Made In China' and cheap go hand-in-hand. However, a slew of textile producers from the Asian behemoth are coming to America; to start afresh.A report from the New York Times over the weekend, highlighted the shift. China was once the symbol of mass manufacturing, pushed on by its low-cost production capabilities and immediate order turnarounds. However, textile production in China is becoming increasingly expensive after years of rising wages, higher energy bills and surging logistical costs, as well as new government quotas on the import of cotton. It's making the business unprofitable.According to the Boston Consulting Group, manufacturing wages adjusted for productivity have almost tripled in China over the last decade, to an estimated $12.47 an hour last year from $4.35 an hour in 2004.Across the pond, manufacturing costs in the United States are becoming more competitive.US manufacturing wages adjusted for productivity have risen less than 30% since 2004, to $22.32 an hour, according to the consulting firm. The higher wages for American workers are offset by lower natural gas prices, as well as inexpensive cotton and local tax breaks and subsidies.In 2015, for every $1 required to manufacture in the United States, it costs $0.96 to manufacture in China.And, China's yarn production costs some 30% higher than in the United States, according to the International Textile Manufacturers Federation.To make matters worse for the Chinese, the United States' planned Pacific trade agreement excludes China, driving Chinese fiber companies to physically enter the US market, for fear of being shut out.This is highlighted by a report published in May by the Rhodium Group, a New York research firm. It said that from 2000 to 2014, Chinese companies invested $46 billion on new projects and acquisitions in the United States, with much of it occurring in the last five years.One such investment comes from Keer. The Chinese cotton firm has invested $65 million to double the capacity of its 230,000-square-foot yarn-spinning facility in Lancaster County, South Carolina, which started shipping cotton yarn in February. Meanwhile, recycled polyester manufacturer JN Fibers, has invested some $669 million in South Carolina operations since 2000.“Everybody believed that China would always be cheaper,” said Harold L. Sirkin, a senior partner at Boston Consulting. “But things are changing even faster than anyone imagined.”
China's Textile Firms Coming To America
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August 4th, 2015
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