Labor costs are one of the primary factors in attracting manufacturing companies to a particular region. For years, China has enjoyed substantial manufacturing prosperity as a direct result of low labor costs and high demand for tech products from across the globe.
But now the resulting growth has also contributed to labor unrest, and that means China may not be quite the prospective manufacturing location that it’s been, especially as more companies are looking for reliable, high output, low cost production of all manner of consumer electronics and other tech products.
This has lead many to wonder which nation could potentially take China’s place. Could it be the U.S.?
The U.S. Remains Prospective
According to findings from the Boston Consulting Group, more than half of the surveyed manufacturing executives were considering reshoring their production facilities back to the U.S. in 2014. While many low cost manufacturers have already left China, they’ve been more likely to relocate to the Middle East and Africa.
Considering how labor makes up a greater percentage of costs for manufacturers in the apparel industry and other low capital producers, China’s rising wages have served as a loud call to move to still-lower labor cost countries. Bangladesh and Laos have recently given China considerable competition in such cases.
A Mixed Blessing For The Eastern Hub
When it comes to tech products, however, China’s electricity infrastructure—which has increased in both reliability and cost—how shown to be a mixed blessing for the global hub. While dependable power is an essential when it comes to the manufacture of various electronic goods, high costs for tapping it won’t attract or keep many producers.
It’s also been observed that tech manufacturers will be more likely to prioritize diversification of resources and tighter supply chains than low cost labor.
Who Will Recapture Tech Manufacturing?
With a renewing consumer market, low power costs, skilled work force, and steady wage rates, the U.S. may give China a run for it’s manufacturing money. However, there is stiff and growing competition from Mexico and South America, where Western manufacturing hubs are increasingly starting to emerge.
Will they take they become the future home of the valuable tech market? It’s important not to discount China just yet, as reshoring or relocating can be a challenging and costly process. Additionally, China’s growing middle class and subsequent consumer spending may give some manufacturers a reason to remain close to their new market.
What are your thoughts on China’s slipping manufacturing status? Despite the less than favorable factors for attracting and retaining manufacturers, do you think they will hold on to their global manufacturing lead for long? Will reshoring continue to make a difference for the U.S.? Share your thoughts in the comments.
Article Sources:
http://fortune.com
http://www.wsj.com
http://www.cnbc.com
http://www.plasticstoday.com
