The U.S. Is Beating China on the Factory Floor. This Is Why.

[JMAC]

"The U.S. will outpace China as the world’s most competitive manufacturing nation by 2020, according to the 2016 Global Manufacturing Competitiveness Index. "


The U.S. Is Beating China on the Factory Floor. This Is Why. | Acumen | OZY

[JBT]

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[Samac]

Outstanding. Thanks for the link, JMAC. During the past few years there have been signs that the USA was making a manufacturing comeback. Great to see it being acknowledged more.

Cheers,

Scott

[planman2014]

Good to hear.

[Antonmb]

In my company we do almost all of our manufacturing in two factories in the States. With the use of Lean manufacturing principles and continuous product innovation, we're able to not only compete with Chinese manufacturers, but actually export to China. American manufacturing, productivity, and innovation can compete effectively on the world stage.

[cmarin]

Originally Posted by Antonmb

In my company we do almost all of our manufacturing in two factories in the States. With the use of Lean manufacturing principles and continuous product innovation, we're able to not only compete with Chinese manufacturers, but actually export to China. American manufacturing, productivity, and innovation can compete effectively on the world stage.

+1 Couldn't agree more. The NAFTA based shared intelligent manufacturing platform with Mexico will lead the world as BREXIT leads to a retrenchment of global supply chains back toward regional integrated economies.

We, on the border, are seeing the growth of nearshoring and reshoring of manufacturing back from Asia. But as always it's about staying one step ahead of the competition (talent, technology, capital and leadership).

[Still-One]

Determining where it is most cost efficient to produce a product must consider:
-source of raw materials (inbound shipping costs)
-fully loaded cost per minute to convert in each location
-outbound shipping costs

[SCAudiophile]

Originally Posted by cmarin

+1 Couldn't agree more. The NAFTA based shared intelligent manufacturing platform with Mexico will lead the world as BREXIT leads to a retrenchment of global supply chains back toward regional integrated economies.

We, on the border, are seeing the growth of nearshoring and reshoring of manufacturing back from Asia. But as always it's about staying one step ahead of the competition (talent, technology, capital and leadership).

Great to hear and see that manufacturing work is coming back from Asia; I wish other industries would follow suit and companies would ditch call centers, etc...that have taken alot of jobs and put them in India, Malaysia, etc...but that is not likely to happen anytime soon.

NAFTA itself however, is better for corporate profit margins and workers in countries other than the US where companies are sending work, factories and entire lines of business to Mexico for purely economic reasons. There have been economic benefits to the US agricultural/meat industries and some others in terms of exports but overall NAFTA has been disastrous for American-based workers and their families who have paid the real price for what it represents. Just one guy's opinion and is not meant to start a political war.

[Antonmb]

Originally Posted by zephyr24069

...NAFTA itself however, is better for corporate profit margins and workers in countries other than the US where companies are sending work, factories and entire lines of business to Mexico for purely economic reasons...overall NAFTA has been disastrous for American-based workers and their families...

I think this is actually a bit more nuanced. From personal experience: in the 80s my company had a factory in Alabama producing what I would consider commodity products. We provided good wages and benefits for relatively unskilled labor, but we were steadily losing business on that product line to Chinese competition, and our profits were declining to the point where the business was becoming unsustainable. Because of our labor and benefits costs on commodity products, we were at a 25-50% price disadvantage. We had a choice if either moving the production to China, Mexico, or simply letting the business go. No matter what, we couldn't keep the Alabama factory running producing commodity products. NAFTA made it viable to move the business to Mexico, and we at least saved the jobs of the people who handled the transactions in the US, the sales staff involved, as well as some supervisory people who moved to Mexico to manage the factory. Had we not been able to move to Mexico, it all would have been gone and even more jobs would have been lost. And we provided, by local standards, very good paying jobs in Mexico, raising the standard of living of 300 people.

In the years since, we've refocused our other two US plants on high-end, innovative products that the Chinese can't compete with, and have actually grown the business so we now employ more people than we did before we had to close the facility in Alabama.

My story is not unique, NAFTA was the salvation for many businesses fighting Chinese competition in the 90s - it allowed us to save a commodity product line that was no longer viable (and still wouldn't be) while giving us the breathing room to refocus our efforts on innovation. Moves to Mexico were sometimes just for extra profit, but sometimes they were to keep businesses viable against Asian competition. So I'd say, while it may have been bad for some American workers, it also was good for some, and helped keep many businesses viable during difficult times.

Sorry for the long-winded comments, but this is a topic close to home for me. I'm proud to have run a company that is a competitive US manufacturer providing over 300 well-paying jobs with good benefits, able to compete on a world stage - but I also remember the business realities during the early days of NAFTA.

[cmarin]

Points well taken. One other point to consider about NAFTA is that the U.S. and Mexico have created a highly integrated manufacturing platform with shared supply chains - an extremely competitive advantage in the anti-globalization BREXIT environment.

A fact that underscores this integration is that Chinese imports into the U.S. have an average of 4% U.S. content. Whereas Mexican imports into the U.S. have an average of 40% U.S. content. Bottom line: Mexican imports create U.S. jobs throughout the U.S. and vice-a-versa.