Cheap Labor? Rising Wages and the End of Manufacturing in China
July 14 2011 by ChiefExecutive.net
Made in China. Or maybe not. Once a place where companies went to find cheap labor, China is becoming less desirable for companies looking to manufacture very inexpensively. Wages are on the rise. Time.com covers the rapid increase in labor costs for manufacturers in China, detailing one CEO whose manufacturing costs have risen by 50 percent over two years (the article notes that real wages for manufacturing workers have grown 12% per year over the last decade). The average manufacturing wage of $3.10 per hour is still drastically under the US’s average of $22.30.
These wage increases have implications across the globe, and not just for business owners. The living conditions for Chinese workers are improving and they are increasingly able to find jobs that pay well enough to work near their home. As business owners are taking their business elsewhere, many other countries are seeing an influx of jobs.
And these manufacturing jobs may not just move to poorer countries like Laos, Cambodia, and Vietnam, but may also come back to the United States. As the unemployment rate reached 9.2% in June, an increase in manufacturing jobs would be an extremely positive development for the US.
ABA is here, awaiting your return.
WASHINGTON — U.S. factories are closing. American manufacturing jobs are reappearing overseas. China’s industrial might is growing each year. And it might seem as if the United States doesn’t make world-class goods as well as some other nations.
“There’s no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products,” President Barack Obama said in his State of the Union policy address last week.
Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.
The story of American factories essentially boils down to this: They’ve managed to make more goods with fewer workers.
AND ABA HAS KNOWN THIS FOR YEARS….COME SEE HOW WE DO IT!
And now I have even more reason to love my Audi……
Jul 11, 2011 2:20 PM
Audi’s CEO has revealed that the German automaker plans to build a vehicle assembly plant in North America and could also build an addition engine and transmission plant.
Audi CEO Rupert Stadler told Automotive News that details of the assembly plant—including its location, what models it will build, and its production capacity—will be finalized within three years.
Audi sold 101,629 vehicles in the U.S. in 2010, a production record. Stadler said the company plans to increase sales in America by 10 to 20 percent this year, and could surpass 150,000 by 2015.
Motor Authority reported that Audi’s U.S. sales have already increased 15.4 percent over the first six months of this year, as the company sold 55,909 cars from January through June.
Stadler also discussed the company’s “Strategy 2020” plan, which calls for Audi to sell two million cars worldwide by 2020. He told Automotive News that Audi will surpass 1.5 million in global sales a year earlier than its targeted date of 2015.
Audi’s lineup will increase from 38 models this year to 42 in 2015, and will hit 50 by 2020.
—Evan MacDonald, Consumer Reports.org
We can thank all the dot.coms of the late 1990s for the trend of having a “casual” or “dress down” Friday. This trend fits perfectly in the California based business culture and is also shared by our relaxed Canadian friends. Psychologically there is simply something very different about getting ready for work on Friday am. It feels like a “pre-weekend” day and instead of winding down, we are gearing up for the weekend.
Thank you dot.coms, wherever you are.
America needs to get back to the basics of creating things of value and there is no better time than now, says Bob Lutz, former vice chairman of General Motors.
“There is a dawning awakening on the part of most Americans that we cannot maintain the wealth of the nation by being bond traders [and] lawyers,” he tells Aaron in the accompanying interview. “At some point the country has to get back to work and create wealth through mining, agriculture or manufacturing.”
In his new book, Car Guys vs Bean Counters: The Battle for the Soul of American Business, Lutz makes the case for why there is now a “historic window of opportunity” for the United States to regain is leadership as the world’s top manufacturer and exporter.
He gives three key factors:
Sobered Unions: “[There's] a new sense of realism on the part of the unions that boy, if you overmilk the cow she is going to drop over dead.”
Drive for Competitiveness: There’s “a renewed emphasis on being more than competitive with the Japanese and the Germans,” especially when it comes to the auto industry.
Weak Dollar: “Right now with the dollar where it is and American wage rates where they are, there is no excuse not to manufacture in the United States.”
July 1, 2011…..from UPS
Effective August 1, 2011 UPS Freight rates will increase 6.9%. This increase will apply to shipments rated on UPS/Canada/Mexico and also applies to off-shore rates and charges…..
Just a note for future manufacturing planning….keep it local. We deliver.
I just read an article explaining that GM will have to halt production at their Shreveport, Louisiana plant due to faulty chips they received from China. Production will be stopped for over one week! Do you know how much revenue they’re losing?
All because of a faulty product they received from overseas. I’ve said it time and time again, you get what you pay for. If this happens to you, please give us a call. We have extensive re-work experience and can get you back on track in no time. For more details on this article and to see what some of the repercussions for GM are, you can check it out here – http://tinyurl.com/2f5mt6