Harry Moser, an expert in manufacturing and founder of the Reshoring Initiative, discusses why companies are leaving China and the trend of reshoring manufacturing jobs. They talk about challenges faced by US companies in China, strategies for encouraging reshoring, and the consequences of leaving China. The decline of US manufacturing jobs and the importance of a strong manufacturing base are also emphasized.
Manufacturing jobs moving out of China are going to other countries like Vietnam, Mexico, and India.
Skilled workforce and vocational training are essential for reshoring efforts and improving the competitiveness of US manufacturing.
Calculating the total cost of ownership, including factors like duty, freight, inventory carrying cost, and intellectual property risk, makes manufacturing in the US more competitive than in China.
Deep dives
The decline of US manufacturing and its impact on the economy
The podcast explores the decline of US manufacturing and its impact on the economy. The US has seen a significant decline in manufacturing jobs, losing about 2 million jobs to China out of a total 6 million. This trade deficit with China has weakened the US economy, reduced tax revenue, and affected defense capabilities. The podcast highlights the misconception that service jobs are superior to manufacturing jobs, emphasizing that manufacturing jobs pay better and provide stability. The loss of manufacturing jobs also leads to a drain on tax revenue and weakens the country's industrial capacity.
The importance of a skilled workforce in reshoring efforts
The podcast emphasizes the importance of a skilled workforce in reshoring efforts. It suggests redirecting resources towards apprenticeship programs and vocational training to provide the necessary skills for manufacturing jobs. This can help increase output and productivity, as well as improve income equality. The goal is to have more well-trained workers who can operate modern equipment efficiently, boosting the competitiveness of US manufacturing.
The cost competitiveness of manufacturing in China
The podcast discusses the cost competitiveness of manufacturing in China. It explains that Chinese wages are significantly lower than in the US, allowing them to produce goods at about 70% of the cost of US manufacturing. This price difference, combined with China's investment in newer factories and automation, has attracted companies to manufacture in China. However, the podcast suggests a different approach for calculating total cost of ownership, taking into account factors such as duty, freight, inventory carrying cost, and intellectual property risk. When these factors are considered, manufacturing in the US becomes more competitive.
The risks of relying on China for manufacturing
The podcast highlights the risks associated with relying on China for manufacturing. It discusses the geopolitical risk and the fear of decoupling from China, as seen with previous conflicts and tensions. Companies are increasingly concerned about relying on China for critical components, especially with regards to national defense and healthcare. The podcast presents data on the probability of decoupling with China and the need for companies to consider the risks and additional costs associated with a potential supply chain disruption.
The role of the US government in reshoring efforts
The podcast discusses the role of the US government in reshoring efforts. While subsidies and incentives are currently being provided for specific industries, the podcast argues for a broader approach to make manufacturing more price competitive overall. It suggests redirecting resources from university education to vocational training and promoting apprenticeship programs. Additionally, the podcast advocates for reducing the value of the US dollar to make US manufacturing more competitive in the global market. The goal is to stabilize and strengthen the US economy by supporting domestic manufacturing and reducing dependence on China.
Manufacturing has slowly been leaving China as companies re-evaluate the profitability of the country and weigh the risks of remaining in China versus the benefits. Some of that manufacturing is moving back to the US, but it's also moving to other countries like Vietnam, Mexico and India. In this episode of China Unscripted, we talk about all the reasons companies are moving out, what the US can do to speed up the trend and whether making everything in the US would cause massive and long-term inflation. Joining us in this episode is Harry Moser, the founder and President of Reshoring Initiative, which aims to bring manufacturing jobs back to the United States from overseas.
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