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Made in America: Trend against outsourcing brings jobs back from China
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.”
By 2015, it will only be about 10 percent cheaper to manufacture in China.
“We have to recognize one thing,” Sirkin told NBC’s Harry Smith in an interview to air Monday on Rock Center with Brian Williams. “The average Chinese worker is about a quarter as productive as the average U.S. worker.”
“It’ll be a major impact. Our projections are, when you take the manufacturing jobs and then the service jobs that get created alongside those, that we will add two to three million jobs to the U.S. workforce.”
The U.S. is already seeing examples of this – starting in Lincolnton, North Carolina.
Rock Center has been following Bruce Cochrane of Lincolnton Furniture as he brings his family business back to the U.S. and re-opens the family furniture plant. Cochrane was invited to the White House last week for a forum on job creation with President Barack Obama and Vice President Joe Biden.
“Now, you don't have be a big manufacturer to insource jobs,” Obama said. “Bruce Cochrane's family had manufactured furniture in North Carolina for five generations. But in 1996, as jobs began shifting to Asia, the family sold their business, and Bruce spent time in China and Vietnam as a consultant for American furniture makers. But while he was there, he noticed something he didn't expect: their consumers actually wanted to buy things made in America. So he came home and started a new company, Lincolnton Furniture, which operates out of the old family factories. He's even re-hired many of the former workers from his family business. “
According to BCG, another manufacturer, Sleek Audio, moved production of its headphones from Chinese suppliers to a plant in Florida. Ford Motor Company is bringing back 2,000 jobs from China after striking an agreement with the United Auto Workers. Sirkin says it’s good news for the economy even though wages will be lower in those jobs than they were previously.
Sirkin believes fears that United States manufacturing is in decline are overstated and notes that the U.S. is still a manufacturing giant. In 2010, China provided 19.8 percent of global manufacturing value added. The U.S. accounted for a marginally less 19.4 percent, which, according to Boston Consulting, was “a share that has declined only slightly over the past three decades.”
Editor's Note: Harry Smith's full report, 'Made in America,' airs Monday, January 16 at 10pm/9c on NBC's Rock Center with Brian Williams.
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.”
By 2015, it will only be about 10 percent cheaper to manufacture in China.
“We have to recognize one thing,” Sirkin told NBC’s Harry Smith in an interview to air Monday on Rock Center with Brian Williams. “The average Chinese worker is about a quarter as productive as the average U.S. worker.”
“It’ll be a major impact. Our projections are, when you take the manufacturing jobs and then the service jobs that get created alongside those, that we will add two to three million jobs to the U.S. workforce.”
The U.S. is already seeing examples of this – starting in Lincolnton, North Carolina.
Rock Center has been following Bruce Cochrane of Lincolnton Furniture as he brings his family business back to the U.S. and re-opens the family furniture plant. Cochrane was invited to the White House last week for a forum on job creation with President Barack Obama and Vice President Joe Biden.
“Now, you don't have be a big manufacturer to insource jobs,” Obama said. “Bruce Cochrane's family had manufactured furniture in North Carolina for five generations. But in 1996, as jobs began shifting to Asia, the family sold their business, and Bruce spent time in China and Vietnam as a consultant for American furniture makers. But while he was there, he noticed something he didn't expect: their consumers actually wanted to buy things made in America. So he came home and started a new company, Lincolnton Furniture, which operates out of the old family factories. He's even re-hired many of the former workers from his family business. “
According to BCG, another manufacturer, Sleek Audio, moved production of its headphones from Chinese suppliers to a plant in Florida. Ford Motor Company is bringing back 2,000 jobs from China after striking an agreement with the United Auto Workers. Sirkin says it’s good news for the economy even though wages will be lower in those jobs than they were previously.
Sirkin believes fears that United States manufacturing is in decline are overstated and notes that the U.S. is still a manufacturing giant. In 2010, China provided 19.8 percent of global manufacturing value added. The U.S. accounted for a marginally less 19.4 percent, which, according to Boston Consulting, was “a share that has declined only slightly over the past three decades.”
Editor's Note: Harry Smith's full report, 'Made in America,' airs Monday, January 16 at 10pm/9c on NBC's Rock Center with Brian Williams.
It is atrocious! It is also hard to believe that it doesn't end with China. China just has the most of it. Part of the real problem there is, those good people working in those environments know no difference. If they had a clue..... Wow!
On a side note, unions and the labor board over there don't do a whole bunch, do they? Label you as a trouble maker and run you off.... jeez, thanks a lot. I'd just as soon use my mouth and own ideas to get me run off a job.
On a side note, unions and the labor board over there don't do a whole bunch, do they? Label you as a trouble maker and run you off.... jeez, thanks a lot. I'd just as soon use my mouth and own ideas to get me run off a job.
The good thing about being a pessimist, is you aren't let down!
I thought conditions were bad, just not quite that bad, the size of the thing, the dehumanization. It brings up visions of bad sc-fi movies.
