Why China won’t own next-generation manufacturing

Why China won’t own next-generation manufacturing

Aug 29, 2016

By Vivek Wadhwa, The Washington Post After three decades of dramatic growth, China’s manufacturing engine has largely stalled. With rising salaries, labor unrest, environmental devastation and intellectual property theft, China is no longer an attractive place for Western companies to move their manufacturing. Technology has also eliminated the labor cost advantage, so companies are looking for ways to bring their high-value manufacturing back to the United States and Europe. China is well aware that it has lost its advantage, and its leaders want to use the same technologies that have leveled the playing field to give the country a new strategic edge. In May 2015, China launched a 10-year plan, called Made in China 2025, to modernize its factories with advanced manufacturing technologies, such as robotics, 3-D printing and the Industrial Internet. And then, in July 2015, it launched another national plan, called Internet Plus, “to integrate mobile Internet, cloud computing, big data and the Internet of Things with modern manufacturing.” China has made this a national priority and is making massive investments. Just one province, Guangdong, committed to spending $150 billion to equip its factories with industrial robots and create two centers dedicated to advanced automation. But no matter how much money it spends, China simply can’t win with next-generation manufacturing. It built its dominance in manufacturing by offering massive subsidies, cheap labor and lax regulations. With technologies such as robotics and 3-D printing, it has no edge. After all, American robots work as hard as Chinese robots. And they also don’t complain or join labor unions. They all consume the same electricity and do exactly what they are told. It doesn’t make economic sense for American industry to ship raw materials and electronics components across the globe to have Chinese robots assemble them into finished goods that are then shipped back. That manufacturing could be done locally for almost the same cost. And with shipping eliminated, what once took weeks could be done in days and we could reduce pollution at the same time. Most Chinese robots are also not made in China. An analysis by Dieter Ernst of the East-West Center showed that 75 percent of all robots used in China are purchased from foreign firms (some with assembly...

U.S. Manufacturing Competitiveness Rising, Set to Take No. 1…

U.S. Manufacturing Competitiveness Rising, Set to Take No. 1…

Jul 18, 2016

“U.S. Manufacturing Competitiveness Rising, Set to Take No. 1 Spot from China by 2020” By Michelle Drew Rodriquez, Manufacturing Leader, Center for Industry Insights at Deliotte In a study I recently coauthored and conducted in collaboration with the U.S. Council on Competitiveness, executives indicated the United States is expected to be the most competitive manufacturing nation, moving China into the number two position by 2020. The study – 2016 Global Manufacturing Competitiveness Index – by Deloitte Touche Tohmatsu Limited (Deloitte Global) and the Council on Competitiveness (Council) – follows earlier studies we released in 2010 and 2013. The findings are based on an in-depth analysis of survey responses from more than 500 chief executive officers and senior leaders at manufacturing companies around the world, ranking nations in terms of current and future manufacturing competitiveness as well as the global drivers at the heart of manufacturing competitiveness. A number of interesting findings arose this year. For instance, the 2016 study finds the United States is expected to be the most competitive manufacturing nation by 2020, and consistent with prior reports, talent is identified as the number one driver of manufacturing competitiveness. To take a look at the many aspects of the study, and slice and dice the data through interactive drill-downs of rankings and drivers, be sure tovisit the GMCI Interactive Website. The following summarizes key findings related to country level competitiveness and key drivers of manufacturing competitiveness: Rankings: The United States is projected to take number one spot by end of decadeimproving its ranking from 4th in 2010 to 2nd in this year’s study, and is expected to reach No.1 by 2020. As the U.S. invests heavily in talent and technology, it ranks highest as an advanced manufacturing economy. The “Mighty Five” (MITI-V) is starting to show face as manufacturing power group. Made up of the five-Asia Pacific nations of Malaysia, India, Thailand, Indonesia and Vietnam, the MITI-V or “Mighty Five” could represent a “New China” and enter the top 15 rankings of global manufacturing competitiveness over the next five years. The study also indicates BRIC crumbles as member nations’ individual ratings shuffle. Among the BRIC countries, only China is viewed as a top manufacturing nation in 2016. The other three – Brazil, Russia and India –...

How Does America “Reshore” Skills That Have Disappeared?

How Does America “Reshore” Skills That Have Disappeared?

