Fortune (Ford) - There seems to be little doubt that unemployment is going to remain stubbornly high -- quite possibly for years to come. There's also mounting evidence that a good part of that unemployment is really structural in nature: The skills and capabilities of many experienced workers are simply no longer demanded by the market. In manufacturing and in many clerical and administrative occupations, computerization and automation have left many formerly middle-class workers with few viable career options. Is it possible that we're creating a future in which jobs are going to be harder and harder to create?
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The major reason we have a shortage of jobs is our trade deficit. If we balanced the deficit by importing fewer goods we would create about 5 million more manufacturing jobs and as many as 7 million more multiplier jobs. The timing is perfect, given the Chinese manufacturing wage increases of 24% to 100% reported on June 7. By reducing imports, we will achieve a much more sustainable recovery than by additional government spending. Rather than increasing debt, we will reduce spending and increase tax revenue.
ReplyDeleteThe NTMA (National Tooling and Machining Association), PMA (Precision Metalforming Association) and AMT (Association for Manufacturing Technology), just held a re-shoring Purchasing Fair in Irvine, CA. The next Fair will be in Mashantucket, CT on Oct 29. See http://tinyurl.com/y8lzb8c. Large companies bring out work that is now off-shored. Hundreds of attending U.S. shops then bid on the work. 64% of the large companies at the Irvine Fair brought work that was currently offshored.
A major reason for offshoring is faulty accounting of the comparative costs. To help the companies make better sourcing decisions we also made available the first draft of a TCO (Total Cost of Ownership) Estimator that helps the large companies perform the complex calculation of the real offshoring impact on their P&L.
I will be describing the Re-Shoring Initiative and the Estimator in a free 6/29 AME/APQC webinar: https://www1.gotomeeting.com/register/172212153
If your company now off-shores machining or tooling production, suggest to your Supply Chain Manager or Purchasing Dept. that they attend the Fair and request the TCO Estimator.
You can reach me at harry.moser@comcast.net
Harry Moser, Chairman Emeritus, Agie Charmilles LLC
Add onto that wage increase a rise in the value of the Yuan versus the dollar announced at the G-20 this weekend. US products will be less expensive in China and Chinese products will cost more in the US. Looks like it will weaken the dollar relative to the Euro as well.
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