I thought conditions were bad, just not quite that bad, the size of the thing, the dehumanization. It brings up visions of bad sc-fi movies.
Just got done listening. Interesting story, but I believed that things were that bad already. I was impressed/depressed that the factories were that big. I assumed there were many, many factories throughout China but thought that at least that many people were affected.
Hi Brice,
It's factual. The only possible problem could be in translation.
However it gives a good overview of how things are being made in China.
Besides the human rights issues, it makes it clear how much the corporations are willing to do to increase profits.
Besides that, the guy is interesting to listen to.
Take care.
It's factual. The only possible problem could be in translation.
However it gives a good overview of how things are being made in China.
Besides the human rights issues, it makes it clear how much the corporations are willing to do to increase profits.
Besides that, the guy is interesting to listen to.
Take care.
I tried to listen yesterday but work wont allow me to listen to the piece in whole. But from what I gathered from reading the set up, I couldn't tell if this was a "story" or if it was factual. I'll try to listen to it today.
I suggest you listen to Mr. Daisy's visit in China. It's an eyewitness account of 'where our stuff is made."
Might change a few views.
Might change a few views.
He is working on incentives for American companies to bring jobs back. I'm not sure what these incentives are and how they will impact the nation, but if the negative impacts don't create too many ripples, I'd gladly give the President his props.
There is a billionaire in India (this was on Yahoo news) who basically said that he is willing to invest but has no real place to invest locally. He is in the medical/pharmaceutical field and needs newer and better technology. He said he has clients that are awaiting product and what he has cannot produce in the fashion/quantity necessary with the technology/equipment available to him at this time. The need for what he can provide grew faster than his current capabilities can keep up with. So he basically put out notice to any and all comers to come on board with him.
(On a side note, this year is the first year in quite some time that "oil" bested technology (above where you mentioned India) as an export.
Basically when you do business in China today, they won't let you trademark your product, look at and steal your plans, then produce the very same product as you do and sell it for a cheaper price than you do. Who is one of the biggest importer of goods from China? We are... So it would be awesome to get these jobs back here, but who is willing to do it at a giant shot to their profits? I don't think many would, so what would those consessions be and what are the affects of doing this?
What we have to do in this country is quit doing things that are going to have a negative impact 10 years down the road. Quick fixes are part of todays problems. We do something knowing that there will be repercussions down the road with the attitude of, "we'll cross that bridge when we get there". That mentality stinks and doesn't work. If we are going to do something today to get jobs back here that is gonna kill something somewhere down the line.... not so sure that is a great idea.
There is a billionaire in India (this was on Yahoo news) who basically said that he is willing to invest but has no real place to invest locally. He is in the medical/pharmaceutical field and needs newer and better technology. He said he has clients that are awaiting product and what he has cannot produce in the fashion/quantity necessary with the technology/equipment available to him at this time. The need for what he can provide grew faster than his current capabilities can keep up with. So he basically put out notice to any and all comers to come on board with him.
(On a side note, this year is the first year in quite some time that "oil" bested technology (above where you mentioned India) as an export.
Basically when you do business in China today, they won't let you trademark your product, look at and steal your plans, then produce the very same product as you do and sell it for a cheaper price than you do. Who is one of the biggest importer of goods from China? We are... So it would be awesome to get these jobs back here, but who is willing to do it at a giant shot to their profits? I don't think many would, so what would those consessions be and what are the affects of doing this?
What we have to do in this country is quit doing things that are going to have a negative impact 10 years down the road. Quick fixes are part of todays problems. We do something knowing that there will be repercussions down the road with the attitude of, "we'll cross that bridge when we get there". That mentality stinks and doesn't work. If we are going to do something today to get jobs back here that is gonna kill something somewhere down the line.... not so sure that is a great idea.
Didn't I read in the paper that Obama is working on incentives for American companies to keep jobs in America?? I didn't vote for Obama and don't plan to in the next election but , . . I was thrilled to read he is addressing this.
As far as India, my shipping husband (that's his business) says that India isn't aligned to do business with our companies and unless they do that for manufacturing, they won't become the next china. Call centers and the like are already in India but manufacturing has a long way to go and their government would make it difficult. Husband says that Vietnam and Tailand and inner China where it is still cheaper is where companies are going.
So, if Obama can get some companies to bring manufacturing home to America---- my feelings would change about him. That would be a huge accomplishment. (although then my husband might be out of a job . . . )
As far as India, my shipping husband (that's his business) says that India isn't aligned to do business with our companies and unless they do that for manufacturing, they won't become the next china. Call centers and the like are already in India but manufacturing has a long way to go and their government would make it difficult. Husband says that Vietnam and Tailand and inner China where it is still cheaper is where companies are going.
So, if Obama can get some companies to bring manufacturing home to America---- my feelings would change about him. That would be a huge accomplishment. (although then my husband might be out of a job . . . )
This sounds very promising, but just a week ago on Yahoo news (I think) there was a big article about how India is becoming the new China. American companies are running to India for all of the same reasons they initially ran to China.
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