Heat Treat Industry News
May 05, 2008
NAM Reports Rising Costs Force Some U.S. Manufacturing Firms to Leave China, Survey Finds
The AFP (4/28) reported that "China is losing some of its attractiveness to foreign investors as rising costs are forcing some U.S. manufacturing firms to leave the country," according to a survey by the American Chamber of Commerce (AmCham). Factors cited in the decline included "price pressures from competition and major customers, rising salaries and wages, changes in raw material prices, tax expenses and real estate cost inflation." In addition, "'For manufacturers, the seemingly endless supply of low-cost unskilled labor may be approaching its limits,' Norwell Coquillard, chairman of AmCham in Shanghai," said. He also noted, "'The competitive labor market poses difficulties for export-oriented manufacturers, especially in low-margin sectors such as toys, garments and shoes." Instead, more manufacturers "are looking to India, Vietnam, and other places." But, despite the survey data, "companies still see China as a strategically important manufacturing base because of its domestic market potential." Reuters (4/28, Subler) also covered the story. In the coming years, a lot of factors could be lining themselves up to create more outsourced heat treating in North America including:
Rising Costs in China
Supply of Low Cost Labor Pools Drying Up
Slowing Economy in the U.S.
Manufacturer's Margins Getting Thinner and Need to Cut Costs
Less Output Means Less Capacity for In-House Heat Treating
These are just a few of the reasons there is optimism for heat treating in the coming years. It is important that every commercial heat treater keep their name in the manufacturing community and push themselves as a preferred source for outsourcing by increasing a manufacturer's productivity and lowering its cost.
Posted: 30 April 2008 - Metal Treating Institute website @
www.heattreatonline.com/newsInDetailHome.php?id=379
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