Courtesy of Reshoring Initiative | Reshoring Initiative (reshorenow.org)

August 2023 E-News: China Manufacturing Dwindles as U.S. Gains

A systemic U.S. shift away from globalization in general and China in particular.

Developments Propel Shift Out of China

China approves sweeping expansion of anti-espionage law.

A new foreign policy law provides a clearer legal premise for China to take “countermeasures” against Western actions it deems as threatening its national and economic security, adding to the already heightened and murky risks of doing business in China. From Washington, the National Counterintelligence and Security Center is warning businesses of Beijing’s increasing power over, and control of, U.S. companies with operations in China. See also the CNBC documentary China’s Corporate Spy War.

It’s Getting Riskier to Do Business in China

The WSJ writes that Western companies may find their capital and people trapped if Beijing starts a war over Taiwan.

U.S. recommends Americans reconsider traveling to China due to arbitrary law enforcement and exit bans.

China’s Aging Population Is a Major Concern. But Its Youth May Be an Even Bigger Problem

There are not enough laborers and too many highly educated workers with no jobs. RI comment: In the U.S. about 30% of university degree holders are in jobs that do not require a degree while we have shortages of manufacturing workforce.

China’s $23 Trillion Local Debt Mess Is About to Get Worse

The massive debt implies an inevitable slowing of economic growth.

Where are China’s exports going?

Less and less to the U.S., the latest trade data confirms.

Xi Jinping Chokes Off Crucial Engine of China’s Economy

Very good article on the collapse in foreign direct investment (FDI).

Germany adopts its first comprehensive Strategy on China

“China’s economic strategy aims to make it less dependent on other countries while making international production chains more dependent on China.” Recognizing that asymmetry is step one. Step two is devising a plan to counter it. RI comment: Our Competitiveness Toolkit will counter China and strengthen the U.S.

Supply Chain 

Why It Seems Everything We Knew About the Global Economy Is No Longer True

RI comment: The title ought to be, Much of What We Knew About the Global Economy Was Never True. The NYT author understates how wrong her publication and most experts have been. She and most commentators refer to globalization as providing efficiency. This description is not correct and never was. Globalization reduced costs. Supplying the U.S. from Asia actually increased: energy/fuel usage; effort since productivity was lower; inventories; waste due to overstocking at retail; pollution, etc. If measured correctly, globalization often did not even reduce cost.  Companies that source based on Total Cost of Ownership (TCO) find that 20 to 30% of what they import can be sourced here with equal or greater profitability and much lower risk. The U.S. and companies have made excellent progress, increasing the number of reshoring jobs announced from 6,000/year in 2010 to a projected 390k/year in 2023.

Widespread Lean Adoption Would Make the US More Competitive

Doug Berger explains why raising individual company productivity is essential to revitalizing U.S. manufacturing.

Reduced risk, regionalization become supply chain priorities, economics expert says

Historic decarbonization deal could inflate future shipping rates

“Methanol is triple the price of very low sulfur fuel oil, said Hapag-Lloyd. Consultancy Drewry estimated that a switch to “green” methanol — methanol produced from biomass or by other means to reach carbon neutrality on a well-to-wake basis — would increase fuel costs by 350%”

Why are Companies Moving Back Home? An investigation into the drivers of location choice in the European apparel industry

RI comment: Relevant to U.S. reshoring. Europe seems to have offshored somewhat less than the U.S. and has maintained more industry capacity. Cost is a driving factor in offshoring as in the U.S.

3 major companies trying to move supply chains out of China, and how they’re faring in their attempts to move away from the factory of the world

Apple, TSMC and Mazda

Survey: Nearshoring to Mexico happening ‘faster than expected’

“While 88% of SMBs (small to medium businesses) plan to switch at least some of their suppliers to ones either in the U.S. or close by, 45% plan to switch all of them.”

Three-quarters of US SMEs ‘looking to nearshore suppliers’

Small and mid-sized businesses are looking to nearshore their supply chains to increase efficiency and improve sustainability, according to a survey by Capterra. RI comment: In this survey “nearshoring” includes bringing work to a near shore and to the U.S.

More Reshoring News

Hiking and fishing with other Camp Kotok guests …for those who think Harry only works!

 See our contribution to David Kotok’s discussion on the national debt ceiling debate here.

Chip Fabs Are Springing Up Nationwide. The Next Step? Boosting Printed Circuit Board Production

RI has been strongly advocating this for a year. No sense in making huge numbers of chips if we do not assemble the products that use the chips. We do not want to depend on China as our chip customer.

Inflation remains high in most of world as it cools in the U.S.

The annual rate of U.S. inflation — the increase in the Consumer Price Index —is at 3%  from June 2022 to June 2023. It’s the lowest inflation we’ve seen since the spring of 2021. 8.7%, 6.4% and 4.8% are the latest annual inflation rates for the U.K., Germany and India, respectively. The U.S. has now gotten ahead of much of the world in fighting inflation. Combined with the USD down 8% from its 2022 high, this makes us more competitive.

Senators Baldwin, Vance Introduce Bipartisan Bill to Ensure Taxpayer-Funded Inventions Are Made in America

Green Energy Is Helping Drive U.S. Industrial Real-Estate Growth

Manufacturers of electric vehicles and parts are leasing more space as e-commerce pulls back from its rapid expansion during the pandemic.

More governors are saying ‘no college, no problem’ to job-seekers

Government employers are looking “at the broader phenomenon of what supporters call “skills-based” hiring — essentially deciding that work experience or life experience can substitute for a diploma — for government jobs,” a trend that will further expand opportunities for vocational workers.

‘American Made’ T-Shirts Are Having Their Best Year Yet

Good article on US apparel.

World Robotics Report: “All-Time High” with Half a Million Robots Installed in One Year

Automation equipment companies are expected to be the other big winner from a North American manufacturing revival as their technologies are what make the economics of such a shift work, but growth in robot installations in the U.S. in 2021 was a fraction of the pace seen in China and also trailed Japan and the combined European market, according to the International Federation of Robotics.

Why is America running short of cancer drugs?

The problem is rooted in America’s overreliance on foreign suppliers, Tinglong Dai and Christopher S. Tang wrote, “Either we take steps to phase out our reliance on foreign manufacturers, or the FDA needs to step up its quality inspections.” Nearly 3,000 foreign factories provide most of America’s pharmaceuticals, but the FDA inspected just 6% of them in 2022. That means crises like the cancer drug shortage are always lurking. “This is a glaring failure hidden in plain sight.”  RI comment: The risk the U.S. faces along with the loss of manufacturing jobs is especially galling given that the U.S. price for pharmaceuticals is twice the price of other developed countries. Americans pay for the worldwide industry’s research and profit and then do not get the manufacturing jobs and dependable supply.

Reshoring Initiative Aug 2023 News