Monday, May 7, 2012

Chemical manufacturing "reshoring"?

In this week's Chemical and Engineering News, an article by Michael McCoy about a Boston Consulting Group survey of executives showing that they're thinking about bringing production back to the United States from overseas:
In 2000, they found, Chinese factory workers earned a mere 3% of their U.S. counterparts’ wages. But by 2015, workers in China’s main high-tech manufacturing region will be earning around 25% of what U.S. workers earn in low-cost states. Take much higher U.S. worker productivity into account, and Chinese labor costs are 60% or more of U.S. costs, BCG calculates. 
The industries closest to the “tipping point” for moving back to the U.S. include rubber and plastic goods, industrial machinery, and electrical equipment. The chemical industry isn’t considered close to returning mostly because, Lanxess aside, it didn’t move offshore to an appreciable extent. (emphasis CJ's)
Still, reshoring is likely to benefit the U.S. chemical industry. Although BCG has yet to dig into the secondary effects of reshoring, Zinser tells C&EN that the return of chemical-consuming companies to U.S. shores should work to the industry’s benefit. “For the same reasons that we are seeing the tipping point, someday these companies may be looking for the cost advantage of suppliers that are close to home,” he says.
I'm kind of stunned at the statement about chemical manufacturing not moving offshore. Something happened to lose 200,000 jobs over the last ten years (2000-2010) in chemical manufacturing; of course, productivity gains could be a part of the job loss. Maybe there's an angle to the story that I don't really understand. (I probably need to understand what BCG means by 'moving offshore'.)


  1. Probably because shutting down/downsizing research all together is not off shoring. In my anecdotal experience, it seemed that Chinese/Indian postdocs and grad students were more likely to return to their home country for academic positions and not private sector research jobs.

  2. I find it interesting that these production jobs are expected to come back to the US, as opposed to elsewhere in Asia. Take for instance textiles jobs moving from Taiwan to Vietnam. Maybe the difference is the skill level associated with high-tech manufacturing vs. textile production?

  3. I'm with the second anonymous on this. What's wrong with moving jobs to rapidly developing Indonesia (more than 200 million people) or to countries like Vietnam or Thailand that have a similar work-culture to China, value education similarly, and maybe lower costs? Eventually India is going to have better roads and less corruption and lying, and then the jobs should be sent there instead, right? I doubt all those countries would be lacking enough people with skill levels for high-tech manufacturing as they invested a lot in education recently

  4. What's wrong with bringing manufacturing back to the United States?