The End To Offshoring?

I saw in an interesting article in The Economist. Apparently, on current trends, offshoring basic manufacturing of American goods to China will no longer be cost effective by 2015. There are a lot of caveats though.

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Good. Cause it ain't right to send work to some bastards in a far off land when your own people need work.

I'm not surprised; labor market arbitrage is by its very nature unsustainable. It's not even that foreign costs have to match US costs; it's that beyond a certain point the savings are not enough to make up for the sheer pain-in-the-ass it is. Having your manufacturing operation in a distant company, with an incompatible timezone, and the inevitable language barriers and much longer shipment times of finished goods means that it's far from the ideal situation.

A brighter future for a darker age.

Yup. Rising energy prices/wages and a weakening US dollar all make offshoring less attractive.

I didn't even read the article before I started to comment and then I thought, maybe I should read it to see if they even mention those things. It's about wages and a weakening US dollar, although like I said I'd add increasing costs of transport to the list.

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They do mention transport costs, as well as supply chain costs.

edited 15th May '11 10:40:24 PM by storyyeller

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Namely transport costs and the several middle men makes things much more expensive. Cut out both of those and suddenly it becomes more than feasible to get American workers and pay them.

The thing about making witty signature lines is that it first needs to actually be witty.

Also the rising value of Chinese money and increasing worker payment in China? That'd raise the price too.

But it doesn't matter, because they'll just move onto the next exploitable second-world country with cheap labor. Remember when everything said "Made in Mexico", or when it was all "Made in Taiwan"? I think "Made in Vietnam" was a really common thing there for a while as well. Offshoring isn't going to end, it's just going to move to the new cheapest location.

The only way to get manufacturing back to America would be to make it cheapest there.

edited 15th May '11 11:07:44 PM by deathjavu

Look, you can't make me speak in a logical, coherent, intelligent bananna.

Or put up tariffs.

While you guys over at the West are relishing on the idea that the Chinese can no longer afford to steal your jobs, I'm beginning to worry if they'll start dumping their wares at Southeast Asia (Those shoddy, hazardous wares).

Doesn't help that we here have lax laws covering comsumer rights and rampant corruption; in other words, we could be screwed many times over by the Chinese and nobody gives a shit.

^^ Which is a terrible idea because then everyone will immediately get mad at the US when everything outside the counytry suddenly costs more.

There's some hope for Indonesia, but Malaysia... yeah... sucks to be in Malaysia no matter how this all goes down.

What absolute gall! Seriously!

Indeed.[rolleyes]

Oh, wow, is this an average? Yeah, of course it is, which means it's completely worthless, since 99% of that gain could be for 1% of workers, which it probably is. Also, of course, they noted the change, but not the actual value itself. I'm unable to find median (50% of population) earnings for Chinese line workers, or even for the entire country, but 16% of Chinese live on under $1/day, and 36% on less that $2. By comparison in the USA, 14% live below our $5,587 poverty line, while 14% of workers earn under $7500, 35% under $11052, and the median income is $28,567. In other words, there'll have to be 500000% Chinese growth to reach anywhere in the same universe as our labor market.

Ah, I see, so it's not about growth in China, it's about obliterating everything left stateside to the point where there's no difference. Thanks for the heads up.

Yep, first they'll have to exhaust the supply of warm bodies in the Chinese countryside, then India, then Vietnam, then Indonesia, then the rest of Asia, then a second Scramble For Africa will ensue… THEN once that's finished, the USA and Europe will have turned into 4th world nations, assuming we don't slam the brakes on this neoliberal moronity.

Eric,

But Eric! If we slammed the brakes on this neoliberal moronity, as you put it, how would the oligarchs make enough money to afford private jets and private helicopters and private boats and fleets of antique cars and vacations in Dubai? Don't you understand the humiliation of being behind everyone else? The super-rich have needs too, you know!

edited 16th May '11 4:02:36 PM by EnglishIvy

And then maybe they'll try to have a stable regime in place in these countries instead of maiming the country for its resources and the quality of living will rise and then they'll move to the next country and the next and the next and PEACE LOVE AND UNDERSTANDING.

Fuck yeah liberalism!