As Economies Change, Manufacturing Counts for More

Outsourced production facilities return home as China reconsiders its industrial goals

Economies shift in response to changes in financial power, and these changes will always affect our world. News reports about the strikes and labor problems in several Chinese manufacturing plants highlight the challenge the Chinese government faces in maintaining an economy based on cheap labor and exports. Although such an economy is not sustainable in the long run, it has served China during its industrial development phase. However, China’s manufacturing base has been evolving since the government completely revised its labor laws. These changes, along with the currency appreciation of the yuan and stricter enforcement of environmental legislation, have caused China to signal it is no longer interested in low-value production. Although the recent strikes and labor unrest have certainly contributed to this change, they aren’t the sole cause of it. China is increasing its manufacturing momentum to draw alongside and possibly overtake some of its global competitors. The fallout from this is just beginning.

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Jack Healy's July 19 article, re-shoring

Jack mentioned the NTMA/PMA Purchasing Fairs. The Fairs are part of the Re-Shoring Initiative which has the objective to bring work back home. The NTMA (National Tooling and Machining Association), PMA (Precision Metalforming Association) and AMT (Association for Manufacturing Technology), just held the Irvine, CA Fair. The next Fair will be in Mashantucket, CT on Oct 29. See www.purchasingfair.com. Large companies bring out work that is now off-shored. Hundreds of attending U.S. shops then bid on the work. Sixty four percent of the large companies at the Irvine Fair brought work that was currently offshored.
A major reason for offshoring is faulty accounting of the comparative costs. To help the companies make better sourcing decisions we also made available the first draft of a TCO (Total Cost of Ownership) Estimator that helps the large companies perform the complex calculation of the real offshoring impact on their P&L.
If your company now off-shores machining or tooling production, suggest to your Supply Chain Manager or Purchasing Dept. that they attend the Fair and request the TCO Estimator.
You can reach me at harry.moser@comcast.net
Harry Moser, Chairman Emeritus, Agie Charmilles LLC