Topic: American Factories Are Making Stuff Again as CEOs Take Production Out of China (Read 111 times)
July 13, 2022, 01:00:37 AM
Well hopefully from being exposed, we learned something about having to be overdependent on others. I just wonder if the pace will be sustainable or will we see business as usually once things seem sort of caught up and the money has been made.
July 12, 2022, 08:39:21 PM
Its harder to bring back the jobs back home when they see the laborers will rally to increase the pay. The globalization disables first world countries to make it when their people are used to living comfortably by letting the people from 3rd world countries work for them.
Apple for example will not go back to pay more than 25/hour to its employee in US when they can pay 5/hour in China.
July 12, 2022, 06:04:46 PM
There is a saying "to kill two birds with one stone". It looks like the US is going to kill a lot of birds with one stone 
1. Rise of own economy. It is foolish to deny that there are also a lot of problems in the USA now. Unemployment, problems in the economy, etc. And the transfer of production from China back to the United States is an impetus for the economy, these are hundreds of thousands of jobs, these are taxes, etc.
2. Create problems for China, or rather, increase and accelerate the growth of China's internal problems - from a decrease in income and demand from exporters of Chinese goods, to rising unemployment, budget destruction, and an increase in internal tension.
3. Global reduction in dependence on the Chinese market, US and EU markets. Because China has recently effectively monopolized some segments and markets.
4. Diverting attention to domestic issues will reduce China's interest in foreign policy issues. And interest in Hong Kong. And help the country terrorist Russia. And many other interests will fade into the background.
1. Rise of own economy. It is foolish to deny that there are also a lot of problems in the USA now. Unemployment, problems in the economy, etc. And the transfer of production from China back to the United States is an impetus for the economy, these are hundreds of thousands of jobs, these are taxes, etc.
2. Create problems for China, or rather, increase and accelerate the growth of China's internal problems - from a decrease in income and demand from exporters of Chinese goods, to rising unemployment, budget destruction, and an increase in internal tension.
3. Global reduction in dependence on the Chinese market, US and EU markets. Because China has recently effectively monopolized some segments and markets.
4. Diverting attention to domestic issues will reduce China's interest in foreign policy issues. And interest in Hong Kong. And help the country terrorist Russia. And many other interests will fade into the background.
July 12, 2022, 02:17:34 PM
Sinc ethe pandemic I've learnt there's a lot of manufacturing that still gets done in Europe and a lot of manufacturers can open and expand their operations extremely quickly (with the right investment - and they didn't see me too hard to be sourced afaik) - even for things less related to the pandemic.
Of course, a lot of manufacturing is still done here, just because some smartphones and tablets are done in China is not that everything is made there, not even Huawey phones were entirely made in China or by Chinese manufacturers.
Those trillions in exports are made out of stuff being produced here, and a lot if made and a lot could be made but the main problem is the workforce!
At least here in the middle of Europe, we have reached employment levels above 2019 and yet everywhere you look there are jobs openings, there are plans for factory expansions but no workers to do that, and very fragile logistic chains that have just barely recovered from the pandemic and still problem with getting all the stuff shipped around the union, for example, one of the largest hub operators is planning 5 logistical centers for better linking through the TEN-T routes...
But there are no construction workers, no truckers to haul all that merchandise, and so on.
Kind of ironic, we could produce more but we don't have the workforce and if we do find a solution we will simply not be able to ship all the extra goods around.
Some driverless trucks, and when I say some I mean thousands would be a godsend.
Quote
To Kevin Nolan, the CEO at GE Appliances, all this fretting about high costs in the US is overdone.
Yeah the guy is right, when you're whole manufacturing line is automated and you have fewer and fewer people in the actual process the cost will start to be the same all over the world, and with raising wages everywhere in the world is not like you're going to get quality workers for 1/10 of the pay anymore anywhere.
If you produce stuff that can't be done cheaply and efficiently by machines like a lot of the clothing yeah, the solution is still Southern Asia or South America but for gadgets, electronics, and all kinds of machinery it makes no sense anymore.
