What goes around, comes around. The industrialization of mainland China means the growing prosperity of that nation but also has meant the loss of jobs in the US.
Rising income is addictive however and the Chinese have proven quite adept at seeking better opportunities creating a shortage in skilled labor causing production prices to rise by double digits annually. It pays to read the whole article, but the point is that the companies who fled to China will either economize, raise prices here, move to yet cheaper countries, or some combination.
Rising prices here though may mean new opportunities such as US based assembly/distribution plants as opposed to manufacturing operations and other forms of “home sourcing”.
From Business Week
As a result, companies across the board are feeling the squeeze. Last year turnover at multinationals in China averaged 14%, up from 11.3% in 2004 and 8.3% in 2001. Salaries jumped by 8.4%, according to human resources consultant Hewitt Associates LLC. And a January report by the American Chamber of Commerce in China found that rising labor costs have pinched margins at 48% of U.S. manufacturers on the mainland. “China runs the risk of losing its advantage” of cheap labor, says Teresa Woodland, an author of the report.
That means managers can no longer simply provide eight-to-a-room dorms and expect laborers to toil 12 hours a day, seven days a week. When 30-year-old He Maofang first arrived in Dongguan in 2000, for instance, “work was hard to find.” But now “there are plenty of choices,” says He, who started at Yongjin last June. In addition to boosting salaries, Yongjin has upgraded its dormitories and improved the food in the company cafeteria. Despite those efforts, its five factories remain about 10% shy of the 6,000 employees they need.
No comments yet.