Only a fool

By   via   Article

The Chinese Jig Is Up

“…study from the Boston Consulting Group about the shifting and current costs of global manufacturing.  Among its conclusions:

The gap between China and the U.S. in overall manufacturing cost – before transportation – is less than 5 points today.’

Put another way, only a fool would manufacture in China unless they plan to sell the output of their production in China.  “Before transportation” is huge.  Even larger are the enormous wastes resulting from China lead times. …

The author of the study summarized it in BusinessWeek, including ‘As Chinese labor costs rise, American productivity improves, and U.S. energy expenses fall, the difference in manufacturing costs between China and the U.S. has narrowed to such a degree that it’s almost negligible. For every dollar required to manufacture in the U.S., it now costs 96¢ to manufacture in China, before considering the cost of transportation to the U.S. and other factors. For many companies, that’s hardly worth it when product quality, intellectual property rights, and long-distance supply chain issues are added to the equation.’

… Taking on the risk of third world manufacturing and exposing the company to the sorts of risks that await them, rather than thoroughly learning and embracing lean principles and going after that non-value adding waste is just plain silly.  Manufacturing as close to the customer as you can, with the greatest value adding cost structure you can create is the universal formula for success.  There is more to it than that, of course, but producing far from the customer focused only on labor cost is a fool’s game, and the BCG study is serving to expose quite a few fools who went all in on China.”


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