By Sopan Deb
Rock Center
The United States may be on the verge of bringing back manufacturing jobs from China.
Harold Sirkin, along with Michael Zinser and Douglas Hohner (all experts from the Boston Consulting Group – a leading management consulting firm), says that outsourcing manufacturing to China is not as cheap as it used to be and that the United States is poised to bring back jobs from China. The three consultants first reached this conclusion in a recently published study titled “Made in America, Again: Why Manufacturing Will Return to the U.S.”
Many companies, especially in the auto and furniture industries, moved plants overseas once China opened its doors to free trade and foreign investment in the last few decades. Labor was cheaper for American companies – less than $1 per hour according to the BCG report. Today, labor costs in China have risen dramatically, and shipping and fuel costs have skyrocketed. As China’s economy has expanded, and China has built new factories all across the country, the demand for workers has risen. As a result, wages are up as new companies compete to hire the best workers.
“The tilt is now getting lower,” Sirkin says. “We think somewhere around 2015 it’ll look flat and may start to tilt in the U.S. favor at that point in time.”
By 2015, it will only be about 10 percent cheaper to manufacture in China.
“We have to recognize one thing,” Sirkin told NBC’s Harry Smith in an interview to air on Rock Center with Brian Williams. “The average Chinese worker is about a quarter as productive as the average U.S. worker.”
“It’ll be a major impact. Our projections are, when you take the manufacturing jobs and then the service jobs that get created alongside those, that we will add two to three million jobs to the U.S. workforce.”
The U.S. is already seeing examples of this – starting in Lincolnton, North Carolina.
Rock Center has been following Bruce Cochrane of Lincolnton Furniture as he brings his family business back to the U.S. and re-opens the family furniture plant. Cochrane was invited to the White House last week for a forum on job creation with President Barack Obama and Vice President Joe Biden.
“Now, you don't have be a big manufacturer to insource jobs,” Obama said. “Bruce Cochrane's family had manufactured furniture in North Carolina for five generations. But in 1996, as jobs began shifting to Asia, the family sold their business, and Bruce spent time in China and Vietnam as a consultant for American furniture makers. But while he was there, he noticed something he didn't expect: their consumers actually wanted to buy things made in America. So he came home and started a new company, Lincolnton Furniture, which operates out of the old family factories. He's even re-hired many of the former workers from his family business. “
According to BCG, another manufacturer, Sleek Audio, moved production of its headphones from Chinese suppliers to a plant in Florida. Ford Motor Company is bringing back 2,000 jobs from China after striking an agreement with the United Auto Workers. Sirkin says it’s good news for the economy even though wages will be lower in those jobs than they were previously.
Sirkin believes fears that United States manufacturing is in decline are overstated and notes that the U.S. is still a manufacturing giant. In 2010, China provided 19.8 percent of global manufacturing value added. The U.S. accounted for a marginally less 19.4 percent, which, according to Boston Consulting, was “a share that has declined only slightly over the past three decades.”
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the TiGor thanks for your insight. I am a VP of Operations and I face these kinds of decisions daily and we think about automation everytime we design a product. I buy from China and Tiawan at this point and will continue, becasue i cant make it here because of labor costs (becasue were in the feel good society) and what my customers are willing to pay for the product. We do "make vs buy" on all products and sometimes it just needs to go overseas at this point. Notice i said at this point. We would love to auotmate everything we do, but when you do a business case analysis the numbers just don't come out in favor of making it here. Automation is also controlled by the upper management. They want you to watch your fixed assets, so theres more money in teh bonus program.
Go figure.
stamp out socialism in america. put police and fire departments up for bid from private contractors. :-)
Tim wrote that the NHS in Britain makes us less productive. Don't really understand why he thinks that is so. Having a free health service would make people more productive I would have thought. They fall ill, they go see the doc in his local area surgery, he fixes them up with free medication and they are back to work in no time. Where does the 'less productive' aspect come into it?
i heard walmart is changing there name to CHINAMART !!
No, but, it would darn sure be appropriate. Ironically, when I was a kid there was a business of that name two blocks from where my dad worked. Of course, they sold dishers.
The reason this person was invited to the WH was for photo op. obama and biden want America to know they are the author of this in-sourcing thoery. and that is one of the biggest lie obama and his staff concoct. and liberals will believe whatever these 2 bozos will say. the guy already built his business and these 2 incompetent and failed idiots want to claim credit. typical of liberal democrats. after that, the liberal democrats will invite unions to forcefully infiltrate these "repatriated businesses." this again will cause chaos and loss of revenue for business owner(s) for unions want a "big piece of the pie" for free and through force. and the strong arm of the democratic party, the national labor relations board (NLRB) will make sure it happens.
