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China's Export Pain May Be Mexico's Gain

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Shipping and freight statistics show an increase of shipments from Mexico. Trains and truck shipments from Mexico to the U.S. increased by 8.7% by weight in the first 11 months of 2011 compared to the prior year. By comparison shipping containers entering the ports of Los Angeles and Long Beach went down by 0.2% in 2011. Mexico stands to benefit from the shift in dynamics as manufacturing costs in China increase with labor constraints, higher wages, higher commercial land prices and recent Asian supply chain issues making firms wary of unanticipated problems. This is expected to benefit the U.S. with the return of some manufacturig jobs and a serious rethink of outsourcing. Because of highly automated factories and advanced technologies the manufacturing process requires fewer and more skilled operators, reducing the labor component of costs. Carlisle Companies CEO, David Roberts says he is expanding tire manufacturing plants in Tennessee. He says he can make tires as cheaply or cheaper in the U.S than in China. This has serious implications as the U.S. gets down to rebuilding and renewal of its manufacturing industry.

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Andy Grove brushes off talk of sending technologies and jobs much needed at home to China, with the talk he hears of "a China strategy." He doesn't see how an America with high paying jobs and mass of unemployed could work. He says American companies have failed to scale up, the way Intel did in the seventies. For every Apple employee there are 10 employees in China working on Mac's, Iphones, and Ipads. The idea of manufacturing as not important is misguided and he would like to see America rebuild its industrial base.

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Conditions at Hon Hai and a strike at Honda are part of a changing picture of worker dissatisfaction with wages and discipline at Chinese factories. The period of low prices and worker discipline of the kind that prevailed for several decades of industrialization appears to be closing. The Chinese government is also having second thoughts as America and Europe are no longer the growing markets they used to be, and as it weighs a policy shift to domestic consumption.

Grouped Articles

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The need for a strong and growing manufacturing base in the U.S. is one key realization for business leaders from the heads of Boeing, Intel and GE, and other business leaders to leaders in government. Failure to do this simply breeds a sense of pessimism about the future and creates an economy that leaves many productive people jobless, creates unsustainable trade deficits and foreign borrowing. Jeffrey Immelt says this in an op-ed piece in the Washington Post on the day he is appointed to head the President's Council on Jobs.

Grouped Articles

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Growth isn’t enough to help the middle class - The Washington Post

Washington Post 02/14/2013

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Wall Street Journal 12/20/2013

Americans Sour on Trade

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Toyota and locating manufacturing plants outside Japan

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Toyota Signals Shift on Plants

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Grouped Articles

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After Michigan Loss, Hillary Clinton Sharpens Message on Jobs and Trade

New York Times 03/09/2016

Wanted: new customers

Economist 10/01/2009

Economist.com

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