3 ms·
This has been predicted for a while. This has been said as early as 2010 and possibly even before that by about 2015 costs would equalize. In 2013 there was an
by sien 11y ago
This has been predicted for a while. This has been said as early as 2010 and possibly even before that by about 2015 costs would equalize. In 2013 there was an article in The Economist on this:
http://www.economist.com/news/special-report/21569570-growing-number-american-companies-are-moving-their-manufacturing-back-united http://www.economist.com/news/special-report/21569570-growin...
Here is a key quote from the article:
"BCG used to argue that companies unwilling to send their manufacturing to lower-cost countries were putting their very future in jeopardy. Now it says that companies will bring manufacturing back to America from China. As soon as 2015, says Hal Sirkin, a consultant at the firm, it will cost about the same to manufacture goods for the American market in certain parts of America as in China in many industries, including computers and electronics, machinery, appliances, electrical equipment and furniture. That calculation takes into account a wide variety of direct costs, including labour, property and transport, as well as indirect ones such as supply-chain risk."
Also worth noting is that the US is often a bigger market for some goods.
But it's also worth noting that German and Japanese manufacturing has been more expensive that US manufacturing for decades and still in some areas Germany and Japan do very well.
It's interesting to see an article that puts fracking up as the key reason. Energy costs are not irrelevant but are also often not a big part of the cost.
- ChuckMcM 11y agoI was going to mention this as well, thanks for finding the economist article. Manufacturing costs are more than just the price of parts, sending people to and from the factory several times, communicating requirements, Dealing with tariffs and customs. For smaller runs it is definitely getting competitive in the US, but so far the parts suppliers haven't yet picked up on this. I'm expecting a midwest town or two with good air/rail transport to figure this out and start a mini-manufacturing boomlet. Will be interesting to see.
- patrickk 11y agoAlso quality issues. If you want the absolute best industrial part/tool/whatever on the market, often you go to a mid sized German company no one has heard of and get it there. Strong apprenticeships and unions (meaning very high quality, loyal workers therefore low turnover) and an obsession with quality can all be important advantages in the competition with China: http://www.economist.com/news/business/21606834-many-countries-want-mittelstand-germanys-it-not-so-easy-copy-german-lessons http://www.economist.com/news/business/21606834-many-countri...
- yellowapple 11y agoMy view is naturally biased (since I live in the area), but Reno/Sparks might very well be a potential site for such a mini-manufacturing boomlet. We've already got Tesla's Gigafactory coming in (albeit on the outskirts), and it sits on some pretty major rail and road routes (including I-80, which hits quite a few cities across the U.S.). Plus, taxes are low, which is generally a plus for a business.
- icelancer 11y agoThis was discussed at the turn of the century when outsourcing was the wave of the future. Economists and manufacturing experts knew that in-house stuff would have a large place regardless of what occurred with massive offshore work. We've seen it at my business. Chinese suppliers crush American ones on low-skilled goods but we pay top dollar for intermediaries and local stuff when we can. Scaling is the real key of Chinese manufacturing, though. Cost we can negotiate on and play around with, but speed and scaling? Chinese factories crush the Americans in my line of work.