Setup: The global plastics business shift goes on

We don’t go to Chinaplas expecting to see much in the way of new technology. For that we go to the K show in Germany and Chicago’s NPE. Chinaplas is a must, however, for taking the pulse of the global shifts in the plastics molding business that impact us all.

Now and then we hear that the transfer of molding, moldmaking, and molding-associated production to China and other low-cost countries may be leveling off, or at least cooling. If Chinaplas is a leading indicator, that looks like wishful thinking. The pulse is strong. Traffic in the show aisles is dense, and exhibitors say the “just looking” types are few. A part drawing lying on a table surrounded by serious-looking people is a common sight around the halls.

The high level of “doing business” is being fed by the continuing parade of OEMs coming to China seeking the well-known cost savings, plus the less-credited speed—for the first time. Since the established China players are also busy, these newbies, or more accurately, their projects, send local suppliers out looking for technology and, more importantly, for the connections they need to amplify their own supply chains to handle the load.

But we’re OK. Right?

For many years after a spirit-squelching Economics 101 course, I could not conceive of that subject as interesting. Then I discovered it was vital. But I keep my economics simple now, avoiding abstruse, convoluted theories in favor of who gets what and why. Some things just don’t make sense, even if the stats say they do.

A good example: Why, given that U.S. factories have closed by the hundreds as manufacturing moves to Mexico and China, does the U.S. economy continue to grow and, more specifically, why have U.S. productivity figures risen as production has left the country?

The productivity question truly bugged me. The cover story in the June 18, 2007 issue of BusinessWeek (European edition), “The real cost of offshoring,” suggests the answer may be in the way one statistic hasn’t kept up with the times.

Citing a soon-to-be-published paper by Susan N. Houseman, an economist at the W.E. Upjohn Institute for Employment Research, BusinessWeek’s Michael Mandel explains that many cost cuts and, get this, product innovations made overseas by global companies and their foreign suppliers are counted as improvements in U.S. productivity.

But it ain’t happening here. It’s happening over there. This means that domestic productivity gains, and thus the overall economy, are being overstated. Those saying that things are worse than they appear may be right this time.

The BusinessWeek article stresses that much of this is yet to be verified, but even so, it’s worth a read. Whether you read it or not, please check out this month’s Plant Tour starting on p. 16. You’ll see one U.S. molder that is doing well, in one sense against the odds, but in another more important sense by using the latest tools to excel at the basics and add value.

Rob Neilley, Editor [email protected]