Posted on 11/01/2011 6:58:24 AM PDT by SeekAndFind
Reshoring is the economic idea of the moment. The idea is simple. The costs saved by manufacturing goods in China will disappear as Chinese wages rise, leading manufacturing jobs to “reshore” themselves back home to the west. A rise in the renminbi would accelerate this process.
This would be a dream for Barack Obama, a politician from America’s industrial heartland. So too for David Cameron and Nick Clegg in the UK, eager to prove that we are all in it together. Manufacturing jobs have traditionally paid well and offered good careers to men who did not excel at school. This group has been hard hit by the past 25 years of economic change. It is no surprise politicians love manufacturing jobs.
But reshoring will not happen. For a start, wages will not rise quickly in China, where 34m urban factory workers are paid an average of $2 an hour. A further 65m factory workers in town and village enterprises average just 64 cents. They would be delighted to work for $2. And 675m people are employed elsewhere in China, mainly in agriculture and at lower wages. Chinese wages will rise, but the potential supply of low-cost Chinese labour remains elastic.
If China runs out of workers willing to work for $2, low-cost producers will leave China. They will not, however, return to high-wage economies. Instead they will move to India, Bangladesh and ultimately Africa. This is history repeating itself. At the start of the 20th century Britain lost its textile industry to Japan. As wages rose, those jobs left Japan, but they did not return to Britain. They went first to Hong Kong, then to Korea, and now to China. Simple products will never be produced in developed countries in any quantity again.
(Excerpt) Read more at ft.com ...
No bias in that comment! /s/
“But reshoring will not happen. “
When it comes to the economy, the only ones who are absolutely certain of something are fools.
Outsourcing made sense in some isolated instances. Business schools taught it, and soon, it was seen as what forward thinking businesses did, “sticking to their core competency”. Many of those who outsourced, reopened departments in their business when the contractors were found to be less than adequate.
Then came offshoring. Businesses have been falling all over themselves to offshore, even in cases where it didn’t make sense, because the decision makers didn’t want to be seen as asleep at the switch.
IF Obama is ousted, and IF the regulatory environment improves, reshoring could be quite viable.
Mass produced Textile jobs may never come back but small,specialized textile companies or furniture companies that cater to specific clientele still do well.
The federal government should stop over regulating small business like these with burdensome tax codes along with asinine health care mandates and let these small business do what they do best: create a desired product and create the majority of American jobs.
If the dollar falls to the point where the cost of producing goods in a foreign factory does not make economic sense, the jobs will return to where they left. They won’t be high wage jobs when they come back, but they will come back.........
....and IF unions become extinct...........
Right you are.
Gotta add to more IF's:
IF the unions could be reined in, and IF executive compensation could be reined in.
The last one should not be overlooked. You cannot say to the average worker "look, to save your job you've got accept $10 an hour, not $12", while at same time the top company officials pay themselves tens of millions in salaries and bonuses.
And no, that not OWS propaganda. It's common sense. To get jobs back to the USA, which is obviously critical, everyone will have to be more reasonable.
It’s not a matter of will or won’t.
To a degree, manufacturing will move back to America as the dollar declines in value.
A declining dollar is the equivalent of American wages dropping relative to other countries including China, and it’s also equivalent to the cost to manufacture in America dropping in comparison to the rest of the world.
Americans might become less compensated, but they’ll have a job. Not a bad deal compared to chinese workers, who will become unemployed as foreign demand for their goods drops.
Bingo.
When it comes to manufacturing, it’s not a good idea to
take advice from somebody from Great Britain. They’ve always sucked at it, and clearly don’t understand it’s role.
Endless government regulations & taxation drove out our industries and they will NEVER return to America!
http://www.freerepublic.com/focus/f-news/2800373/posts
Remove those & industry will flood back, but the nanny state has choked the life out of American industry & now holds sway in Education as well.
We are sinking into 3rd world status.
Can reshoring happen, yes. Unfortunately, I don't believe many in the U.S. really want it, nor will they take advantage of the opportunity.
Let's face it, how many of today's younger generation really want to get their hands dirty and work up a sweat in an environment that can be a bit uncomfortable (think of a foundry for a perfect example).
Secondly, we don't have the manufacturing base upon which to draw. Tool & Die makers are a dying breed unfortunately, and too many so-called machinists today are simply button pushers running CNC equipment where they just load and unload parts. If the U.S. is serious about returning manufacturing jobs, they need to start focusing on the fundamentals via technical and trade schools and keep all the politically crap out of the curriculum.
There is a window of opportunity, but I don't think the U.S. will be ready.
“And no, that not OWS propaganda. It’s common sense. To get jobs back to the USA, which is obviously critical, everyone will have to be more reasonable.”
I agree with you in principle. Why should someone like Carly Fiorina get paid 10s of millions of dollars, when she was directly responsible for damaging a company? Meanwhile, the average worker loses his or her job.
But, there is no mechanism to require a business to be reasonable. At least no mechanism that’s just. If a business wants to pay the CEO $100 million while a line worker makes $2/hour, it’s their right. It’s not just, it doesn’t make good sense, but it’s their business.
Our problem is, when it comes to business, people quit being Americans and hide behind their business. They make decisions that hurt America, and say, well, that’s business. Sometimes yes, sometimes no.
The other problem, and this one is huge, for publicly traded companies, there is an incestuous relationship between the board and the management team. That should be dealt with, and if we had leaders instead of corrupt political hacks, it would be dealt with.
Obama, Bernanke, and Geithner are working hard on this project. :)
I am sure that is what he meant to say.
American manufacturing prowess was built on cheap energy. Cheap energy, i.e. unregulated, and cheap manpower abound in China. Cheap energy allowed Americans to increase productivity where the Chinese have no need for productivity increases since manpower is so plentiful.
“This would be a dream for Barack Obama, a politician from America’s industrial heartland.” Give me a break, this fraud would not know an industrial heartland if it bit him in the ankle.
There is an assumption that there are American workers to fill the returning jobs. The current unemployment is the result of hard times and culling the inadequate from the work force. Those culled will have a hard time.
Then there is the fact that many of the young just can’t stay off drugs and just will not motivate themselves to get up every day and go to work. There is also a substantial number that refuse to educate themselves for the work to be done. The three added together are a bad headache for those needing workers.
During the Bush admin, we were at less than 0 unemployment. To get the work done and fill all the jobs, illegals were used to fill the vacancies.To date, I have seen no numbers on the return of the illegals as a result of the decrease in need . I have not seen a number where American jobless replaced illegals.
Then there are India and China and Indonesia and Maylasia and Thailand and the Philippines...... all have been roused. Their combined purchasing power is growing tremendously and their desires for stuff as well. The production to fill these markets can’t be supplied from here because of the cost. America simply can no longer supply all the stuff that is needed.
The emergence of China and India alone causes need for stuff on an ever increasing curve so great as to be incomprehensible.
The man is correct. the manufacturing jobs won’t be reshored. That day and time is over.
America must do what it has always done, innovate and lead.
Certainly Barack Obama is not capable of reversing the trend. It would take a Ross Perot on Steroids type who was willing to slap very high tariffs on imports, blow up the WTO and let the chips fall where they may.
You say Americans would never elect a guy like that? I wouldn’t bet on it.
Winston Churchill once described Great Britain as "a nation of shopkeepers; a island nation surrounded by some of the world's richest oceans teeming with fish life which they refused to use."
Since his mother was an American, I think it was his maternal side speaking in this statement.
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