China Shuts Down Tens Of Thousands Of Factories In Widespread Pollution Crackdown (msn.com)

Buildings in China are shrouded in smog. From a report: China has implemented an unprecedented pollution crackdown in recent months as the country shuts down tens of thousands of factories. The effort is part of a national effort to address China's infamous pollution and has affected wide swaths of China's manufacturing sector. In total, it is estimated that 40 percent of all China's factories have been shut down at some point in order to be inspected by environmental bureau officials. As a result of these inspections over 80,000 factories have been hit with fines and criminal offenses as a result of their emissions. Safety officials have been moving from province to province (30 in total so far) shutting down factories as well as electricity and gas as they inspect the factories for meeting emissions requirements. This has resulted in late and missed orders, increased costs, and could ultimately result in higher prices on US shelves.

Comments

Not higher prices, more efficient factories

[WillAffleckUW]

The thing is, those who have little knowledge of how China works fail to understand how patronage has allowed very inefficient factories to continue to exist.

Starting with the replacement of old WW I style mills and power systems based on coal, China has literally either forced them to be replaced with cogeneration coal plants that capture excess heat, allowing an old style to produce twice the power output with the same raw inputs. They closed down those which could not be retrofitted.

Now they are doing the same with many of the factories. New factory designs are far more efficient, and cheaper to operate, allowing far fewer raw inputs to produce valuable goods, and requiring far less power.

Which makes them more competitive, dropping prices, not raising them.

This is part of why the Western US, with high investment in renewable power and modern fabrication techniques, outcompetes the old style factories in other regions.

Does it cost? For a 2-5 year cycle, sure. But it drops your operating expenses and maintenance, and it lets you outcompete the fossil factories kept up with wire and tape.

Stop focusing on the short term quarterly results, and look to the operational cradle-to-grave results. Adapt or die.