Are US Manufacturers Reconsidering China Factories?

Kelly says, with China becoming a more industrialized nation the benefits of US manufacturers locating their factories there are dwindling.

U.S. COMPANY PULLS JOBS FROM CHINA

FROM JEROME CORSI'S RED ALERT
By Dr. Jerome Corsi
(c) 2010 RedAlert.WND.com

Business relocates positions to America

Milwaukee-based Master Lock has decided to relocate jobs out of China and back to the U.S., according to the Milwaukee Journal Sentinel.

This story is definitely in the category "man bites dog."

So many millions of U.S jobs have been outsourced to China that a report of yet another company closing a U.S. plant to open a plant in China is not considered news.

But when a U.S. company decides to bring jobs outsourced to China back home, that's something different.

Master Lock has added some three dozen jobs in Milwaukee, bringing its total factory head count to 379.

Still, at its peak in the 1990s, Master Lock employed 1,300 employees in Milwaukee, before the company began sending jobs to cheaper cost-of-labor markets in China and Mexico.

According to the report, Master Lock listed the following reasons for bring jobs home:

* Labor unrest in China has pushed wages higher in a nation that touted a supposedly inexhaustible supply of cheap workers. Thirty provinces have raised their minimum wages in 2010, some more than 20 percent.

* Beijing has engineered a 20 percent weakening of the dollar against the yuan in the last five years, bending to the demands of Washington, with the result that costs in China, including the cost of labor, have gone up dramatically.

* Shipping rates from Chinese ports have increased 400 percent in the 12 months that ended in August, to their highest levels in maritime history, according to Universal Cargo Management Inc. in Los Angeles.

"No one suggests that America is on the brink of a manufacturing renaissance, or that the reverse flow of jobs is anything but a trickle," Schmit wrote. "But the jobs that flow against the tide reflect a slight but hopeful tilt in the trade equilibrium."

What's the problem with China?

China is running out of a rural migrant poor labor force to exploit with low wages, long hours and barely acceptable working conditions.

Even worse, workers trapped in low-paying jobs are beginning to show signs of being unwilling to continue, without changes that will cost Chinese employers dearly.

"The favorable demographics that have supplied manpower for economic growth are changing," wrote Andrew Batson and Bob Davis in the Wall Street Journal last summer. "China's working-age population, age 15 to 64, has grown continuously. But partly because most families are limited to one child, growth of this working population is slowing, according to the United Nations."

The United Nations projects that the Chinese labor pool will peak in 2015.

The Wall Street Journal reported that China's second-quarter gross domestic product grew 10.3 percent from a year earlier, down from the 11.9 percent growth of posted in the first quarter.

"No country grows at 8 percent to 10 percent indefinitely," Dwight Perkins, a Harvard University economist told the Wall Street Journal. "In all countries, that growth rate comes to an end."

Plagued by suicides and strikes

Increasingly, reports from China indicate that labor unrest that began in China's industrial heartland in the south is spreading throughout China, creating a difficult new challenge for Beijing.

"The spate of strikes and suicides that have rocked China's southern manufacturing belt over the last fortnight could well go down as the moment China stopped being a place of endless cheap labor," wrote Geoff Dyer in the Financial Times.

Last year, China was rocked by a spate of suicides at a Foxconn electronics plant in Shenzhen in southern China.

Foxconn employs between 300,000 to 400,000 workers in 12-hour shifts assembling iPads for Apple, plus cell phones, computers and a wide range of other computer devices for Sony, Dell, Hewlett Packard and Nokia.

Equally defining is a strike of Honda workers at a 1,800-strong employee plant in Foshan, a factory town in the southern Guangdong province that manufactures transmissions for the Japanese carmaker.

Production last week remained stalled at the Honda components factory, despite a 24 percent wage increase offer that would have increased the average monthly salaries at the factory to $280 a month.

The Honda workers, pressing for a 30 percent wage increase, rejected the offer, deciding instead to continue their strike.

"Strikes at large multinational companies are rare in China, where independent union activity is usually suppressed by the government," reporters Tom Mitchell and Jonathan Soble noted in the Financial Times.

"The years of an endless supply of cheap labor, on which the first three decades of China's economic lift-off was built, are coming to an end," David Pilling wrote in the Financial Times. "That is partly demographic. Because of China's one-child policy, the supply of workers under 40 has dwindled by as much as a fifth. Fewer workers mean more bargaining power."

ABOUT THE AUTHOR: Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972. He is the author of the #1 New York Times bestselling books THE OBAMA NATION: LEFTIST POLITICS AND THE CULT OF PERSONALITY and the co-author of UNFIT FOR COMMAND: SWIFT BOAT VETERANS SPEAK OUT AGAINST JOHN KERRY. He is also the author of AMERICA FOR SALE, THE LATE GREAT U.S.A., and WHY ISRAEL CAN'T WAIT. Currently, Dr. Corsi is a Senior Managing Director in the Financial Services Group at Gilford Securities as well as a senior staff writer for WorldNetDaily.com.

ABOUT GILFORD SECURITIES: Gilford Securities, founded in 1979, is a full-service boutique investment firm headquartered in New York City providing an array of financial services to institutional and retail clients. From investment banking and equity research to retirement planning and wealth management services, our financial experts are prepared to accommodate the needs of investors. For more information about Gilford Securities please visit, Click Here: http://www.gilfordsecurities.com/financial-services-group.php

The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect Gilford Securities Incorporated's views, opinions, positions or strategies. Gilford Securities Incorporated makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information expressed herein  and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.

ABOUT RED ALERT: Jerome Corsi's RED ALERT is your weekly, global financial strategies newsletter. Designed to be your guide to economic trends in the best of times and the worst of times, it is edited by New York Times best-selling author Jerome Corsi, Senior Managing Director of the Financial Services Group at Gilford Securities as well as a WND senior staff writer and columnist. For 25 years, Corsi worked with banks throughout the U.S. and the world developing financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. Corsi developed three third-party financial services marketing firms that reached annual gross sales levels of $1 billion in annuities and equal volume in mutual funds. Corsi received his Ph.D. in political science from Harvard University in 1972.