Posted on 09/03/2019 9:24:11 AM PDT by SeekAndFind
President Trump and other mercantilists are hoping that his tariffs will drive U.S companies out of China, perhaps even back to the United States. They can keep hoping. It’s not likely to happen.
In a further escalation of his trade war, on August 23 Trump “ordered” U.S companies to leave China, or even return to the United States. This prompted a debate among legal scholars as to whether he even has the authority to do that. Regardless of whether he does or doesn’t, it is unlikely to have any impact.
A proviso is called for here. Some U.S companies are already leaving China - and started to before Trump became president. For one thing, wages in China have been climbing. Since 2008, the average wage in China has tripled. But rather than return to Ohio or Pennsylvania, companies are departing for Vietnam, India, Indonesia and Bangladesh, simply accelerating a move that was underway long before Trump launched his trade war.
Will the corporate exodus pick up? Likely not much. For one thing, companies would have to worry about whether the country they choose to go to would be the next target of protectionist wrath. That’s one of the problems with pursuing a protectionist trade policy - one never knows what country will get a target painted on its back next. Unable to decipher any hint of a long-term plan, U.S companies simply have to function on a day-by-day basis.
India is a good example of a future target. Trump has already removed zero-duty access on $6.3 billion of Indian goods. The Indian government has threatened tariff retaliation.
Vietnam is the most frequent country of choice for U.S companies departing China. Vietnam was already becoming the second Asian home of production for U.S manufactures long ago. Nike moved there in the 1990s, and Cannon copiers in 2012. But while the country is seen as a great place for textile firms, toy makers and footwear manufacturers, and even furniture makers, like most Asian countries it has neither the infrastructure nor the skilled workforce most companies need. Vietnam doesn’t even have the population. It is about a tenth the size of China. If a large number of U.S companies were to move their operations there, the country’s ability to serve as a supplier would be maxed out in a year.
In response to the import taxes on China, some countries have developed supply sources in other Asian countries - with the cooperation of the Beijing government and Chinese companies. Much of the raw materials are still sourced in China; Asian production capacity is simply widened.
While we will no doubt see some companies leave China, few will return to the United States. For one thing, there are simply not enough workers available in a mature economy with a low unemployment rate and a growing proportion of seniors. Domestic labor sources do not exist on the scale that would be needed - one of the reasons the Taiwanese firm Foxconn revamped its investment plans in Wisconsin. U.S consumers would have to build a whole new infrastructure - factories, domestic supplier chains, worker training - a task that would likely take decades. As it stands now, with hour a massive return of production facilities, The United States will soon need a half-million more skilled workers. Deloitte estimates it the country will require a couple of million by 2030.
For another thing, the United States no longer constitutes as big a market as it used to. By 2030, it will be accountable for only 7 percent of sales - less than a third as much as China.
Given comparative growth numbers like this, it is not surprising to see corporate executives salivate at the idea of increasing their Chinese footprint. Trump railed against GM for shifting some production to China - a week after China announced projected 25 tariffs on U.S-made automobiles. GM’s operations in China are actually aimed at the growing China market, where they can expect to sell more cars than in the United States. Last year, the company sold 3.6 million vehicles in China - compared to only 3 million in the United States. Despite the fact that it already faces punitive tariffs against its products from China, even Apple shifted production of the Mac Pro entirely to Shanghai. The United States simply doesn’t have the clout it once did.
The biggest problem the United States faces trying to repatriate companies is the fact that American wages are just too high. The average wage for Americans is about $60,000 per year, many times more than China, India or Vietnam.
If Washington tried to somehow force companies to repatriate their operations, domestic firms won’t be doing much hiring, at least not of American blue-collar workers. They will take a look at the cost of robotics, and realize that it’s a lot more efficient to shift to robots than pay increasingly scarce blue-collar workers $50 an hour. There would be more production in the United States - but no more jobs. That would be a boost for Silicon Valley firms that provide much of the AI software, but would just intensify the wage gap.
Of course, robots are not yet able to meet the needs of some companies, such as footwear makers, which require detailed, intricate work. If they are forced to compete from the Unites States, many of these companies will simply go out of business. Would Nike be able to compete with a European or Asian firm if it was yoked to U.S wage rates? More likely, they would look at Asian growth rates, and move more operations there. Again, the only result would be fewer jobs in the United States, and more in Asia.
Anyone hoping that blue-collar jobs will magically return to the United States can stop hoping for any such thing. Those jobs are gone. There is no point in crying over spilled milk.
“Someone has to build the robots and program the software. Based on the performance and durability of modern day electronics, the robots will have to be upgraded/replaced once a year. The software will undergo neverending revisions. Takes people to do that.”
A handful of jobs at most.
Robots will build the robots.
A friend works in food automation. Him and 6 other guys fix all the machines at a large food prep plant over 3 shifts.
30% 0f the population is untrainable.
Wait in 10 years or less when 3.5 million long haul truckers lose their jobs to self driving trucks.
Oh God you are another "jobs Americans won't do" plutocrat!!! LOL!
“A friend works in food automation. Him and 6 other guys fix all the machines at a large food prep plant over 3 shifts.”
