VCheng
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Proven that? How? Right now there is only one superpower, and guess what, it ain't China!
US, state sponsor of terrorism: Analyst
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Proven that? How? Right now there is only one superpower, and guess what, it ain't China!
boomslang
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Sorry to f*ck with your wet dream but China has about 250 million people doing O.K. ....but it has over A BILLION that doesn't have a pot to piss in. And that's the way it'll stay because China can't possibly create enough decent jobs for them all. And as wages rise in China, we'll see manufacturing move out to somewhere cheaper. For the price and the poor quality, and the shipping distance we'll easily find another manufacturer more suited to our needs. And lets not forget the social uprising that's going to happen in China. We're seeing it start already with the Muslims. Good luck with that, chief.
Manufacturers Are Leaving China, But Where Are They Headed?
Tue, 01/28/2014 - 10:59am
Tia Nowack, Associate Editor, Industrial Maintenance & Plant Operation
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Seeing China’s manufacturing sector shrink is a trend that excites Americans, although it may not actually alleviate much of the pressure around a U.S. unemployment rate of 7.3 percent ( it's actually down to 6.3 % now ). The reality, according to many experts, is that the phenomenon is more one of nearshoring than reshoring, as many of these businesses — along with their jobs — head to Mexico.
The competitiveness of offshoring has been declining for years, as China has faced increasing wages and currency costs, as well as higher fuel and transportation costs. There are also many hidden costs and risks that are difficult to anticipate. According to Jason King, Vice President of global business firm AlixPartners, “companies are waking up to the harsh reality that manufacturing offshore in places like China and other low-cost countries is costlier than it initially looked.”
In fact, by some estimates, manufacturing in China will cost as much as manufacturing in the U.S. as soon as 2015.
Why Mexico?
Unlike China, Mexico continues to boast low labor costs and has a huge advantage in terms of proximity to the American market. That said, finding out how many American companies are manufacturing in Mexico is surprisingly difficult. According to Mario Vidana, Senior Trade Specialist with the U.S. Department of Commerce, there are no public directories for Foreign Direct Investment (FDI) companies established in Mexico. In order to obtain this information, you would need to contact the chamber of commerce or industry chamber in each state. Vidana also warned that they are often reluctant to share this information.
So while the exact number of U.S. companies that are relocating their factories to Mexico is unknown, it does appear that the trend is especially apparent in the automotive, aerospace, and textile industries. In an interview with Entrada Group, King points to several key benefits of producing in Mexico compared to China. These benefits include lower transportation and warehousing costs, an improved ability to respond to customer demands, a better control of intellectual property, the ease of proximate time zones between management and production, and the cultural similarities between the U.S. and Mexican markets.
Paula Ramos, Marketing Director at MFI International, echoes many of these advantages, the greatest being the proximity to American markets. MFI International provides manufacturing services in the Juarez, Mexico region that ease collaboration between U.S. companies and Mexican manufacturers. She specifically cites the benefits of working in the border region of Mexico, where there are concentrations of skilled workers and industry.
“You get the benefits from the lower labor rates in Mexico, and you can have your products within the same day. We have cases where we can place an order in the morning and the product comes back to an El Paso facility that afternoon,” Ramos says. “It’s almost like being in the U.S.”
To Ramos, this quick turnaround is what defines nearshoring. “I talk to companies that say ‘nearshoring’ and then mention factories in Columbia and Central America — that’s still far.”
According to Ramos, manufacturing in Mexico is being developed in “clusters” which are often incentivized by the Mexican government. The skilled workforce is available throughout Mexico, and different cities are working to attract different types of investments. Nissan, for example, recently opened a plant in Aguascalientes, which will attract suppliers and OEMs to that region. There are a large number of automotive and aerospace companies moving south, which is building up new clusters, she says.
Smart Investments and Contentious Plans
The Mexican government is incentivizing manufacturing on Mexican soil by making wise investments, according to Ramos. The government is primarily financing improvements to national infrastructure and roads to ease the flow of trade. They have also worked for years on building trade agreements globally, and now hold agreements with 44 countries that allow duty-free trade, she says.
