04.05.11
Race you to the bottom of the slave labor market
Alert reader C. tips the blog to a manufacturing story on China. Even that country’s workers may slowly get the ‘benefits’ of being serfs for US masters of the universe.
When millions of workers didn’t return to their southern China factory jobs after Lunar New Year holidays, a turning point was reached for foreign manufacturers scraping by with slim profit margins.
Companies were already under pressure from rising raw material costs, restive workers and lower payments for exports because of a stronger Chinese currency. Despite hiking wages, labor shortages kept getting worse as workers increasingly spurned the often repetitive and unskilled jobs that helped earn China its reputation as the world’s low-cost factory floor.
At one of those factories in an industrial suburb of the southern Chinese city of Guangzhou, a worker uses a sewing machine to stitch together black padding for an orthopedic foot brace. Across the aisle from her, others snip loose threads off disposable cushions for operating tables.
At the end of the shop floor, a young woman glues velcro squares to an elastic strip used to hold an ice bag over an injured leg, churning one out every few seconds using a large machine press.
Later this year, these jobs will be gone as Guangzhou Fortunique’s American owner, Charles Hubbs, moves a large chunk of production to Southeast Asia.
“I don’t know of any factory in China that can absorb both the raw material prices we have, the labor issues we’ve been looking at and the renminbi,” China’s strengthening currency, said Hubbs. The currency is also known as the yuan.
He’s joining a wave of export manufacturers, big and small, that are moving from China’s coastal manufacturing regions to cheaper inland provinces or out of the country altogether, in a clear sign that southern China’s days as a low-cost manufacturing powerhouse are numbered.
Seems that making cheap stuff in China for a pittance for the crumbling middle class on food stamps in the US sucks also for a lot of Chinese workers.
Never fear! American businessmen move their offshore manufacturing to the poorer and more desperate Chinese interior.
Even the makers of Apple master-of-all-music-and-phone kit are looking for better sweat shops:
Foxconn Technology Group — the world’s biggest contract electronics manufacturer with customers including Apple Inc., Sony Corp. and Hewlett-Packard Co. — is planning to gradually cut its workforce of 400,000 in the southern Chinese city of Shenzhen by a quarter and move the bulk of manufacturing inland.
The article concludes really cheap labor in China is slowly becoming less cheap. In ten year or more, the country’s competitive advantage here, it alleges, will be gone.
Long before that the US economy will have been permanently wrecked.
“Could it be that the thrill is gone?” asks reader C., perhaps rhetorically.