Tuesday, February 26, 2013

China Manufacturing or American Manufacturing?

In the United States Election Debate, American Manufacturing is a hot topic. According to blommberg[1]"Both Republican presidential nominee Mitt Romney and President Barack Obama talk dreamily about a manufacturing revival, with Romney promising to roll back regulations and Obama offering tax breaks and other incentives that border on industrial policy"

How is this so hot American Manufacturing going and why not China Manufacturing? This passage is going to analyse from the perspective of SCM to tell the environmental changes which makes the outsourcing choices in China seems less attractive today and a new trend of intelligent manufacturing is coming.

According to Bloomberg's investigation in 106 company leaders who have manufacture in China, a large percentage of them are considering move their factory to somewhere else.

The results[2] shows that 67 percent in rubber and plastic products, 42 percent in machinery, 41 percent in electronics, 40 percent in computers, and 35 percent in fabricated metal products said they expect to “reshore” production from China.

Why? Top factors cited as driving decisions on future production locations were labor costs (57 percent), quality (41 percent), ease of doing business (29 percent), and proximity to customers (28 percent). In additional, 92 percent said they believe that Chinese labor costs “will continue to escalate.”[2]

The fact is that in the last 33 month the American Manufacturing is reviving miracly from a dozen years depression, " Over the past 12 years, U.S. manufacturers have cut 31 percent of their workforce, or nearly 6 million workers. Their contribution to gross domestic product fell to 12.2 percent in 2011 from 22.7 percent in 1970."According to Mckensey's report, "manufacturing will be among the most dynamic sectors of the U.S. and global economies, driving higher productivity and standards of living. But it also shows that what we usually think of as a traditional manufacturing job isn’t coming back."[3]

That means we are stepping of  a new era of intelligent manufacturing and say farewell to the old labor intensive manufacturing. In this new kind of manufacturing you can not say many workers crowded in the factory, instead you will see a lot of machine and robot working with just a few "workers" controlled the computer and do some techician jobs. And what may surprise you is that, all these workers might took high level of education,let's say doctor degree.

Intelligent manufacturing is coming under the condition that worker wages increase and AI technology matured. This means, in the future, worker's image will change a lot and manufacturing is no longer that limited by the labor cost, therefore not limited by geography.

Market and technology will be instead the crucial factors redefining the Supply Chain. US has technology while China has Market. It is for you, the future makers, to balance whether it is China Manufacturing or American Manufacturing in the future!


1.Bloomberg View: A Reality Check on American Manufacturing, Sep, 2012(http://www.businessweek.com/articles/2012-09-06/bloomberg-view-a-reality-check-on-american-manufacturing)
2.Repatriating Jobs:US Manufacturing Gains Momentum, April 2012(http://www.businessweek.com/articles/2012-04-20/repatriating-jobs-u-dot-s-dot-manufacturing-gains-momentum)
3.American manufacturing is coming back. Manufacturing jobs aren’t, Nov, 2012(http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/19/american-manufacturing-is-coming-back-manufacturing-jobs-arent/)

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