Manufacturers Move Supply Chains Out of China
Jul 14, 2019 21:46:37 #
In reading this story, it is disappointing that more of these U.S. companies are not, at the present, anyway, considering a return to manufacturing in the United States, despite the recent substantial drop in the U.S. Corporate tax rate.
Unwilling to compromise the drastic savings in worker's salaries they found in China, they are relocating to India, to Vietnam and to Taiwan and Malaysia, resulting in no benefit to U.S. workers.
Manufacturers Move Supply Chains Out of China
BY DJ Business News| Asia-Pacific , China | 5:44 AM ET 07/14/2019
U.S. manufacturers are shifting production to countries outside of China as trade tensions between the world's two biggest economies stretch into a second year.
Companies that make Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras are producing goods in other countries to avoid U.S. tariffs of up to 25% on some $250 billion worth of imports from China. Apple Inc. also is considering shifting final assembly of some of its devices out of China to avoid U.S. tariffs.
Furniture-maker Lovesac Co. is making about 60% of its furniture in China, down from 75% at the start of the year. "We have been shifting production to Vietnam very aggressively," said Shawn Nelson, chief executive of the Stamford, Conn., company. Mr. Nelson said he plans to have no production in China by the end of next year.
The moves by U.S. companies add up to a reordering of global manufacturing supply chains as they prepare for an extended period of uneven trade relations. Executives at companies that are moving operations outside China said they expect to keep them that way because of the time and money invested in setting up new facilities and shifting shipping arrangements. Companies said the shifts accelerated after the tariff on many Chinese imports rose to 25% from 10% in May.
"Once you move, you don't go back," Mr. Nelson said.
Yeti Holdings Inc. said it plans to move most production of soft-sided coolers out of China by the end of this year. iRobot Corp. said it would start producing Roombas in Malaysia this year, too. Crocs Inc. said it expects less than 10% of U.S.-bound products to be made in China by next year, down from 30% in June. And diesel-engine maker Cummins Inc. said it has avoided $50 million in tariff expenses by moving some production to the U.K. and other countries.
Imports from China fell 12% in the year through May compared with a year earlier, according to the U.S. Census Bureau, the biggest decline since the financial crisis a decade ago.
The biggest beneficiaries of that decline have been other countries in Asia where production costs are low, such as Vietnam, India, Taiwan and Malaysia. Many of those countries have seen sharp increases in exports, although there have been allegations that some of that added traffic was due to goods made in China that were routed through those countries without significantly altering them to avoid tariffs.
U.S. imports from Vietnam are expected to reach $64.8 billion this year, up 36% from 2018, according to consulting firm A.T. Kearney.
"We're moving production to other parts of the world," Marvin Edwards, chief executive of CommScope Holding Co., said in June. The Hickory, N.C., company is making antennas for sale in the U.S. at its plant in India instead of China.
There is little evidence, though, of U.S. manufacturers bringing production from China back to the U.S., a move the Trump administration hoped the tariffs would encourage.
While imports from other Asian countries have climbed, U.S. manufacturing output has declined 1.5% through May from a recent peak reached in December, according to the Federal Reserve. The Institute for Supply Management said earlier this month that its manufacturing index slipped again in June to the lowest level since 2016.
"If we were to try to do a factory in the U.S., it would be enormously expensive," said John Hoge, co-owner of Sea Eagle Boats Inc., which makes 85% of its inflatable kayaks, canoes and fishing boats through contract manufacturers in China. Mr. Hoge said the network of manufacturers and suppliers in China that makes boats for Sea Eagle and many of its competitors isn't as comprehensive in any other country.
"It took us 20 years to build up the supply chain in China," he said. Mr. Hoge estimated the 25% duty on his products that took effect in May would double the Port Jefferson, N.Y., company's tariff expenses to about $500,000 a year.
Crown Crafts Inc. analyzed manufacturing costs in a half-dozen countries before deciding to keep making its baby blankets in China despite the tariff costs.
"It's very difficult to find a country that can do it competitive with China," Randall Chestnut, chief executive of the Louisiana company, told analysts in June.
More than 100 companies have asked the Commerce Department to waive the latest 25% tariff on their imports because they say they can't find suppliers outside of China.
