For all expecting and new parents, you probably have learned how quickly buying your child’s products adds up! So why would you be willing to pay more for an American-made product when you could purchase a similar product or even the “same” product, produced overseas, for half the cost? Read more
Later this year along the banks of the James River outside Richmond, Virginia, a paper products maker based in northeastern China will begin construction on a new U.S. manufacturing plant. The factory will churn the region’s straw and corn stalks into household products including napkins, tissue and organic fertilizer—all marked “Made in the USA.” Made by China, in America.
Daniel Acker | Bloomberg | Getty Images
Jack Brown Produce workers sort apples on a packing line in Sparta, Mich. The state, a big exporter of agricultural goods, is among U.S. regions raising its export profile.
It’s well-known American jobs have been lost to overseas competition. While work on U.S. manufacturing floors has declined, overseas markets have developed a growing appetite for American-made goods—from chemicals and wood products, to medical devices.
Documentary: Made by China in America? directed by Miao Wang about Chinese firms bringing manufacturing to the U.S. It is part of Morgan Spurlock’s “We the Economy” series (www.wetheeconomy.com).
When I was a baby, my mom waited in line at 3am with her ration ticket to pick up the monthly allowance of meat. As fortunate dwellers of China’s capital city, we received a little more than two pounds. In remote provinces, it was half or a quarter of that amount.
The United States remains the largest medical device market in the world with a market size of around $110 billion, and it is expected to reach $133 billion by 2016. The U.S. market value represented about 38 percent of the global medical device market in 2012. U.S. exports of medical devices in key product categories identified by the Department of Commerce (DOC) exceeded $44 billion in 2012, a more than seven percent increase from the previous year. Read more
A Montgomery County manufacturer of plastic injection molds and K’NEX construction toys is bringing production of one of its classic toy brands back to the United States from China.
Lincoln Logs, a classic toy brand developed nearly 100 years ago, is part of the K’NEX family of brands. Beginning next year, Pride Manufacturing in Burnham, Maine, will manufacture the Lincoln Logs product line. The Maine company is a manufacturer of engineered wood products.
K’NEX Brands, which licenses the Lincoln Logs brand from Hasbro, has designed Lincoln Logs since 1999, but decided to build upon its reshoring initiative that it introduced in 2009, said Michael Araten, president and CEO of K’NEX and its subsidiary, The Rodon Group in Hatfield. As part of this initiative, K’NEX delivered the production of Tinkertoy products back to the U.S. in 2012, where it is mass produced by The Rodon Group.
Since The Rodon Group does not make wood products, it needed to find a manufacturer in the U.S.
“We kept at it and finally found a manufacturer in Maine who will manufacturer the Lincoln Logs,” Araten said. “It’s really about substituting our U.S. supply chain for the China supply chain.”
Now, the entire supply chain for the production of Lincoln Logs will be U.S.-based, Araten said.
K’NEX will continue to design Lincoln Logs in Hatfield.
“We’ve started production of the logs now, so we can have product on the shelf in July,” Araten said.
Next year, K’NEX will launch 10 new sets that are made in the U.S.: Horseshoe Hill Station, Country Meadow Cottage, Oak Creek Lodge, 100th Anniversary Tin, Collector’s Edition Village, Wrangler’s Ranch, Wolf’s Lodge, Mountaintop Hideout, Grand Pine Lodge and Colts Creek Command Post.
Next on the company’s agenda is to potentially bring production of toy motors back to the U.S. “That’s our next big initiative,” Araten said.
He said there are many reasons manufacturing is returning to the U.S. from China.
Chinese labor rates are rising dramatically, the U.S. is experiencing an energy boom, manual labor is being replaced by automated systems in U.S. manufacturing facilities and the flexibility and skills of the American workforce are strong, according to Araten.
Lincoln Logs, the popular building toy created nearly a century ago by a son of architect Frank Lloyd Wright, is coming home to the U.S. Read more
Brad DeNoyer, manufacturing and distribution leader for accounting and advisory firm Baker Tilly Virchow Krause LLP, said a lot of middle market manufacturers supplying larger companies are starting to come back to the U.S.
