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 âjust lookingâ 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 âdoing businessâ is being fed by the continuing parade of OEMs coming to China seeking the well-known cost savings, plus the less-credited speedâfor 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 weâre 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 donât 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), âThe real cost of offshoring,â suggests the answer may be in the way one statistic hasnât 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, BusinessWeekâs 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 ainât happening here. Itâs 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, itâs worth a read. Whether you read it or not, please check out this monthâs Plant Tour starting on p. 16. Youâll 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|