Single payer healthcare is the same thing as romney care and obumacare. The only way it would work is if the Federal Gov ment put massive amounts of money into it. just look at romney care. Plus with that you get death panels.
They need to open up health care across the states like care insurance. Then it will go down!
People who otherwise insist that "States' Rights" is just a rightist dodge of progress on any other issue are ardent supporters of it when it comes to insurance, whereas people who otherwise proclaim their willingness to die for states' rights think that when it comes to insurance, forget 'em.
One of the biggest myths in America is "We don't make anything anymore!" In 1950, when much of the manufacturing capacity of the world still lay in ruins the US accounted for one a whopping one quarter of global manufacturing...now it's down to one fifth...still a huge slice of the pie. The big change has been mechanization replacing lousy labor jobs such that far fewer ppl are employed in the sector today--I think that is the source of this myth.
I believe that we could be the pre-eminent manufacturer in the world. We once were. Instead of everyone going to college and spending hundreds of thousands of their family's savings, send those who lack academic talent to trade schools and apprenticeships. We can create an unstoppable workforce with young talent. And yes, we can have a single payor system for healthcare. We need to cut out all of the middlemen in the mix. The money siphoned out of the system by insurance companies, hospital executives, for-profit labs and x-ray services, pharmaceutical mammoths, and assorted vulture capitalists would more than pay the tab. Taking greed out of the medical profession would create doctors that actually care about the patients. Yes, it is possible, and it is time that we do it. Making it possible to employ more workers is the key to solving joblessness. This country has the talent and the creativity to flourish, but not when it is having its arteries slashed by greedy pigs who think that personal $$millions should really be personal $$billions-NO MATTER WHAT THE HUMAN COST. Working toward a better, fairer, more humane, more nationalistic America will pay dividends to all Americans. I do not favor communism or even socialism, BUT nor do I favor mad greed that benefits a handful of Americans while millions of others languish and have no hope for a future. What will make us weak and vulnerable to outside enemies is a lack of cohesion within our borders. Cohesion can only be achieved by making America an opportunity for all Americans.
I know you went to college. Why didn't you go to trade school ? Did your kids go to trade school or college ?
I went to trade school and I went to university.
I think he is on the ball. Some of us do not have the right attitudes for more schooling. The reality of the situation is that the people in trades can and do earn more then engineering people supervising them. It gets them mad. The rich folk hate it when you are more qualified then them.
An america for all americans sounds good to me. How to stop the big money in congress that warps the laws ?
If you send 1000 jobs overseas and then 10 come back then that does not mean the jobs are returning . We outsource 1000s of jobs every week and the American people pay for it as you can see by the unemployment rate . But hey China has never had it so well . China has always said that one day they would control the world . Everyone thought it would be by force . Try control through economics . I keep my fingers crossed that someday the USA will wake up and we elect people in government that are truly Americans and for America . All of this free trade BS is just designed to outsource our jobs and make the rich even richer . To a C.E.O. of a company the only thing that is important is what goes into his pockets . I really loved how in Dec. the government was bragging about the drop in unemployment claims and it was nothing more than seasonal Xmas help . That happens every years . Come on now all you elected officials stop trying to feed us crap like that . Then there is the problems with the Post Office . The Senate caused all of that . They are making the U.S. Post Office prepay their health insurance and retirement for employees that are not even born yet . They have been prepaying that for several years and its many millions every year . Guess what ? It goes into the general fund to make it look like there is more money in the budget . That is the sort of crap that makes big business fail like Enron .
KEEP OUR JOBS AT HOME AND KEEP AMERICA HEALTHY
Henry Jacobs you are completely correct .
Outsourcing jobs anywhere but in the United States should be not be allowed. Our own country is at stake here and shame on any American who supports it. We are supporting a country that would blow us off the face of the planet if and when it could do it, and like sheep being headed for the slaughter house, our own people are pushing us in. I wonder if all the profits and bonuses made in the name of free trade are enough to offset the fact that future generations of their own families will never enjoy the greedy money made by these morons. One day you might not see what your greed has done, but rest assured, a descendant surely will. Choke on your profits while taking comfort in that fact that anything that dibbles down your chin will not be wasted, you will be feeding the misery of our 3rd world country- U.S.A
US may be able to stop US firms from outsourcing. But how about international firms, like German firms. What about US investment in German firms which outsources ? GM has German subsidiaries already, and those can run the outsourcing, and import the products made to the US. May be US should stop all manufactured products from all other countries. Isolate US like North Korea, and you stop all outsourcing.
