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Dramatic Shifts In Manufacturing Costs Are Driving Companies To US, Mexico
hackingbear writes: According to a new Cost-Competitiveness Index, the nations often perceived as having low manufacturing costs — such as China, Brazil, Russia, and the Czech Republic — are no longer much cheaper than the U.S. In some cases, they are estimated to be even more expensive. Chinese manufacturing wages have nearly quintupled since 2004, while Mexican wages have risen by less than 50 percent in U.S. dollar terms, contrary to our long-standing misconception that their labors were being slaved. In the same period, the U.S. wage is essentially flat, whereas Mexican wages have risen only 67%. Not all countries are taking full advantage of their low-cost advantages, however. The report found that global competiveness in manufacturing is undermined in nations such as India and Indonesia by several factors, including logistics, the overall ease of doing business, and inflexible labor markets.
When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else:
music
movies
microcode (software)
high-speed pizza delivery
.
Prisencolinensinainciusol. Ol Rait!
Good point, and I don't think they will benefit from lessons learned elsewhere. America has had to compensate for lack of a cheap labor force by implementing technology. It took a while, but regulations now protect the workers (and consumers).
China, on the other hand, has always had plenty of cheap labor. They have solved problems with brute force instead of applying technology.
As that culture changes for China, they will make the exact same mistakes the other industrialized countries have made. China's water and air conditions are miserable ... a condition that is reminiscent of the 1900s in the US.
It little behooves the best of us to comment on the rest of us.
I'm gonna disagree.
This is supposedly a sign that the race to the bottom is actually done. The bottom filled out and is rebounding, and "we" mostly resisted our worst political urges vis-a-vis protectionism and removing regulatory protections that exist for good reasons. An equilibrium has been reached, and all the sacrificing has been mostly of the short term kind.
I know posting anything that isn't a hyper-cynical prediction of doom-and-gloom isn't too popular on slashdot, but this happened with Japan in the early 90s, and it happened with the United States(to the British Empire) in the 1850s. This isn't an unprecedented development. Cheap labor isn't infinite and eventually labor starts to get positively valued again.
It wasn't always like that though. Blame globalism if you want; but in the post war years, DETROIT was the richest city in the United States. It did not get that way due to service industries and intellectual property creation. They took raw materials, and made cars. for profit. and did not pay slave wages. The rust belt was bedrock of the American middle class.
I do not buy the argument that manufacturers have to pay shit wages to stay competitive. I think that's an excuse to either inflate managerial / executive salaries; or cover up for failing to invest in increasing efficiency.
Or it's due to the rise of the MBA. Labor is simply an input, a cost to be minimized. There's knock-on effects to selling your workers out in order to slightly lower production costs -- and those goons didn't look at the bigger picture or what we'd lose -- a stable, well functioning, organized society (Look at Detroit/Flint/Gary in 2014)
(In before some libertarian blames government regulation for companies moving production offshore.)