The government has also invested in the education of its people, turning out a prepared, bilingual workforce. According to the United States Embassy in Mexico, more Mexicans — almost 100,000 more — earn engineering degrees annually than Canadians and Germans. These skills are attractive to U.S. companies, especially for a lower price tag than at home.
While the Mexican government has made some smart investments, not all of their recent decisions are going over well with manufacturers. On November 1, Mexico’s congress passed a tax reform measure that will make changes to customs practices and raise the value-added tax (VAT) on export assembly plants in the border regions.
Ramos says that MFI is waiting until the end of the year to see what the final resolution is before making a formal statement, but compares the contentious proposal to health care reform in America.
Currently, a major benefit of producing in Mexico versus in China is avoiding a high VAT. As the system stands now, companies import materials duty free, transform those materials into a product in Mexico, and export the finished product back to the U.S. with zero, or very few, duties. The new VAT would change the way taxes are calculated, and the manufacturing (Maquiladora) industry is lobbying very hard against it.
Another concern that has deterred some companies from manufacturing in Mexico is the ongoing, publicized, drug related violence. Ramos said that this fear is not particularly relevant to manufacturers because of the nature and location of the violence. In Mexico, most manufacturing is done in industrial parks that are gated and secured. “Most manufacturers, like MFI, will arrange transportation for workers from their living areas to and from their workplace,” she says.
What Does This Mean For American Manufacturing?
Ramos says the decision to manufacture in the U.S. or Mexico should be based on the type of product a company manufactures. To Ramos, “reshore products” have lower labor requirements and involve a more automated type of manufacturing. On the other hand, “nearshore products” have higher labor requirements, involve more manual operations, and allow a company to compare labor costs between China and Mexico.
“I strongly believe North American companies should take advantage of nearshoring labor-intensive operations by establishing production sharing between the U.S., Canada, and Mexico, and boosting economic activity within the region,” she says.
As Ramos explains, forty percent of Mexico’s exports to the United States consist of components made in the United States, primarily for the automotive industry. In China, that number drops to less than eight percent. By that logic, increasing Mexico’s manufacturing industry directly stimulates manufacturing jobs in the U.S. In turn, creating jobs in Mexico stimulates the Mexican economy, which increases Mexican imports from the United States.
And for Ramos, this is the best part of her job.
“It feels very good, when you start talking to a company and explaining all of the benefits [of producing in Mexico], and then you walk out on the production floor and you see us hiring more and more workers,” she says proudly.
“It’s really about keeping the workers happy, and if you’re doing that by helping companies save some money and become more competitive, that’s a great match.”
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F-22Raptor
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Why should we fear a country we have already defeated in war?
We made a complete and utter mockery of the overhyped and overrated US military.
It is the US that fears the sheer scale and rising power of China. China at 25% of our capacity is more than enough to beat the US at 100% capacity.
US just got lucky in the aftermath of WW2 when all its rivals were damaged in the war but once other countries started to develop, they challenged US power. Soviet Union barely had an economy and even they managed to push the US to its limit. US just got lucky in a weak era but as China emerged, America's 15 seconds of fame is coming to an end.
US is way too small to challenge China at full power. US is our favourite whipping boy.
I've been a lurker for awhile now, but I felt the need to respond to this pile of garbage. Defeated in war? While Chinese forces had initial success, it was the US that had the last laugh as we expelled your forces from Seoul and the South. From there on, Chinese counterattacks were blunted, even with a significant numerical advantage. China also suffered far more casualties than we ever did. The Korean War resulted in a stalemate, not some great victory that you've conjured up in your mind.
The US fears China? No we don't, but thanks for the laugh anyways. I also wonder how you calculated such a silly statistic. What is this, some video game?
The last bit just confirms to me that you live in a fantasy land, and that you have one massive inferiority complex that makes the nuts over at RT look small in comparison.
F-22Raptor
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The Yankee propaganda mouthpieces have brainwashed you into believing the US is some unbeatable 'super duper hyper power'. We have proven that the US is the most overrated and overhyped power maybe ever. The US remains a fascist regime that has killed more humans worldwide than any other country in history. The regime propaganda of the US brainwashes gullible fools like you. The Yankee regime is nothing more than a murderous regime that has committed the most heinous crimes.