One is Zoom Telephonics Inc., which said it lost $1.1 million during the first quarter and likely more in the second as a result of the tariffs on the cable-TV modems it imports from China and sells through Amazon.com Inc., Best Buy and other retailers.
"I don't think anybody makes them in the U.S.," Frank Manning, chief executive of the Boston-based company, said in an interview. "We're bleeding."
Write to Austen Hufford at austen.hufford@wsj.com and Bob Tita at robert.tita@wsj.com
Unwilling to compromise the drastic savings in worker's salaries they found in China, they are relocating to India, to Vietnam and to Taiwan and Malaysia, resulting in no benefit to U.S. workers.
Manufacturers Move Supply Chains Out of China
BY DJ Business News| Asia-Pacific , China | 5:44 AM ET 07/14/2019
U.S. manufacturers are shifting production to countries outside of China as trade tensions between the world's two biggest economies stretch into a second year.
Companies that make Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras are producing goods in other countries to avoid U.S. tariffs of up to 25% on some $250 billion worth of imports from China. Apple Inc. also is considering shifting final assembly of some of its devices out of China to avoid U.S. tariffs.
Furniture-maker Lovesac Co. is making about 60% of its furniture in China, down from 75% at the start of the year. "We have been shifting production to Vietnam very aggressively," said Shawn Nelson, chief executive of the Stamford, Conn., company. Mr. Nelson said he plans to have no production in China by the end of next year.
The moves by U.S. companies add up to a reordering of global manufacturing supply chains as they prepare for an extended period of uneven trade relations. Executives at companies that are moving operations outside China said they expect to keep them that way because of the time and money invested in setting up new facilities and shifting shipping arrangements. Companies said the shifts accelerated after the tariff on many Chinese imports rose to 25% from 10% in May.
"Once you move, you don't go back," Mr. Nelson said.
Yeti Holdings Inc. said it plans to move most production of soft-sided coolers out of China by the end of this year. iRobot Corp. said it would start producing Roombas in Malaysia this year, too. Crocs Inc. said it expects less than 10% of U.S.-bound products to be made in China by next year, down from 30% in June. And diesel-engine maker Cummins Inc. said it has avoided $50 million in tariff expenses by moving some production to the U.K. and other countries.
Imports from China fell 12% in the year through May compared with a year earlier, according to the U.S. Census Bureau, the biggest decline since the financial crisis a decade ago.
The biggest beneficiaries of that decline have been other countries in Asia where production costs are low, such as Vietnam, India, Taiwan and Malaysia. Many of those countries have seen sharp increases in exports, although there have been allegations that some of that added traffic was due to goods made in China that were routed through those countries without significantly altering them to avoid tariffs.
U.S. imports from Vietnam are expected to reach $64.8 billion this year, up 36% from 2018, according to consulting firm A.T. Kearney.
"We're moving production to other parts of the world," Marvin Edwards, chief executive of CommScope Holding Co., said in June. The Hickory, N.C., company is making antennas for sale in the U.S. at its plant in India instead of China.
There is little evidence, though, of U.S. manufacturers bringing production from China back to the U.S., a move the Trump administration hoped the tariffs would encourage.
While imports from other Asian countries have climbed, U.S. manufacturing output has declined 1.5% through May from a recent peak reached in December, according to the Federal Reserve. The Institute for Supply Management said earlier this month that its manufacturing index slipped again in June to the lowest level since 2016.
"If we were to try to do a factory in the U.S., it would be enormously expensive," said John Hoge, co-owner of Sea Eagle Boats Inc., which makes 85% of its inflatable kayaks, canoes and fishing boats through contract manufacturers in China. Mr. Hoge said the network of manufacturers and suppliers in China that makes boats for Sea Eagle and many of its competitors isn't as comprehensive in any other country.
"It took us 20 years to build up the supply chain in China," he said. Mr. Hoge estimated the 25% duty on his products that took effect in May would double the Port Jefferson, N.Y., company's tariff expenses to about $500,000 a year.
Crown Crafts Inc. analyzed manufacturing costs in a half-dozen countries before deciding to keep making its baby blankets in China despite the tariff costs.
"It's very difficult to find a country that can do it competitive with China," Randall Chestnut, chief executive of the Louisiana company, told analysts in June.
