The June 30th edition of Business Week Magazine (BW) featured a well written article titled Can The U.S. Bring Jobs Back From China?. My reaction to this article was a sense of anger. This anger is not directed toward this article or its author, but that it is yet another evidence point that exposes an obvious lack of concerted action by our collective industry, government, and other influential leaders to both acknowledge that the U.S. needs to have a comprehensive global competitiveness strategy and actually put the components of a strategy into place. While Supply Chain Matters is not a forum of political commentary, please indulge me.
The BW article literally challenges readers to ponder certain facts that are driving obvious strategic shifts for sourcing manufacturing in China:
- Since 2002, the value of the U.S. dollar has plunged 30% against China’s yuan, as well as other foreign currencies.
- Labor rates within China itself are rising 10-15% per year.
- The current high transportation costs to move containers of goods from China to fulfill consumer needs in the U.S. has soared by 150% since 2000, with an example cost of $5500 to ship a container from Shanghai to San Diego.
But, as U.S., European and other manufacturers continue to explore alternative options for moving certain high value or other innovative product production into the U.S. to compete more cost effectively in servicing U.S. customer needs, they discover that there is no effective supply chain infrastructure to support such an effort. Examples of metal foundry, furniture, household appliances and batteries are all brought to light. As the author points out, while U.S. manufacturers were tightening their belts through elimination of their U.S. domestic supply chain infrastructure and capital equipment, companies in China and other regions continued to invest in process, more modern logistics infrastructure and manufacturing productivity. Now some would argue that the U.S. does have competitive manufacturing and supply chain capabilities, but in my view, the key question is whether that capability came from U.S. or foreign investment.
The article in the printed magazine edition includes an insert that outlines the various views on the issue of restoring U.S. manufacturing jobs from the two presumptive U.S. presidential nominees. I submit that as a nation, we need to demand much more from our political and business leaders, including a comprehensive strategy with far reaching initiatives that will place the U.S. in the game for long-term global manufacturing and supply chain competitiveness. Here’s my starter list:
- Identify the key strategic industries that are essential to long-term U.S. competitiveness. This can include areas such as alternative energy, green-based energy, aerospace, biotechnology and other key growth industries. China performs this exercise in each of its five year plans.
- Invest in private and public R&D that continues to place the U.S. on the leading-edge of innovation in these strategic industries.
- Find a comprehensive solution for delivering quality healthcare for all citizens that also places U.S. employers in the game for global cost competitiveness
- Provide incentives for insuring that technological capabilities are nurtured and developed by U.S. based suppliers.
- Identify a prioritized set of initiatives to insure a competitive and vibrant U.S. transportation infrastructure. This should include identifying what will be the core infrastructure for transporting both production goods as well as people, along with investing in required changes. Political leaders need to move beyond partisan politics, and determine the priority of new roads, expanded high-speed rail, ports, or air travel as the key infrastructure needs.
- Re-skill the current workforce as needed to insure that U.S. manufacturing has an ample supply of qualified workers in key strategic industries.
Sound easy? Absolutely not! But the most important takeaway for each reader is to join me and demand more accountability in our leaders to recognize the obvious fact that the U.S. needs a comprehensive strategy for U.S. competitiveness.
Call or email your U.S. Congressmen, Senator, or presidential candidate and demand action beyond rhetoric, and get yourself into the game while there is still a game.