Manufacturing Saying Goodbye to China!

With rising labor costs, more factories are leaving for better locations in India and Vietnam.  In Shenzhen, sewing machines that made garments for Lever Style now collect dust. Activity on the factory floor has dropped over the past 2 years by 33% or 5,000 workers as lower labor regions emerge. Apparel manufacturing for the Japanese retail chain are shifting to Vietnam where wages are HALF of those in China.  It’s just a matter of survival they say. For the last decade and nearly 20% annual wage increases, the brands can no longer support the growing labor component. 

In 2012, Boston Consulting Group predicted that the most expensive regions of eastern China would see costs about on par with the least expensive regions of the US by the end of 2015, given wage rates and expected productivity levels.  The shift has started.

Sources:  Wall Street Journal, pg B1, May 1, 2013, New Study from Boston Consulting Finds China Manufacturing Cost Advantage Over US to Disappear by 2015. Supply Chain News: MIT, SCDigest Announce Major Research Project on US Manufacturing, Reshoring, June 12, 2012

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