Manufacturing in 2050 (Ia)

choi

Likely Wall Street Journal (WSJ) will not translate these articles, in a series titled "2050 Demographic Destiny; A multimedia series on how we will age and how we will live in the coming decades."

(1) Kathy Chu and Bob Davis, A Nation of 1.4 Billion Faces a Labor Shortage. WSJ, Nov 24, 2015 (front page).
http://www.wsj.com/articles/as-c ... rnatives-1448293942

Quote:

"The end of very cheap labor in China is giving a push to these advances in technology [such as automation], which will make China less central to global manufacturing. But changing consumer tastes [fast fashion]—enabled by the same technological change—are diminishing China’s role too.

"Examining the choices faced by Levi, whose history traces the course of globalization, provides a window into the challenges and opportunities presented by China’s demographic transition. The 162-year-old company ]1853- ; based in San Francisco] manufactured solely in the US until the 1960s * * * Levi first began production overseas in Hong Kong in 1966. * * * During the early 1980s, demand for jeans declined * * * In 1986, Levi started to shift its production to China. * * * [comeback:] Levi’s revenue has grown each of the past two years, reaching $4.75 billion in fiscal 2014, but pales compared with the company’s $7.1 billion in revenue at its peak in 1996.

"China’s rise to the world’s No 2 economy relied on a huge increase in the country’s working-age population, which expanded by 380 million people between 1980 and 2015. In one of history’s greatest migrations, hundreds of millions of rural Chinese headed for cities for manufacturing jobs * * * China’s foreign shipments rose about 6,700% between 1980 and 2007, when China surpassed the US as the world’s largest exporter. Manufacturers who had been automating US and European factories to shave labor costs stopped once they set up in China. 'Machines couldn’t compete,' says David Love, a Levi executive vice president. As late as 2002, Chinese labor costs were just 60 cents an hour [see next quotation for current level], according to the Conference Board, a business research group.  But China’s working-age population recently peaked * * * By 2050, the working-age population will decline by 212 million [compared to 2015?] , estimates the United Nations—roughly as many people as live in Brazil, the world’s fifth most-populous nation

"Already, China’s rising labor costs—now $14.60 an hour [a footnote with the graphic says, 'Including wages and benefits'] on China’s coast, adjusted for productivity, compared with $22.68 an hour in the U.S., according to the Boston Consulting Group—have diminished China’s competitiveness. Adding energy costs, China is now a more expensive place to manufacture than Indonesia, Thailand, Mexico and India, says BCG.

Note:
(a) "In an apparel factory in Zhongshan  广东省中山市 * * * lasers are replacing dozens of workers who scrub Levi’s blue jeans with sandpaper to give them the worn look that American consumers find stylish."
(b) "Andrew LO 罗 正亮, chief executive of Crystal Group [晶苑集團; 1970- ; based in Hong Kong], one of Levi’s major suppliers in China.
(c) "Roger Lee, the chief executive of Hong Kong’s TAL Group TAL集團 [from 'Textile Alliance Limited'/ includes a subsidiary: TAL Apparel Ltd 聯業製衣有限公司], which makes 1 of every 6 dress shirts sold in the US for brands from Banana Republic to Brooks Brothers."
(d) "In Nansha 广州市南沙区, a manufacturing hub 30 miles north of Zhongshan"
(e) "These days in hilly, arid Torreon, Mexico, Apparel International Inc. is counting on China’s shrinking working-age population and rising wages to gain an edge. Fifteen years ago, the big jeans maker halved its workforce of 6,000 because it couldn’t compete with China. Now it is modernizing aggressively."

Torreón
https://en.wikipedia.org/wiki/Torreón
(f) Regarding the last quotation and the accompanying graphic-- the only graphic in print (as opposed to online). Some nations including Japan have experienced DECREASING labor costs per hour (2015 v 2000), but Taiwan is the worst (in this graphic).