Apr 1, 2016

By Todd Oppenheimer, Craftsmanship.net  Now that manufacturing wages in Asia are starting to rise, some U.S. industries are bringing their businesses back to our own shores. Yet many others remain skittish about the paucity of workers here who still know how to make things. Can this downward spiral be reversed? When I talked on the phone recently with Harry Moser about all the hysterical arguments this year’s presidential candidates are having about immigration, I could almost see the mischievous twinkle in his eye. Moser is the founder of The Reshoring Initiative, a Chicago-based organization dedicated to bringing manufacturing back to America. And in his view, the solution to the immigration problem is pretty simple. During your first meetings with overseas contractors, you’re likely to be shown some impressive prototypes, manufactured by a relatively skilled production team. By the time the second and third rounds of deliveries are made, the quality of the materials has declined. “The work isn’t being done by the A team anymore,” says Harry Moser of the Reshoring Initiative. “The plant now has its C team on the job.” “If I were running for president,” he told me, “here’s what I’d tell everybody I would do on day one. I would call the president of Mexico and say, ‘Why don’t you and I target certain industries in Asia, and have the U.S. and Mexico cooperate as a team to bring those manufacturing operations back to North America.’ ” Moser explained that some of that work would be best suited to the labor force in Mexico, and some is best done in the U.S. His point is that, with a little planning, our two countries could create a whole new manufacturing infrastructure on this side of the world, and a host of new jobs. This would cut our trade deficit with Mexico, boost our neighbor’s economy, and raise its workers’ wages. That, in turn, would reduce the pressure on immigration and eliminate the need for a wall—no matter who pays for it. There’s only one small problem: Neither Mexico nor the U.S. has a workforce with the full complement of skills needed to fill those jobs. Many factory workers in China aren’t...

China Expected To Lay Off Millions At State-Owned…

China Expected To Lay Off Millions At State-Owned…

Mar 2, 2016

“China Expected To Lay Off Millions At State-Owned Industrial Firms” By Andy Szal, Manufacturing.net The Chinese government is reportedly preparing to implement the most severe cutbacks in state-owned enterprises — including its industrial sector — in nearly 20 years. Reuters, citing two sources with close ties to government leadership, pegged the number of layoffs planned over the next two to three years atbetween 5 million and 6 million. The government also plans to spend billions to cover the layoffs and protect against unrest. About $23 billion will be needed for the coal and steel industries alone, which the nation’s country’s human resources minister previously estimated would see 1.8 million layoffs. China plans to reduce its steel capacity by 150 million tons and its coal production by 500 million tons in coming years, and other industries with excess supply will also see job cuts. Additional funding, meanwhile, will be needed to resolve the debts of so-called “zombie firms” — state-owned companies that ceased operations but continue to pay workers — that could compromise local banks. In the midst of economic turmoil in China, officials vowed late last year tocrack down on such companies. Reuters said that the state accounted for 40 percent of the country’s industrial output and nearly half of its bank lending. About 37 million people worked for the state as of 2013....

What Could be done about China’s Theft of Intellectual Property

What Could be done about China’s  Theft of Intellectual Property

Feb 24, 2016

By Michele Nash-Hoff, Saving U.S. Manufacturing Hardly a week goes by without a report of Chinese “hacking” or Intellectual Property Theft, so it was no surprise that a published analysis by CrowdStrike, a California-based cyber security company, revealed that China violated its cyber agreement with the United States the very next day after  CNBC reported that President Obama and China’s President Xi Jinping agreed to not conduct cyber theft of intellectual property on Friday, September 25, 2015. President Obama said. “The United States government does not engage in cyber economic espionage for commercial gain, and today I can announce that our two countries have reached a common understanding on a way forward.” However, the U.S.-China agreement “does not prohibit cyber spying for national security purposes.” It is interesting to note that the day before the announcement, September 24, 2015, Chet Nagle, a former CIA agent and current Vice President of M-CAM, penned an article in the Daily Caller, stating, “At FBI headquarters in July, the head of FBI counterintelligence, Randall Coleman, said there has been a 53 percent increase in the theft of American trade secrets, thefts that have cost hundreds of billions of dollars in the past year. In an FBI  survey of 165 private companies, half of them said they were victims of economic espionage or theft of trade secrets – 95 percent of those cases involved individuals associated with the Chinese government.” He blamed the corruption of Chinese government officials for the problem and stated that “President Xi Jinping has instituted a strict anti-corruption campaign. Regrettably, the campaign has focused on “tigers” – senior government officials – at the expense of eliminating the rampant corruption by the “flies” – officials at the provincial and local level. In any event, putting a dollar value on direct corruption does not address the totality of the costs. Business confidence and foreign direct investment in China are already falling because of the absence of the rule of law.” He concluded, “China’s disregard of the rule of law should be the underlying driver for all discussions of commercial topics during the coming visit of China’s president. Lack of the rule of law is the most difficult...