Plus there is another risk, you might have no problems when producing in the Philippines for Sweden for example, as there will be no tension between those two, but maybe the Philippines will have a disagreement with Australia which supplies the raw material for the manufacturing and here you go, because of some regional conflict you're out of business.
July 12, 2022, 10:23:19 AM
Sinc ethe pandemic I've learnt there's a lot of manufacturing that still gets done in Europe and a lot of manufacturers can open and expand their operations extremely quickly (with the right investment - and they didn't see me too hard to be sourced afaik) - even for things less related to the pandemic.
The same probably goes for the US and most other countries production is Lilley to move to.
I can imagine shipping costs to have increased a lot since the price of both oil and steel rapidly increased.
The same probably goes for the US and most other countries production is Lilley to move to.
I can imagine shipping costs to have increased a lot since the price of both oil and steel rapidly increased.
July 12, 2022, 02:57:00 AM
Are there ways we can resolve these issues efficiently and effectively without extreme measures?
Short term it will be hard to fix all the issues, because it takes time to build up factories, get the operations running and train the employees. It's still a good idea to shift the production more locally again in my opinion. The covid pandemic showed us how vulnerable the global economy is to disruptions in the supply chain. Together with the increase in protectionism this year and the sanctions against Russia it becomes important for the biggest economies to be more self sustainable in their production processes. Rely on a country which is political not stable or engages in a war needs to be avoided going forward. I don't think China is ready yet to rely on it's own economy for growth and not western trade partners. That is probably also why China is not more aggressive towards Taiwan yet. A fragile world economy is creating more problems long term for emerging markets that are dependent on the trade with industrial nations.
July 12, 2022, 02:56:22 AM
It's not only the US companies that's moving out. It was also reported that companies from Japan and South Korea transferred their production facilities to Vietnam.
Considering the fact that those two countries don't do anything without US permission and are practically US colonies, it is not surprising.Economically America would benefit from this move because employment opportunities would be created. ~ since most of these industries would be located in Mexico.
Don't you think that is contradictory? If they are moving to Mexico, they will create employment opportunities for Mexicans not Americans. 
July 12, 2022, 02:39:05 AM
Donald Trump made American businesses to think outside the box. The sanctions on Chinese goods and the retaliation by China exposed many American businesses to risk of sanctions. These CEO began to consider moving their business back home. The Covid-19 restrictions increase the momentum of the relocation of these industries. Economically America would benefit from this move because employment opportunities would be created. Also, if the cost of production is cheaper when compared with shipping and other logistics expenses from China, then its also good for the US. Politically it shields the government of US from unnecessary threats and interference in its internal politics by China. It would be also a veritable tool to curb the influx of illegal immigrants into the US, since most of these industries would be located in Mexico. Thereby curbing the immigration tension in the US-Mexico border.
July 12, 2022, 02:18:49 AM
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The concept of manufacturing and production being moved outside of china's borders is an interesting claim.
Other sources say manufacturing and production have become more centralized inside china since COVID and the global pandemic in 2020.
The former is more believable. Unless they cut a special deal with the Chinese government, I don't really see how it would be beneficial for companies to keep their production there when they have difficulty moving it out of the country because of lockdowns. When it comes to skills, I think US workers are on par (could be better) with the Chinese.The concept of manufacturing and production being moved outside of china's borders is an interesting claim.
Other sources say manufacturing and production have become more centralized inside china since COVID and the global pandemic in 2020.
It's not only the US companies that's moving out. It was also reported that companies from Japan and South Korea transferred their production facilities to Vietnam.
July 12, 2022, 01:54:39 AM
It would be good for US economy if they were reshoring but it seems like many of them are actually nearshoring instead. Basically this means that instead of factories moving back to US they are moving back to somewhere closer to US but not US itself, like moving to Mexico. That solves the problem of shipping costs and intellectual property risks and possible future conflict risks but only solves the high production cost problem if they move to somewhere like Mexico.
July 11, 2022, 11:57:50 PM
As the article states very clearly, the corps are only moving production from China to US for financial reasons - ports and shipping expenses and so on. They know every well that the age of more factory jobs is past and over.
