Trade War Casualties: Factories Shifting Out Of China

Trade War Casualties: Factories Shifting Out Of China

Jul 30, 2018

By Kenneth Rapoza, Contributor, Forbes Supply chains starting to shift at a faster pace as companies look to avoid tariffs.  China-based manufacturers were already in the process of moving to lower-cost Southeast Asia. Now that trade tariffs have been enacted on at least $50 billion worth of goods, and another $200 billion likely by summer’s end, they are shifting their supply chain. It’s happening. “With recent tariff battles, companies aren’t as eager to have production in China,” says Nathan Resnick, CEO of startup company Sourcify. The business-to-business manufacturing platform has offices in San Diego and Guangzhou. “We run production runs in India, Bangladesh, Vietnam, Philippines, and Mexico right now. Labor costs are actually more affordable outside of China, so for products like apparel where there is a lot of cut-and-sew labor, most companies are moving out of China anyway,” he says. Sourcify raised $2.5 million through Y Combinator this winter. “I’ve been going back and forth to China for years, and it is getting more expensive. With all these tariffs coming, why not run some of your production runs elsewhere? Companies are saying that the scare of these tariffs has decreased the incentives to manufacture in China.” Sourcify is small, but Kerry Logistics Network, a Hong Kong-listed firm owned by Malaysia’s billionaire Kuok family, is not. The South China Morning Post reported that Kerry shifted part of its production lines from mainland China to its corporate home further south in order to avoid tariffs. “Our clients have been shifting part of their production lines as early as March from China to other Asian countries where they already have manufacturing plants,” William Ma Wing-kai, Kerry’s managing director, was quoted saying in the Hong Kong daily. “This is a reallocation of global production bases,” Ma said. For the last couple of years, China has been moving to a more automated assembly line, pushing lower-cost manufacturing to Vietnam and elsewhere. China is now one of the world’s largest producers of robotics used in manufacturing assembly lines. As the country moves up the value chain, old-school labor like stitch-and-sew apparel manufacturing is leaving the country. Now that the tariffs are in place, with more promised, companies that were...

171,000 Jobs Come Home to USA in 2017

171,000 Jobs Come Home to USA in 2017

Jun 4, 2018

By Frank Spotorno with Dan Murphy, Yonkers Times A recent report by our friends at The Reshoring Initiative (reshorenow.org) found that last year, 2017, the USA saw an increase in manufacturing jobs coming back to this country, or reshoring, at a record pace: 171,000 jobs have returned as a result of reshoring or foreign investment. American companies are shifting their production of goods from outside the U.S. and bringing their jobs home. While the 171,000 jobs that returned last year is significant, projected figures from this year show that the trend toward making it in the USA is continuing. While some of the reasons for the return of manufacturing jobs to the USA can be attributed to President Donald Trump and his “Buy American, Hire American” initiative, other factors that add to the bottom line of U.S. companies include proximity to customers, government incentives, and the value of “Made in the USA” branding. Harry Mosher, president of the Reshoring Initiative, said that more jobs will continue to come back to the USA. “With 3 million to 4 million manufacturing jobs still offshore, as measured by our $500 billion-per-year trade deficit, there is potential for much more growth,” he said. “We call on the administration and Congress to enact policy changes to make the United States competitive again.” Mosher added that a strong dollar and a stronger skilled U.S. workforce helps continue the wave of jobs coming back home. The Reshoring Initiative has been calculating the cost of doing business for American companies overseas, and comparing it to making it in the USA for more than a decade. Every year the cost of building goods and products in China, in comparison to the USA, has narrowed and is now at the point where it makes real business sense to return manufacturing plants back to America. “We know where the imports are by country, and we know the price difference between the foreign price and the U.S price,” said Mosher. “The total cost of foreign-made goods delivered to the U.S. is a full 95 percent of the cost of U.S.-produced goods. We know how much you have to shift it to make the U.S. competitive with China.”...

Apple announces plans to repatriate billions in overseas cash…

Apple announces plans to repatriate billions in overseas cash…

Jan 19, 2018

“Apple announces plans to repatriate billions in overseas cash, says it will contribute $350 billion to the US economy over the next 5 years” By Anita Balakrishnan, CNBC Apple on Wednesday made a slew of announcements about its investment in and contribution to the U.S. economy in part because of the new tax law. The headline from Apple is that it will make a $350 billion “contribution” to the U.S. economy. The company also promised to create 20,000 new jobs and open a new campus. It said it expects to pay about $38 billion in taxes for the horde of cash it plans to bring back to the United States. This implies it will repatriate virtually all of its $250 billion in overseas cash. Apple also said it will spend over $30 billion in capital expenditures over the next five years. About $10 billion in capital expenditures will be investments in U.S. data centers, the company said. Apple added that it will spend $5 billion as part of an innovation fund, up from the $1 billion CEO Tim Cook announced last year on CNBC’s “Mad Money.” The job creation will include direct employment and also suppliers and its app business, which it had already planned to grow substantially (app developers earned $26.5 billion in 2017.) The new campus will focus on customer support. Wednesday’s announcement indicates that Apple will still have hundreds of billions of dollars in cash. It could spend that money on buybacks, dividends or acquisitions or moonshot projects. The announcement raises the bar for the world’s most valuable company — now a huge driver of the economy — to continue its dominance and growth in the wake of political pressure on big tech companies. The plan calls for Apple to keep up 2018’s $55 billion “supercycle” spending rate with domestic suppliers and manufacturers. “We have a deep sense of responsibility to give back to our country and the people who help make our success possible,” Cook said in a statement. Apple to create 20,000 jobs over the next 5 years from CNBC. In 2016, then president-elect Donald Trump publicly called out Apple’s reliance on its Chinese supply chain, telling The New York...

