Buck Up, America: China Is Getting Too Expensive

[dkf]

In the Great Game of global wage and cost arbitrage, bits of some rather surprising industries are drifting back to U.S. shores, and the pace could quicken. Furniture making—usually labor intensive and low-skilled—is just one shocker. On Tuesday Ford said it will build some auto parts in the U.S. that have traditionally been sourced in China. And there's more.

Currency hawks in Congress are this week promoting legislation to penalize China for manipulating the yuan. They might want to take note of this trend: The jobs they want to bring home may already be trickling back to the U.S.—emphasis on the trickle.

Bruce Cochrane is emblematic of the incipient shift. He's opening a furniture factory in Lincolnton, N.C., a rare event in a region and industry that have been walloped by outsourcing. Employment in U.S. furniture factories fell by 60% over the last decade.

Mr. Cochrane says furniture made in China and sold in the U.S. previously had a price advantage of up to 50%. That's often down to 10% to 15% now, in part because wages in China are soaring—up 15% or more a year in some locales. Shipping costs, he says, have doubled from a few years ago.

http://online.wsj.com/article/SB10001424052970204294504576615251485073540.html

[DJ13]

1. In the back of my mind I keep thinking this is just another

corporate shakedown scheme, one thats meant to force the Chinese government to pressure their industries to keep wages down.

[RegieRocker]

2. There is still cheap labor in the world, nothing for you to fear.

[dkf]

3. The price of oil will solve that. Shipping will get too expensive.

[FarCenter]

5. They will move more stuff to India, Philipines, and the rest of southeast asia

[RegieRocker]

6. Still plenty of areas south of the border.

Check out Paraiso for Sale on NPR.

[tsuki]

4. One of Son's best friends is getting married this week-end. I thought

that I would sew up something new, then decided to "treat" myself to a new store bought something, long and colorful.

I went to 4 stores, China, China, China and Vietnam. I have never seen clothes so poorly sewn, no darts, pucked facing, thin cotton (I could move the threads with my nail). And the prices, 88 for a top, 120 for a dress sewn as a box, cheap material.

I am to believe that a union worker cannot produce better for those prices?

I'm finishing my outfit tomorrow.

No Craptanista for me.

[xmas74]

12. The "in" thing for some is to totally

give up on purchasing new and to instead remake clothes from thrift shops. The quality and material is better than anything on the racks in the stores.

[Creideiki]

7. China's sitting on multiple bubbles, any one of which can pop and set off

the chain reaction leading to un-fun.

A housing bubble, a hidden financial bubble, an infrastructure/employment bubble...

And that's not even counting the food prices that will go even higher due to climate change-induced agricultural catastrophes.

[Kennah]

11. One wonders if the rupture of said bubbles would actually IMPROVE the U.S. economy ...

... when we're forced to start making shit again?

[X_Digger]

8. So is India.. but there are other cheap markets for labor..

Much of our previously India based offshore development is moving- to Argentina and the Dominican Republic.

[Dragonfli]

9. That's why they want three new "free trade" deals silly, they need more slave labor /nt

[FarLeftFist]

10. This is actually sad news.

[Initech]

13. I call it "virus economics"

It started with the US. Then it moved out of the US to Japan.

Then Japan got too expensive. Now it's moved to China and India.

Now China and India's too expensive. Soon it's gonna move to Thailand and Laos.

Then when Thailand and Laos get too expensive, it'll move to Uganda and Nairobi.

Then when those get too expensive they'll move to Ecuador and Peru.

And so on and so forth. Virus economics - destroying the world one country at a time.

[mistertrickster]

14. I lived in China in 1982. The official exchange rate was a ridiculously high

8 yuan to the dollar.

Now, almost 30 years later, the yuan is a ridiculously LOW 6.15 to the dollar.

It should be about 4 to the dollar, given the colossal trade deficit, but the Chinese keep buying American Treasuries to keep the dollar strong against the yuan.

They've been gaming the system for years, which is why Obama is putting the screws to them.

[JackDragna]

15. There's always Bangladesh!

RACE! RACE! RACE TO THE BOTTTOOOOM!