Are China Manufacturing Jobs Moving Back to the U.S?
Easy to obtain, low cost goods — the products we wonder how manufacturers can afford to make and transport at such super-low prices — at the local mega retailer may be a thing of the past. Yes, quite possibly, the era of cheap China goods may be finally coming to an end.
Over the last few months, labor unions, through a series of strikes in China, are demanding better conditions for their members and higher pay; successfully accomplishing their goals with corporate management. Couple this with the recent decision of the Chinese government to allow its currency to rise in value and we finally have a potential recipe for positive change in the U.S. economy. While these events may eventually generate higher prices for U.S. consumer goods, the positive take is additional manufacturing jobs moving back to America.
Take for example the recent changes at the toy maker Wham-O, the inventor and manufacturer of such famous products as the Frisbee, Hula Hoop and Slip ‘N Slide. They recently made a strategic business decision to bring about half of the Frisbee and some other toy manufacturing processes back to the U.S.
The Guangdong Province of Southern coastal China, long-time considered the world’s manufacturing empire, is taking an unexpected hit. A number of foreign companies have historically depended on China for cheap labor and the ability to produce just about any product, from toy soldiers to even more sophisticated products such as the iPad, With the labor force finally demanding their rights, it seems as though we will start to see a shift in the world picture here.
Workers have for years welcomed with open arms poorly designed factories sporting low labor rates and deplorable working conditions. These factories, no matter how degenerate were viewed as an opportunity to lift workers from the poverty and isolation of provincial life.
Even in what is considered the upper-end, high-tech factories such as those run by Taiwanese giant Foxconn, the largest manufacturer of electronics and computer components worldwide with large factories in the Guangdong Province of China, all is not well. Foxconn has recently witnessed several worker suicides in its company dormitories. Many believe the low wages and poor working conditions have contributed to these tragic events. In response the company has increased wages by 70%, added improved psychological services and upgraded dormitories for workers. Foxconn is one of the largest private manufacturing companies in China with over 800,000 employees. They make circuit boards and components for such giants as Apple, Nokia and Dell.
As the summer heats-up so do the strikes and labor unrest in the Guangdong Province, as many factories are without air conditioning and proper ventilation. These conditions are conducive to greater unrest and the likelihood of strikes as factory workers demand better working conditions.
The burst of disputes that started in May has since affected over a dozen mainly foreign-owned factories, raising legitimate questions about the region’s future as a cheap manufacturing hub.
As of this writing, there is a week-old strike at a gear shift manufacturing plant making parts for the giant automotive company Honda. While it looks as though this strike may be moving towards a resolution, the likelihood of additional unrest is very possible.
Just Today, 400 to 500 Workers at Japanese electronics maker Omron’s southern China factory have gone on strike demanding better wages of up to 40%. The company manufactures critical switches and digital ignition keys for such companies as Ford Motor Company, BMW and Honda.
Surprisingly the Beijing governmental authorities which normally control and subdue such labor unrest at the very onset of a movement, fearing the stability of the Communist Party, seem to be willing to tolerate the strikes and labor demonstrations. There appears to be larger political goals here in an effort to increase domestic consumption of goods and help to dispel anger at a growing gap between the rich and poor. Some think Beijing may also want to move away from the cheap manufacturing perspective in order to boost the countries value chain.
These Chinese labor disputes and increased wage patterns are a fortunate sign for the U.S. economy as they signal the potential of even more manufacturing jobs returning to the States. This Writer believes the U.S. economy and job market will experience a substantial turn-around in the last half of 2010 and into and throughout 2011 and 2012 due to these surprising Chinese developments and a number of other recent positive economic indicators.
Joseph Nino Rudolph
