. Just two years ago the lock-making machinery there was only running a few hours a day because it was cheaper to order padlocks from China rather than making them at home.

Today the lock-making machine is running at a whirlwind pace seven days a week and three shifts per day. How can this be when wages are six times higher in the US than in China? The answer is because of superior efficiency. In Milwaukee locks are produced thirty times faster than in the factories in China, which more than makes up for the wage gap.

“I can manufacture combination locks in Milwaukee for less of a cost than I can in China,”

said Bob Rice, a senior vice president at the largest U.S. padlock manufacturer.

In the past two years Bob Rice has added about 80 workers to his workforce, which totals 440 at the moment, and could very well continue to rise. A good sign for the future of US manufacturing.

Time to Invest in Chinese Companies

US and EU Hit Hard

The global economic crisis – as we all know – hit hard.  Especially tough impacts were encountered by the European Union and the United States of America.  These regions are today, still being impacted by the crisis, vis-à-vis an uncertain economic future and increasingly high levels of public debt.

China’s 2008 Plans

In reaction to the crisis in 2008, China sensibly set out plans to help make world financial markets more stable.  The country – as companies that seek to make investments there have known for years – is usually on top of its economic situation and what it needs to do to stabilize matters where required.  This is what makes it an ideal environment for companies such as ARC Investment Partners to put their capital.

China Thinking Ahead

This clear thinking during a tough time for Chinese companies, really made a lot of sense for the country’s economic future.  Today, China is a hotspot of stable economic growth, along with a substantial foreign exchange reserve.  The question thus being asked, is can it also now play a role in finding a solution to the world’s current financial issues?  Maybe.  But first, the rest of the world needs to get on board and formulate an accurate perspective of the advantage of making investments in China today.  Some critics firmly believe that if America and Europe really look into investing serious capital into China, a lot of their financial woes would be dissipated.

In other words, America and Europe need to get over their paranoia that investing in China is troublesome due to the country’s national security concerns or other inaccurate perceptions