Are U.S. Manufacturers Gaining Ground on China?

Does Chinese manufacturing still yield the benefits it has over the last decade?  As the dollar weakened through the economic meltdown, manufacturing in China doesn't seem to make as much financial sense as it used to.  Granted over the last few weeks, with the financial problems in Greece and the rest of the European Union, the dollar has been on the rise.

Over the last decade, many companies have gone over seas for their die building and stamping needs.  Die building in China can save as much as 40-60% off the cost of tooling.  However, quality can sometimes be compromised.  The tools usually need to be debugged and reworked in the US unless you have a reliable engineer on foreign soil.

China has been a haven for cost efficient manufacturing work due to low labor costs.  The New York Times (5/28, B1, Bradsher) reported that "a strike at a crucial parts factory has forced Honda to shut down all four of its joint venture assembly plants in China." All of the 1,900 workers at Honda's transmission factory in Foshan (100 miles northwest of Hong Kong) have been striking since May 21, according to Honda spokeswoman Yasuko Matsuura. As such, the "four assembly plants in China making Honda cars and light trucks have run out of transmissions, they have also had to shut down."

According to state-controlled Chinese media, workers at the a Honda transmission factory earn $150 to $220 a month and are demanding to be paid the same wages as Honda’s assembly plant workers, who earn $300 to $370 a month. With the advances in knowledge and communication, the Chinese work force is starting to figure out who's getting the short end of the stick on the low labor costs.  It seems that the Chinese worker has had enough... and it's time for a change.

The New York Times (5/28, B1, Bradsher) reported that "a strike at a crucial parts factory has forced Honda to shut down all four of its joint venture assembly plants in China." All of the 1,900 workers at Honda's transmission factory in Foshan (100 miles northwest of Hong Kong) have been striking since May 21, according to Honda spokeswoman Yasuko Matsuura. As such, the "four assembly plants in China making Honda cars and light trucks have run out of transmissions, they have also had to shut down."

The Times notes, "Industrial wages have been climbing steeply in the export zones of China's coastal provinces, but workers' expectations have been rising even more steeply." Migrant workers are less likely to work at factories near the China's coast, preferring to find jobs closer to their home in China's interior, "and the resulting labor shortage has given workers new leverage to demand higher wages and better conditions."

So it seems that the Chinese workers are starting to take a stand... which is great news for manufacturers here in the states such as Die-Tech.  As the cost of labor and price of doing business in China rises, it will make US manufacturers more competitive on a global scale.  The number one factor in companies choosing a supplier is driven by cost.  As the playing field levels for US manufacturers, we can be patiently optimistic that the changes taking place in China are for our benefit.
 
Of course, as the cost of doing business in China rises, some manufacturers will look to other low cost countries such as India and Vietnam.  As with just about everything... people are always looking for the best price.