Babies learn, if they cry, they can get attention. But some never grow up. Some never learn how to feed themselves.
Just listen to the babies on the vine crying. Gimme, gimme. LOL
Arizona Tumbleweed,
Your pacifier is on your left.
Yes! The 1% already took most of the 99% of American tax-payers money. Now they're crying for the rest of it.
I think that can be defined as a real loser attitude.... There is nothing there that will ever spell success for you.
This current Call Centre bill will be also not passed , same as previous outsourcing bill which was dead .Its an Election gimmick , with nexus of corporate s (wall street ) and government to foll people , and they r damn sure that this will too not pass very damn sure , infact Morgan stanley is going to cut more jobs in US around most of them and they will will transferred to India , they want to tranfer about 92 % more jobs outside , A mortgage company OCWEN FINANCIAL which has 90 % of jobs outsourced overseas ( India and some to Uruguay ) r buying more mortgage companies like LINTAS etc and transfer there jobs to overseas too ( mostly all of them ) same with IBM and other companies . so most of american companies will be employing overseas people in future ( might be 95 % of workforce). jobs of authors , contents writers ,editors ,copy writers etc etc will also be going to be outsourced so u too get ready to find other job in Mac Donald or wall-mart And all ur jobs r here , Below in this links
This current Call Centre bill will be also not passed , same as previous outsourcing bill which was dead .Its an Election gimmick , with nexus of corporate s (wall street ) and government to foll people , and they r damn sure that this will too not pass very damn sure , infact Morgan stanley is going to cut more jobs in US around most of them and they will will transferred to India , they want to tranfer about 92 % more jobs outside , A mortgage company OCWEN FINANCIAL which has 90 % of jobs outsourced overseas ( India and some to Uruguay ) r buying more mortgage companies like LINTAS etc and transfer there jobs to overseas too ( mostly all of them ) same with IBM and other companies . so most of american companies will be employing overseas people in future ( might be 95 % of workforce). jobs of authors , contents writers ,editors ,copy writers etc etc will also be going to be outsourced so u too get ready to find other job in Mac Donald or wall-mart And all ur jobs r here , Below in this links
Saying a Chinese worker is only 25% as productive is a bit disengenuous. Productivity gains in the United States have been achieved by factory automation and other improved manufacturing processes. While I would never generalize that "American workers are lazy", there is an expectation by an increasingly larger group that they should get more compensation for less work.
I guess another way to put it is "give me the good life with out any struggles, work or usefulness on my part". (Reference: OWS)
In order to compete with the slave wages in China, automation is the only solution. We must make robots that can made these goods cheaper than the Chinese slaves. US people must live with that, and become skilled tradesmen that controls those robots, instead of making those things manually.
For advocates of a single payer health care system. And just who would foot the bill the over burdened tax payer? Always wanting for nothing but some one pays your welfare.
Healthcare is expensive in this country due to the greed of the hospital administration. Do you think that the hospital boards all over the country work for free? They generally get 6 figure incomes. Do you think that government forms are filled out for free? Well paid people have to do them, then another checks them and a third sends them out. this can be multiplied for larger hospitals. The waste that will be generated by un-regulated government hospitals could be anticipated to be huge. As far as the UK NHS, as a Florida resident, any time I had the misfortune of going to the hospital, they had a lot of english (and other european citizens) getting healthcare here that was paid by their home country. For optional surguries, I would bet that a lot of middle class Europeans come here. WHy recover in cold, damp england when you can recover in sunny FLorida. As far as bringing jobs back, we need stainless steel screws and bolts. There are no manufacturers in this country (except for specialty fasteners) that we buy in stores like Lowes, Home Depot, Fastenal, Ace, etc. That is a disgrace, and an issue for national defense.