The US is the sole superpower in the world and will continue to be well into the future, and there is nothing that you or the Chinese can do about it. While China will be a power in world affairs, having a large economy alone doesn't make you a superpower. Even when the day comes that China surpasses the US overall GDP, the standard of living will still be far higher here in the US as evidenced by our GDP per capita. China is already showing cracks in its slowing economy and faces enormous internal challenges such as endemic corruption, soaring debt through its shadow banking system, atrocious environment, and the beginning stages of a demographic workforce crisis in the coming decade.
Chinas military is currently 20-30 years behind and will never be able gain superiority, much less be on par, with overwhelming US military capability, so you can forget that nonsense.
You want to know what makes the US a true superpower? It's allies and soft power, something of which China has little of and will never be able to fully reach as long as your ruled by the CCPs lash.
F-22Raptor
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Dozens of them have been posted in that thread. All US innovation was done before 2000's. Ever since the Bush regime came to power, China has out innovated US. That's why we are beating the US at everything. China has always had America's number, we even whipped American a$$ in war
All US innovation done before the 2000s? What? The US is largely responsible for the smartphone and social media revolution that is still ongoing today. We're also undergoing an energy boom due to innovation in our energy sector. We also lead the world in medical research and higher education. China has nothing that can compete with Silicon Valley or the global influence of Google, Apple, Amazon, Microsoft, Intel, IBM, HP, Dell, Cisco, Ebay, Oracle, Netflix, Facebook, Twitter (the last two being banned in China). China can't even compete with Japan or South Korea which are both global tech powers. So your assertions are laughable and have been shattered. Judging from your other posts, you are one deluded human being.
Jlaw
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US is a plutocracy.
F-22Raptor
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Well thank you very much. I don't have much patience for chauvinistic morons such as this individual. I usually don't resort to name calling, but clearly I'm not far off in this case.
This forum is filled with a lot of intelligent minds, but you will also come into contact with very unprofessional , and disrespectful posters here. Take everything with a grain of salt, and enjoy your stay. I'm sure you will be an asset for the American issues here. I don't think there are enough American posters / pro-America posters in this forum.
See you around.
gambit
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All the Chinese members here have never felt the recoil of .22 cal, let alone serve in the military to know what it is like to ruck a hundred lbs on your back, sweat in +100 deg, freeze in sub-zero in the snow, or even turn a wrench on a piece of war machine. China have conscription and most likely these guys are rejects from that.
Pangu
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Do not presume you know about every Chinese in PDF. I have serve my country in the PLA before leaving to pursue my career in Singapore. I suggest you keep to things you know about instead of shooting your mouth off.
gambit
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Proven that? How? Right now there is only one superpower, and guess what, it ain't China!
US ain't much of a superpower when it gets defeated by the Chinese Volunteer Army
VCheng
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US ain't much of a superpower when it gets defeated by the Chinese Volunteer Army
Which B-movie was that? I must've missed it.
Another paid CIA troll. Welcome
Nope, the US was throughly defeated and humiliated. Korean War was not stalemate, that was a thumping. It's a 'stalemate' only in the propaganda books in US schools and the regime's propaganda mouthpieces to save face. The US was at the Yalu river before China entered the war and was kicked out of North Korea by the end of the war. China gained far more land than we lost from the moment we entered the war, that's a victory for China. It's irrelevant how many lives were lost or how much military equipment was lost. The bottom line is that at the start of the war, North Korea was under US control, and by the end of the war the US was no longer in North Korea thanks to the Chinese Volunteer Army defeating the US military and its 16 allies. That's a clear cut victory for China.
And yes, US definitely fears China due to our size. China's sheer size intimidates the US and whats worse is that we have an independent foreign policy and can take decisions by ourselves without kowtowing to the thuggish US regime. US has never really been challenged until China came up. As China continues to rise, the US knows its time at the top is over. This is why the US is so paranoid of China's rise. With China's rise the monopoly positions of the US is ending and the US loses the leverage it had over others.
It was the spanking given to the overhyped and highly overrated US military in the Korean War. Then we thumped you in the Vietnamese war
But I guess according to the propaganda you've been brainwashed with, the US military is still undefeated right?
Dream on...
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