I don't think any political whataboutism regarding Taiwan plays a role in these decisions, because we all saw how the war in Ukraine ended up economically for Russia, and how they are being forced to trade however they can. But Russia was weak, ever since oligarchs started buying up ex-Soviet apparatus.
Economically speaking, China is a match for the US (and both of these countries realize this), so a sanctions wave will not hurt China's trading so much as they have so many other customers, but it will actually hurt the US economy because the consumer market will have no sellers [the majority of brands still manufacture in China and US production capacity cannot accomodate all these corps that want to return their plants home].
Besides, the Ukraine war was a political failure for Putin. Everyone can see that, including Xi, so I don't see him copying Putin's mistake.
I don't think any political whataboutism regarding Taiwan plays a role in these decisions, because we all saw how the war in Ukraine ended up economically for Russia, and how they are being forced to trade however they can. But Russia was weak, ever since oligarchs started buying up ex-Soviet apparatus.
Economically speaking, China is a match for the US (and both of these countries realize this), so a sanctions wave will not hurt China's trading so much as they have so many other customers, but it will actually hurt the US economy because the consumer market will have no sellers [the majority of brands still manufacture in China and US production capacity cannot accomodate all these corps that want to return their plants home].
Besides, the Ukraine war was a political failure for Putin. Everyone can see that, including Xi, so I don't see him copying Putin's mistake.
July 11, 2022, 06:57:03 PM
Quote
There has been a sense in financial circles that the fever among American executives to shorten supply lines and bring production back home would prove short-lived. As soon as the pandemic started to fade, so too would the fad, the thinking went.
And yet, two years in, not only is the trend still alive, it appears to be rapidly accelerating.
Rattled by the most recent wave of strict Covid lockdowns in China, the long-time manufacturing hub of choice for multinationals, CEOs have been highlighting plans to relocate production -- using the buzzwords onshoring, reshoring or nearshoring -- at a greater clip this year than they even did in the first six months of the pandemic, according to a review of earnings call and conference presentations transcribed by Bloomberg. (Compared to pre-pandemic periods, these references are up over 1,000%.)
Image link: https://i.ibb.co/tbG7qn1/one.jpg
More importantly, there are concrete signs that many of them are acting on these plans.
The construction of new manufacturing facilities in the US has soared 116% over the past year, dwarfing the 10% gain on all building projects combined, according to Dodge Construction Network. There are massive chip factories going up in Phoenix: Intel is building two just outside the city; Taiwan Semiconductor Manufacturing is constructing one in it. And aluminum and steel plants that are being erected all across the south: in Bay Minette, Alabama (Novelis); in Osceola, Arkansas (US Steel); and in Brandenburg, Kentucky (Nucor). Up near Buffalo, all this new semiconductor and steel output is fueling orders for air compressors that will be cranked out at an Ingersoll Rand plant that had been shuttered for years.
Scores of smaller companies are making similar moves, according to Richard Branch, the chief economist at Dodge. Not all are examples of reshoring. Some are designed to expand capacity. But they all point to the same thing -- a major re-assessment of supply chains in the wake of port bottlenecks, parts shortages and skyrocketing shipping costs that have wreaked havoc on corporate budgets in the US and across the globe.
In the past, says Chris Snyder, an industrials analyst at UBS, it was as simple as “if we need a new facility, it’s going in China.” Now, he says, “this is being thought through in a way that has never been done before.”
In January, a UBS survey of C-suite executives revealed the magnitude of this shift. More than 90% of those surveyed said they either were in the process of moving production out of China or had plans to do so. And about 80% said they were considering bringing some of it back to the US. (Mexico has also become a popular choice.)
This is, of course, a nascent trend. And so many manufacturing jobs were lost here over so many decades -- about 8 million from peak to trough -- that almost no one would argue that the current trend marks a return to those halcyon times. The rise of automation, which has eliminated many low-skilled, low-paid jobs, means US factories today require a much smaller group of workers.
