Work is shifting out of China: The Wall Street Journal reports, “For many U.S. companies, the decision to move manufacturing elsewhere was the right move even before the latest trade squabble.” So far, most of the shifts are to Southeast Asia, India and Mexico. Now is the time for the U.S. to level the playing field and for U.S. suppliers to up their game and win more of the work - before more work settles into low-labor-cost countries.
The impending worker shortage in China is almost here and it will drive labor prices higher, adding to the total cost of producing in China. From Stratfor Worldview: “Chinese society is on the verge of a structural transformation even more profound than the long and painful project of economic rebalancing…” See the compelling implications on our blog.
Shipping costs expected to rise: The International Maritime Organization plans to enforce reduced emissions, costing the shipping industry an estimated $60 billion/year.
The dollar is the strongest it’s been in 30 years. The price of Big Macs in different countries is used by The Economist as a lighthearted barometer of the dollar’s strength. The high dollar is a major driver of the trade deficit. The U.S. can become more competitive by pursuing a moderately lower dollar.
SelectUSA will expand from its traditional role in FDI (foreign direct investment) to work with U.S. companies looking to expand in or bring operations back to the United States. Commerce Under Secretary for International Trade Gil Kaplan made the announcement. Services will include:
- Counseling, customized research, and data reports
- Assistance to firms in understanding and navigating applicable regulatory frameworks
- Connections between firms, local leaders and economic developers
- High-level advocacy from the U.S. government
Are Reshoring Initiatives Working? An informal online poll by Trade & Industry Development magazine shows that only 16% of respondents believe that reshoring is not or will not happen.
Tariffs are working so far:
- Economic Policy Institute reports that “aluminum tariffs have led to a strong recovery in employment, production, and investment in primary aluminum and downstream industries,” and have not impacted jobs in aluminum-using industries.
- Coalition for a Prosperous America reports that primary steel and aluminum industries have added or announced at least 11,000 jobs.
- The Reshoring Initiative does not recommend narrow tariffs for fixing the trade deficit but is pleased to see these preliminary results.
Win the National Metalworking Reshoring Award! Deadline to apply is Feb. 20, 2019.