MangoMan wrote: ↑Mon Dec 14, 2020 11:24 am
pmward wrote: ↑Mon Dec 14, 2020 11:11 am
it's not really that much cheaper to manufacture in China than here these days.
How do you figure? Labor costs are still massively lower in China, especially when you factor in benefits such as health care and retirement plans.
They're not really that much cheaper these days. Look at what wage growth has been like in China over the last 20 years. The "arbitrage" has been happening. Over the last 20 years their wages and benefits have been growing at a fast pace, and ours have been stagnating. So manufacturing in China has become less and less attractive by the day.
Let us also not forget that most companies that started going to China 20 years ago assumed in their cost benefit analysis that the cheaper wages and costs would always be there pretty much indefinitely. Most companies have been shocked at how quickly cost to manufacture in China has went up. Many companies have fallen way short of the ROI they expected by manufacturing in China. It was a large investment to move there, then to have costs go up at a very fast pace year after year, it changed the math mid-way through the game.
You also have to look at logistics. In manufacturing there are additional logistical costs like shipping that come into play.
Being someone who has had to manage foreign contractors in the past, I can tell you it is also not an efficient process. It is a headache. It takes a lot of time and money to babysit the foreign contractors.
Language barriers can make things difficult and cause them to have to do rework because of language misunderstanding.
There is less flexibility, since you're dealing with a different company in an entirely different region. This makes the process more fragile, and that fragility does fail at times and has a cost attached to it.
For these reasons and others, companies were already beginning to sour on manufacturing in China long before the Trump isolationism movement. This movement is too little, too late. The damage is already done. Things were already beginning to shift on their own simply based purely on the "free market". The way China's demographics are looking over the next 10 years, costs are likely to continue to go up. Best at this point to just let the "free market" finish it's process, and complete the inevitable trend towards a fully global economy unimpeded. At this point in the process, the scales start to slowly tip back in our favor over time.