What’s more, the soaring US dollar threatens to curtail the whole thing just as it’s beginning. As the dollar surges against the yuan, yen, pound and euro, it becomes costlier to make goods in the US rather than in those countries.
‘Better and Cheaper’
To Kevin Nolan, the CEO at GE Appliances, all this fretting about high costs in the US is overdone.
It has been for years, he says. Around 2008, he came to realize that on large items -- like, say, dishwasher size and up -- the savings earned by eliminating overseas shipping could outweigh the extra money spent on labor here. The key, he determined, was to wring maximum efficiency out of the factory floor to keep those labor costs down. A year later, he decided to test the thesis out and moved some of GE’s water-heater production to Louisville. Other product lines followed.
It’s all been such a success for the company -- which is now, ironically, owned by China’s Haier Smart Home -- that Nolan has been waiting for other CEOs to follow his move. It took a pandemic to convince them to do it.
“I’ve always said, this is just economics, people are going to realize that the savings they thought they had aren’t real,” Nolan said in an interview, “and it’s going to be better and cheaper to make them here.”
Image link: https://i.ibb.co/hHxT48z/two.jpg
For some companies, the first nudge they got to revamp their supply-chain lines came two years before Covid, when then-President Donald Trump began slapping tariffs on Chinese products again and again.
Generac Holdings, a maker of power generators, started mapping out plans to shift some production from China, and when the pandemic hit, those plans got supercharged. The company now gets more of its parts from suppliers in the US and Mexico, produces more generators near its headquarters outside Milwaukee and runs a brand new plant in a small town just north of Augusta, Georgia.
“We wanted to be closer to our customers in the southeast,” said Chief Operations Officer Tom Pettit. Low shipping costs and quick delivery times are proving a hit with clients and paving the way for the company to keep growing, he said. Opened just a year ago, expansion work on the plant is already underway.
Russia’s invasion of Ukraine also got Pettit’s attention.
Not just because the war further snarled global trade and added to the surge in freight costs but because it reminded him that China could try something similar in Taiwan. And in the same way that business ended for most Western companies in Russia, so too it could end in China. Suddenly, that benign geopolitical backdrop that had helped encourage so many executives to globalize their operations over the past few decades was vanishing. And this, Pettit said, added to his sense of urgency to change things up.
“President Xi Jinping has not been shy about wanting to reunify China and Taiwan,” Pettit said. “We still think China is incredibly competitive. However, we need to have dual sources outside of China.”
https://www.bloomberg.com/news/articles/2022-07-05/us-factory-boom-heats-up-as-ceos-yank-production-out-of-china
And yet, two years in, not only is the trend still alive, it appears to be rapidly accelerating.
Rattled by the most recent wave of strict Covid lockdowns in China, the long-time manufacturing hub of choice for multinationals, CEOs have been highlighting plans to relocate production -- using the buzzwords onshoring, reshoring or nearshoring -- at a greater clip this year than they even did in the first six months of the pandemic, according to a review of earnings call and conference presentations transcribed by Bloomberg. (Compared to pre-pandemic periods, these references are up over 1,000%.)
Image link: https://i.ibb.co/tbG7qn1/one.jpg
More importantly, there are concrete signs that many of them are acting on these plans.
The construction of new manufacturing facilities in the US has soared 116% over the past year, dwarfing the 10% gain on all building projects combined, according to Dodge Construction Network. There are massive chip factories going up in Phoenix: Intel is building two just outside the city; Taiwan Semiconductor Manufacturing is constructing one in it. And aluminum and steel plants that are being erected all across the south: in Bay Minette, Alabama (Novelis); in Osceola, Arkansas (US Steel); and in Brandenburg, Kentucky (Nucor). Up near Buffalo, all this new semiconductor and steel output is fueling orders for air compressors that will be cranked out at an Ingersoll Rand plant that had been shuttered for years.
Scores of smaller companies are making similar moves, according to Richard Branch, the chief economist at Dodge. Not all are examples of reshoring. Some are designed to expand capacity. But they all point to the same thing -- a major re-assessment of supply chains in the wake of port bottlenecks, parts shortages and skyrocketing shipping costs that have wreaked havoc on corporate budgets in the US and across the globe.
