The rise of Chinese manufacturing has defined the past decade but are conditions now ripe for a revival of made-in-America? Possibly, for low-volume, high-ticket goods made in low-cost states, says a Boston Consulting Group report. But my beloved California will have to work harder to get in on the action.
The BCG report notes that labor costs are rising rapidly in China and the value of China’s yuan is creeping up relative to the dollar. Those factors, coupled with the challenges in communications and the costs of shipping and logistics, are making Chinese manufactures relatively more expensive.
The BCG report, which I noticed via an AllBusiness.com article, cited some instances of onshoring: Caterpillar bringing work to a plant in Texas and NCR making ATM machines in Georgia.
Those are Southern states with pro-business reputations, but even out here on the Left Coast, I caught a whiff of this phenomenon in a 2009 article that used plastics manufacturers as the case in point. The dynamics were simple: for small batches, the challenge of distance made China uneconomic. But that is a small part of the universe of manufactured goods.
The U.S. must revive manufacturing. Too many livelihoods depend on production for us to throw in the towel and resign ourselves to an economy based on non-exportable services. The BCG report suggests that unions are realistic about wages, and that some states and locales have made concessions to help.
Can states and communities avoid a race to the bottom in the face of inexorable and global competition? And how can California leverage its position between the rising Far East and the struggling West?
So far California has little to boast. A couple of years ago, a state-local-labor coalition tried but failed to preserve California’s last car-making plant, New United Motors Manufacturing or Nummi. Toyota, which behaved like a great corporate citizen compared to its feckless American partner, General Motors, ultimately decided to move production to low-cost Texas.
Now the governor who led that effort is gone, and California is mired in new crises around its shrinking budget and high unemployment. Even preoccupied with my own employment challenges I see empty warehouses and manufacturing sites around the great port of San Francisco and think: if we had the will, could we find the ways to enable Northern California to benefit from onshoring?