Levi,
Why didn't "they" roll out the news about the economy going to hell in a hen basket? Why didn't "they" tell us about all the money that was being spent on completely senseless wars? Why didn't "they" tell us that the reasons to go to war were fabricated by an administration that nearly brought our great country to its knees? All of this news certainly would have impacted the mid term elections in 2006. You're implying that this news was saved to help Obama get re-elected, and I think that's a foolish statement. If that were the case, why wouldn't they have saved it for September or October so that it would have some impact on the election? Why don't you just take the story for what it is; an update on the labor cost of worldwide manufacturing as it pertains to insourcing and outsourcing in our country. The tables will be turned in the not too distant future, where companies will keep manufacturing here in order to increase their profit margins. There are so many factors that affect this, and this is something that started in earnest in the 1980's, and has taken this long to even out. I'll look forward to these jobs coming back to the USA, no matter who the president is; and instead of nit-picking about the motivation behind printing the story, why don't you apprecitate the fact that this will create jobs, and in turn, improve our economy.
How Dare Americans demand Health Care ! They have to provide an unlimited supply of troops to rebuild other countries after they've destroyed them. They have to pay Halliburton $40 a coke(soda, not powder) for 11 years. And provide $100 Million Dollars a day to run two wars. They have to pay to build new hospitals and schools in other countries while ours fall apart. They have to continue the Republican Bush tax-breaks for Corporations, forever ! To the tune of $400 BILLION DOLLARS a year. To be taken out of Social Security, Medicare, Medicaid and American Health Care. HOW DARE AMERICANS WANT HEALTH CARE ! Who do they think they are? SPECIAL ?
Having opened a plant in China in 2011 and seen first hand the pro's and con's of manufacturing there I would say that this article is overly optimistic.
My experience is that the Chinese worker is 7% to 10% less efficient than his US counterpart making the same product using the same equipment in a very similar layout.
And any analyst that would say "only 10%" is questionable in his understanding of a P&L. Many companies operate on low margins with an OI that is less than 10%.
I believe that the USA should charge an stiff import tariff on every US based company that has their products manufactured overseas to minimize labor cost/increase profit margins and, eliminate the tariffs on products made on US soil. Buy "Made in America By the American People."
Or a cheaper method, require that every overseas product display, in an embarrassingly prominant location, a permanent label indicating the country of origin so we know which American Companies are actually selling us products made in foreign countries.
Hey everyone! Watch the 2010 documentary "Inside Job," written by Charles Ferguson and narrated by Matt Damon. Then quit doing business with every corporation mentioned and vote out every politician!
The health care/insurance battle is really unconscionable. I keep hearing that American's want to buy their own health insurance. Really?? The need for health insurance was created by the insurance companies. Remember the stories of the old days when the local Doctor was the only medical help we had? When medicine reached the point of x-ray machines and other expensive treatments, corporations began "buying" insurance for their officers and extended it to employees as a method of attracting quality people. People have rarely bought their own insurance. It was provided by their employer. Now Obamacare wants to "provide" mandatory national healthcare. When the employers quit providing healthcare (and they will), the individual/family WILL NOT be able to afford it. I really don't know where politicians think people are going to come up with that kind of money. Even with the old 80/20 split, the average hospital stay will bankrupt the working Joe on the street. We are going back to the old country Doctor and dying at home from pneumonia for lack of antibiotics. So be it. The average worker can't afford modern medicine. They never have. I sat in an emergency room last week when an elderly gentleman was brought in for his 3rd heart attack. All they were allowed to do was stablize him--he didn't have insurance, and could not "follow up with his primary care physician." Personally, I haven't been to a Doctor for over 5 years. I have insurance, but I can't afford to pay the $2,100 per year deductable and I won't put my family in debt to do it. You want to know where the money is? Check the bank accounts of the insurance companies. The American government doesn't care about people, it cares about profit margins.
QUOTE: "The United States may be on the verge of bringing back manufacturing jobs from China."
MAY BE? ON THE VERGE?
Sounds like 'NEWSPEAK" to me.
It is also CAMPAIGNSPEAK.....not to be taken seriously...
I mean just how stupid are these posters that decry national health care in the USA!
All they are doing is singing from the Republican hymn book!
SHEEP! Being led by major corporations! How gullible can you get? Or is that how stupid can you get?
And blame Obama because he FINALLY was a politician to do something for the public? The taxpayer?
WE ARE A NATION OF STOOPID PEOPLE!
Do the chinese get single payer healthcare? Maybe that is what makes them so great, free health care for a billion people and they still have enough money to loan us a trillion dollars a year.
Here is something else hard to understand, if Star Trek is a leftist dream world where everything is free, everybody gets free spaceships, medical care, food, clothes and hoochies and nobody has pockets for money,,,,,,,,,,,,,,,,,,much less money.
Why did it cost money to make the show??? Why did the actors, writers and directors who wanted you to demand a world of freebies demand payment for their services?
If you want to see stupid, go to a DNC rally.