In the past, says Chris Snyder, an industrials analyst at UBS, it was as simple as “if we need a new facility, it’s going in China.” Now, he says, “this is being thought through in a way that has never been done before.”
In January, a UBS survey of C-suite executives revealed the magnitude of this shift. More than 90% of those surveyed said they either were in the process of moving production out of China or had plans to do so. And about 80% said they were considering bringing some of it back to the US. (Mexico has also become a popular choice.)
This is, of course, a nascent trend. And so many manufacturing jobs were lost here over so many decades -- about 8 million from peak to trough -- that almost no one would argue that the current trend marks a return to those halcyon times. The rise of automation, which has eliminated many low-skilled, low-paid jobs, means US factories today require a much smaller group of workers.
What’s more, the soaring US dollar threatens to curtail the whole thing just as it’s beginning. As the dollar surges against the yuan, yen, pound and euro, it becomes costlier to make goods in the US rather than in those countries.
‘Better and Cheaper’
To Kevin Nolan, the CEO at GE Appliances, all this fretting about high costs in the US is overdone.
It has been for years, he says. Around 2008, he came to realize that on large items -- like, say, dishwasher size and up -- the savings earned by eliminating overseas shipping could outweigh the extra money spent on labor here. The key, he determined, was to wring maximum efficiency out of the factory floor to keep those labor costs down. A year later, he decided to test the thesis out and moved some of GE’s water-heater production to Louisville. Other product lines followed.
It’s all been such a success for the company -- which is now, ironically, owned by China’s Haier Smart Home -- that Nolan has been waiting for other CEOs to follow his move. It took a pandemic to convince them to do it.
“I’ve always said, this is just economics, people are going to realize that the savings they thought they had aren’t real,” Nolan said in an interview, “and it’s going to be better and cheaper to make them here.”
Image link: https://i.ibb.co/hHxT48z/two.jpg
For some companies, the first nudge they got to revamp their supply-chain lines came two years before Covid, when then-President Donald Trump began slapping tariffs on Chinese products again and again.
Generac Holdings, a maker of power generators, started mapping out plans to shift some production from China, and when the pandemic hit, those plans got supercharged. The company now gets more of its parts from suppliers in the US and Mexico, produces more generators near its headquarters outside Milwaukee and runs a brand new plant in a small town just north of Augusta, Georgia.
“We wanted to be closer to our customers in the southeast,” said Chief Operations Officer Tom Pettit. Low shipping costs and quick delivery times are proving a hit with clients and paving the way for the company to keep growing, he said. Opened just a year ago, expansion work on the plant is already underway.
Russia’s invasion of Ukraine also got Pettit’s attention.
Not just because the war further snarled global trade and added to the surge in freight costs but because it reminded him that China could try something similar in Taiwan. And in the same way that business ended for most Western companies in Russia, so too it could end in China. Suddenly, that benign geopolitical backdrop that had helped encourage so many executives to globalize their operations over the past few decades was vanishing. And this, Pettit said, added to his sense of urgency to change things up.
“President Xi Jinping has not been shy about wanting to reunify China and Taiwan,” Pettit said. “We still think China is incredibly competitive. However, we need to have dual sources outside of China.”
https://www.bloomberg.com/news/articles/2022-07-05/us-factory-boom-heats-up-as-ceos-yank-production-out-of-china
....
The concept of manufacturing and production being moved outside of china's borders is an interesting claim.
Other sources say manufacturing and production have become more centralized inside china since COVID and the global pandemic in 2020.
These events parallel our typical centralization vs decentralization debate. Ownership of the means of production is an ages old discussion in and of itself.
Rampant consumerism is the cultural norm we have all been encouraged to follow since birth.
Rampant productionism could be the trend of the future, if we end up producing our own biodiesel and home grown food.
Supply chain disruptions and drastic shortages may all be defined as dysfunction on the production side.
Are there ways we can resolve these issues efficiently and effectively without extreme measures?
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