“There’s just not necessarily a drive to go there anymore and there is talk about coming back,” DeNoyer said. “Five to 10 years ago, the work was leaving and going overseas, even the smallest of companies was going to China. Now the faucet has stopped and there is talk about whether to come back.”
But some manufacturers are just starting to have conversations with Milwaukee-based suppliers about re-shoring.
Frank Krejci, president and chief executive officer of Strattec Security Corp., also heads up a contract die-casting division called Strattec Component Solutions. Companies that used to get castings from China are now looking to bring back the work to the U.S., but this push to come back home isn’t going to happen overnight, Krejci said.
“This is not an impulse buy at a grocery store,” Krejci said. “The choice is…do you move inventory or tools? What manufacturers are more likely to do is create a separate set of tools, then ramp up in America and shut down in China. But they are still getting the parts from China.
“But next year they are coming out with a new and improved version of their product. And instead of having the new tools coming from China, now they are making it in America.”
Krejci also said more companies are auditing his firm to determine if they might need his company’s services six months or two years down the line for their next product generation.
What does that mean on the jobs front?
Jeff Sachse, regional economist for the Wisconsin Department of Workforce Development, said that he’s seeing manufacturing companies in the four-county metro region have been hiring at a stable rate. The re-shoring effort has been segmented, but companies have also been reinvesting in some production facilities and cutting costs.
“There is a lot of interest in re-shoring from China…Some of that was driven by labor costs because they dropped during the recession and a lot of companies got rid of the high-wage earners because a lot of that was driven by seniority, but there was definite cost cutting going on,” Sachse said. “So we’re seeing relatively lower wage rates in assembly here than there used to be and we are seeing more competitive costs compared to other countries like China.”
Picture Eugene Hoshiko, File/Associated Press
U.S. manufacturing becoming low cost over the past decade compared with factories in China, Brazil and most of the world’s other major economies.
So says a new private study, which found that rising wages and higher energy costs have diminished China’s long-standing edge over the United States. So has a boom in U.S. shale gas production. It’s reduced U.S. natural gas prices and slowed the cost of electricity.
The Boston Consulting Group is issuing a report on its study of manufacturing costs in the 25 biggest exporting countries. Only seven of those countries had lower manufacturing costs than the United States did this year. And since 2004, U.S. manufacturers have improved their competitiveness compared with every major exporter except India, Mexico and the Netherlands.In 2004, for example, manufacturing in China cost 14 percent less than manufacturing in the United States. By this year, the China advantage had narrowed to 5 percent. If the trends continue, Boston Consulting found, U.S. manufacturing will be less expensive than China’s by 2018.
Over the past decade, labor costs, adjusted to reflect productivity gains, shot up 187 percent at factories in China, compared with 27 percent in the United States. The value of China’s currency has risen more than 30 percent against the U.S. dollar over the past decade.
The higher Chinese currency made goods produced in China and sold abroad comparatively more expensive. And foreign goods became comparatively more affordable in China.
Chinese electricity costs rose 66 percent, more than double the United States’ 30 percent increase. The start of large-scale U.S. shale gas production in 2005 has helped contain electricity bills in the United States and neighboring Canada and Mexico.
China, too, has reserves for shale gas. But it will need years to develop them.
“This is not something you can turn on overnight,” said Justin Rose, a partner at Boston Consulting and co-author of the study.
Brazil has lost even more ground than China. In 2004, manufacturing was 3 percent cheaper in Brazil than in the United States. By 2014, Brazil was 23 percent more expensive. Brazilian factories didn’t improve efficiency enough to offset rising energy and labor costs.
The countries where manufacturing was cheaper than in the United States are Indonesia, India, Mexico, Thailand, China, Taiwan and Russia.
Australia was the most expensive country for manufacturing. Its costs were 30 percent higher than those in the United States.
The survey doesn’t include transportation costs, which vary depending on where goods are shipped. Several countries also face obstacles not captured by Boston Consulting’s manufacturing cost index — from corruption to inefficient government bureaucracies.
SOURCE: Washington Post
Last week, Walmart expanded on the $50 billion Buy American pledge it made last January with a full-fledged Made-in-America summit.