I want to add he has worked there since 1990. They had 600 employees now down to 90-all due to automation. They are producing triple the amount of product.
When the robots take over all the manufacturing jobs are gonna be lost.
I’ve read AI and robots are going to wipe out 60-70% of jobs in 15-20 years
Don’t laugh but I predict a day when governments the world over will ban labor saving products so they can keep the population working. That or major population control.
But keep your head in the sand and maybe the economic storm that's coming will miss us.
“President Trump and other mercantilists are hoping that his tariffs will drive U.S companies out of China, perhaps even back to the United States... It’s not likely to happen.”
The article goes on to say:
“U.S companies are already leaving China”
and:
“The United States will soon need a half-million more skilled workers.”
This fruitcake lays out all his theories about why what the data is showing, will not happen.
US manufacturing employment has been growing faster than the general economy since President Trump was inaugurated. There is a stampede of manufacturers out of China.
The plan is not to get low wage jobs making sneakers by hand.
The plan is to pull our supply chain out of China, so we don’t depend on them, and don’t fund their hostile capability. The plan is to make the USA a favorable place to develop NEW manufacturing operations going forward.
Most of the low wage crap manufacturing will move to other Asian countries in the near term, increasingly to Latin American over the mid term, and eventually to the USA (in highly automated processes) over the long term.
Companies are not closing factories in China and opening a direct replacement making the exact same thing in the USA. But manufacturing in general has been growing and gradually diversifying here, and declining in China.
Sadly, in many cases, the question is more like, “ Do we want to CONTINUE to be dependent upon the Chinese” , because we are pretty much dependent for some things at this point even if we don’t realize it just yet
Yes, very important. The U.S. has been subsidizing shipping from China for decades.
It is cheaper to ship from China to the U.S.A. than within the U.S.A.
The issue is not as much bringing jobs back from China, it’s about establishing emerging jobs and manufacturing technology here in the US and ensuring that the capitol investment for new manufacturing systems take place here in the US
“Oh God you are another “jobs Americans won’t do” plutocrat!!! LOL!”
Our farm is surrounded on three sides by Christmas tree farms. The owners had ads for $15 hr (50-60 hr weeks) for tree trimmers for summer jobs. Always hired local HS boys.. My brother worked there for two summers.
It is brutal work 90+ degree weather, bees, snakes, poison ivy and spiders and multi flora rose.
Could not find student workers over last 5 years
Ended up sub contracting to a group of Hispanics to get the job done.
$15 hr for a summer job and no takers.
Unfortunately there is a stigma associated with manual labor, because of the illegals.
It’s going to take some time to undo that.
Getting rid of welfare, for able-bodied people would be a good first step.
Do have some concerns for the segment of the population a standard deviation or so to left of mean on the bell curve, but consider this - heard serious concerns about computer tech leaving the unwashed masses in the lurch back in the day and predicted advances in computational power and interface design would solve that issue.
The new iPhone has many times the computational horsepower of the Cray supercomputer of the 1980s and it is routinely used by 12 year old girls in the ghetto who can barely read or write.
“it will be done mostly by robots, so it won’t really be much of a jobs issue.”
Per unit of output, the number of jobs will plummet. But despite the higher productivity, the USA can get a bigger slice of those jobs that remain - raising domestic corporate profits and tax revenue.
When the jobs are here, the supply chain grows around them, bringing more varied jobs. The wealth from those workers, pays in turn for a richer support chain of jobs in the community - restaurants, dry cleaners, entertainment, etc.
Just like we don’t need big typing pools to get documents created anymore, factories will become less and less large groups of people - but every one of those jobs will produce greater value to the economy.
More like an aversion.
The height of stupidity are those who pay (Btw, banks skim 26% interest off their credit card, gov takes a 25% income tax cut, sales tax another 10%) someone to do their manual work for them (maintenance, daycare, repairs, yard work, cleaning, etc.) while heading to the gym (more income taxes, cc charges, sales taxes, transportation, and workout clothing costs) to get a workout!
But maybe by staying "active", because they don't get enough physical activity, they're avoiding future medical costs, a whole other scam.
Glad you brought that up. US workers are among the most productive in the world. Usually top five, and in reality, the most productive of large countries. The few countries that rank above the US have populations smaller than our cities.
Don’t worry—when the war with China starts all the things we think we need from China will not be availble. I am talking WW III —No ships from China (They will be torpedoed), Internet? China will crash it day one of fighting. Like Poison Gas in WW II, Atomic weapons will not be used. It will be grunts fighting on far away battlefields. The Goal will be who will rule the world—USA and allies vs. Red China and her allies. I foresee a naval war in the Pacific. Carriers will be sunk—A draft will take men and women. Only way to avoid the draft will be for women to have babies sparking a mini-baby boom. I can not see who will win this one.
Seek and Find is always taking the same posture from the Dark Side defeatist we are all gonna die mode
I usually avoid any thread with that name as the originator as they are always the same and invariably draw trolls who pile on
LOL! $15.hr and he hasn't adjusted wages for inflation? Pay more and quit hiring illegals. If you do that then you are common criminal.
So when an asshole gives up on America should I stand by and say nothing? One day you anti Americans are going to get your comeupance.
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