The State Of Manufacturing Reshoring Today

The State Of Manufacturing Reshoring Today

Jan 17, 2018

By Team Thomas of ThomasNet.com Over the past several years, many U.S. manufacturers have moved operations offshore in order to reduce labor costs and bring jobs closer to their raw material sources. Although this can be an efficient way of increasing profits, it does come with its drawbacks — more complex supply chains, delivery issues, culture and language barriers, and long distances to operations, to name a few, making it hard to keep track of jobs and quickly address issues as they arise. For these and other reasons, reshoring — bringing operations back to U.S. shores — is becoming increasingly common among manufacturing and industrial companies. A Look At Reshoring by the Numbers Over the last half-dozen years or so, manufacturing reshoring has brought hundreds of thousands of jobs back to U.S. soil. The Reshoring Initiative, a nonprofit organization that aims to bring well-paying manufacturing jobs back to the U.S., took a look at where those jobs are coming from and how the industry is benefitting as a result in their Reshoring Initiative 2016 Data Report.  According to the report, the transportation equipment sector, in particular, has seen the lion’s share of this growth with the addition of nearly 134,000 jobs. More than 35,000 jobs have been added in the electrical equipment, appliances, and components sector. Plastic and rubber products, fabricated metal products, computer and electronic products, apparel and textiles, chemicals, and machinery sectors have also brought jobs back to the United States, with each sector accounting for thousands of new positions. Source: Reshoring Initiative 2016 Data Report So where are these jobs coming from, and where are they going? The following countries saw the most jobs being brought back to American soil: China (nearly 80,000 jobs), Germany (over 54,000 jobs), Japan (over 35,000 jobs), and Mexico (over 19,000 jobs). Jobs are also pouring back in from Canada, Switzerland, Korea, Spain, the United Kingdom, and Denmark. Source: Reshoring Initiative 2016 Data Report Nearly all U.S. states are seeing job growth due to reshoring efforts, but those with the greatest influx are South Carolina (over 51,000 jobs), Tennessee (over 36,000 jobs), and Georgia (nearly 24,000 jobs). Source: Reshoring Initiative 2016 Data Report The Factors Fueling Reshoring But why now? There...

Tech Advances Drive Manufacturing Investments Back to U.S.

Tech Advances Drive Manufacturing Investments Back to U.S.

Oct 30, 2017

By Andrew Soergel, Economy Reporter, U.S. News Advances in artificial intelligence and industrial production are reshaping the world’s manufacturing landscape. Manufacturing at long last is enjoying a revitalization in the U.S. as companies from around the world invest in the country’s operations – a key development in President Donald Trump’s quest to make America great again. But presidential policies may not be the primary driver of the manufacturing shift back to the U.S. – and an industrial return isn’t expected to create nearly the same number of jobs that factory floors maintained in decades past. It appears to be technological innovations, rather than policies or an availability of labor, driving the manufacturing renaissance. And with operational advances extending well beyond the reaches of Silicon Valley and into Rust Belt communities in the Northeast and Midwest, many believe the country is well-positioned to be a leader in advanced manufacturing for years to come. “The reason is, candidly, it’s less about the manufacturing people. It’s more about the technology,” Mike Marusic, COO of Sharp Electronics, said Wednesday during an event hosted by Bloomberg. Marusic said Sharp is one of several companies that has chosen to increase investment in the U.S. rather than seeking out “traditional manufacturing places” like China and Thailand in recent years. Other companies include medical device manufacturer Insulet – which broke ground last month on a new central Massachusetts facility that’s expected to bring hundreds of jobs to the area after spending several years operating a production outfit in China – and General Electric, which has tweaked investment plans in recent years to funnel more resources into U.S. facilities rather than in countries with historically lower labor costs like Mexico and China. Even Foxconn, a Taiwan-based electronics manufacturer that helps assemble popular products like iPhones, recently announced plans to build a Wisconsin facility and develop operations in the U.S., despite its proximity to what have historically been considered countries with cheap labor. The Reshoring Initiative advocacy group estimates 338,000 jobs migrated to the U.S. from overseas between 2010 and 2016. The country on net is estimated to have gained 25,000 manufacturing positions last year – meaning more jobs returned to the U.S. than were offshored in 2016 for the first net gain in years. At...