Plans reflect shift in global manufacturing, its costs
Sunday, October 7, 2012
Experts say the possibility of expansion at Kyocera Industrial Ceramics Corp. reflects a new paradigm taking place in global manufacturing that starts with shrinking cost differences between production in China and the U.S.
That shift, as well as rising global consumer spending, are expected to increase the demand for components made by Kyocera Industrial Ceramics, which supplies unnamed technology companies, President David Williams said.
He stressed the parts being made are for manufacturing equipment, not household items.
"But you would be shocked at the number of ceramic components in your house," Williams said.
The parts tolerate much higher temperatures than those tolerated by metal components.
"Ceramic is a miracle material," said Pat Cotter, the company's Vancouver-based vice president of administration. "It's incredibly strong and can do a wide range of things in various high-tech applications."
Analysts expect more U.S. plants will produce high-tech components, as the cost of everything -- from shipping and storage costs to protection of intellectual property -- continue to rise. Couple the issues with China's rising wages and the global economy is starting to shift, said Harry Moser, president and founder of the Reshoring Initiative, a nonprofit based in Kildeer, Ill.
He said approximately 50,000 manufacturing jobs have been "reshored," or production moved to the U.S., since January 2010. That's because a few "tipping point" industries have discovered it's cheaper, when weighed against wages in China that are rising at about 15 percent annually, Moser said.
By comparison, Moser said U.S. wages increased by between 2 percent and 3 percent a year.
"There are a lot of products that it makes more sense to make here," said Moser, whose nonprofit analyzes and measures cost differences between offshoring and reshoring for private companies. The trade association-supported group's goal is to get those firms to stay in the U.S., Moser said.
He said it's beginning to happen, and cited China-based Lenovo as an example. The former IBM company this month announced plans to start a computer-assembly facility in North Carolina. It would be the first company in this generation to build computers in the U.S.
Other companies only bring a small portion of their operations back to the U.S., said Joe Cote, a marketing professor at Washington State University Vancouver.
"It gives them better control over the processes and better control over shipping," he said.
He said high unemployment is driving U.S. labor costs to become more competitive, which could eventually create a higher standard of living in China.
"As the dollar gets weaker, that means their currency can buy more," he said. "It can buy a lot more American labor."