Beating China on price?
Will the Chinese equivalent of WalMart soon have to start importing cheaper U.S.-made consumer goods? I wouldn't bet on it quite yet, but a Boston Consulting Group study claims that we're closing the gap in manufacturing costs and might actually get cheaper than China within three years, mostly as a result of drastically reduced fuel costs, which is turn will be mostly because of drastically reduced fracking costs.
As the article notes, all other things being equal, American companies would prefer to eliminate the risk and delay inherent in shipping "cheap" goods here from halfway around the world. We have to get pretty uncompetitive before that starts making sense, but maybe we can innovate our way out of the jam. Or maybe the EPA will find a way to outlaw fracking, to keep us from doing anything competitive or unfair or harmful to Gaia.
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Huge differences depending on type of product...some have a cost structure which is vey sensitive to energy and/or petroleum & gas-based feedstock prices; others, not so much. I don't think electronics assembly, for example, is very sensitive to these costs; neither is apparel manufacturing (whereas the making of the underlying fabric *is* sensitive to energy (electricity) costs)
It'd be great to be able to out-compete a nation where costs of living are very low, standards of living are very low, safety standards and protections for workers essentially nonexistent, and wages provide no room for saving for retirement.
Actually, the savings rate in China is pretty high:
http://www.bloomberg.com/news/articles/2015-05-01/chinese-consumers-cling-to-saving-suppressing-spending
Well, "thirty percent of disposable income." What percentage of their income is disposable? The white collar example doesn't touch the reality of Chinese labor (which is what we're talking about trying to compete with here).
I do find it amusing that a lack of faith in the government is what is driving this virtuous behavior, though. If only we trusted our government less.
That doesn't sound good for China, but right now there's a lot that doesn't sound good for China. Grim, as bad as being a laborer in Chinas is, I'm pretty sure that on average, things are better for the Chinese laborer than they've been in a long time, maybe ever. It's a complicated place, but my grandparents, who had some political connections to the Nationalists, came to the point, before they passed, of thinking that the opening up of markets in China was the way we would win the long war- that it was the foot in the door and eventually, there would be too much invested to revert to some of the old ways. Hopefully, they saw things right. They sure did when they sent their kids here.
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