More than 100 companies have asked the Commerce Department to waive the latest 25% tariff on their imports because they say they can't find suppliers outside of China.
One is Zoom Telephonics Inc., which said it lost $1.1 million during the first quarter and likely more in the second as a result of the tariffs on the cable-TV modems it imports from China and sells through Amazon.com Inc., Best Buy and other retailers.
"I don't think anybody makes them in the U.S.," Frank Manning, chief executive of the Boston-based company, said in an interview. "We're bleeding."
Write to Austen Hufford at austen.hufford@wsj.com and Bob Tita at robert.tita@wsj.com
Jul 14, 2019 21:53:30 #
dtucker300
Loc: Vista, CA
Zemirah wrote:
In reading this story, it is disappointing that mo... (show quote)
As long as we have people like AOC and Sanders spouting all of the socialism nonsense I wouldn't locate here. CA and Gov. Nuisance are dreaming up ways to tax Social Security benefits. Democrats have never met a tax they didn't like. As long as they stay to the left things will deteriorate.
Jul 14, 2019 21:56:20 #
Zemirah wrote:
In reading this story, it is disappointing that mo... (show quote)
D********g. President Trump made every effort to make the US a good place to manufacture. Maybe time to find out who these companies are and no longer purchase their products
Jul 14, 2019 21:59:52 #
dtucker300
Loc: Vista, CA
debeda wrote:
D********g. President Trump made every effort to make the US a good place to manufacture. Maybe time to find out who these companies are and no longer purchase their products
More than likely they are the multi-national g*******ts Corporations who currently control the politicians.
Jul 14, 2019 22:12:59 #
dtucker300 wrote:
More than likely they are the multi-national g*******ts Corporations who currently control the politicians.
UGH
Go global - go broke 
Jul 14, 2019 22:16:34 #
It's business. Many would have eventually moved anyway to cheaper countries. Some will return to America to avoid t***sportation costs. Others won't. We're at full employment and steaming along.
Jul 14, 2019 23:01:20 #
That may well be, although I do know of people who are unemployed.
This country needs to utilize all available means to develop more and more jobs so that our own citizens are able to continue their "full employment" after President Trump leaves office, and to be in a position to remain productive if the socialist desiring progressives are able to c***t their way back into the presidency.
Under Obama's regime, immigrants, legal and illegal were always given preference over legal citizens in hiring, and there is no reason to believe they would not immediately revert to that again.
Who Got Jobs During the Obama Presidency? |
https://cis.org/Who-Got-Jobs-During-Obama-Presidency
Among the findings of this analysis: Since President Obama took office, 67 percent of employment growth has gone to immigrants (legal and illegal). There were 1.94 million more immigrants (legal and illegal) working in the third quarter of 2012 than at the start of 2009, when the president took office.
This country needs to utilize all available means to develop more and more jobs so that our own citizens are able to continue their "full employment" after President Trump leaves office, and to be in a position to remain productive if the socialist desiring progressives are able to c***t their way back into the presidency.
Under Obama's regime, immigrants, legal and illegal were always given preference over legal citizens in hiring, and there is no reason to believe they would not immediately revert to that again.
Who Got Jobs During the Obama Presidency? |
https://cis.org/Who-Got-Jobs-During-Obama-Presidency
Among the findings of this analysis: Since President Obama took office, 67 percent of employment growth has gone to immigrants (legal and illegal). There were 1.94 million more immigrants (legal and illegal) working in the third quarter of 2012 than at the start of 2009, when the president took office.
ImLogicallyRight wrote:
It's business. Many would have eventually moved anyway to cheaper countries. Some will return to America to avoid t***sportation costs. Others won't. We're at full employment and steaming along.
Jul 14, 2019 23:04:52 #
Absolutely any provision to their own funding, private or for campaigning, will be of top priority, over love of country or service to the countrymen they were elected to serve, which has bee relocated to the back of the bus.
debeda wrote:
UGH Go global - go broke
Go global - go broke Jul 14, 2019 23:06:09 #
More than likely, you are 100% correct.
dtucker300 wrote:
More than likely they are the multi-national g*******ts Corporations who currently control the politicians.
Jul 14, 2019 23:09:55 #
Boyotting their products is a temporary solution, seeing them go bankrupt would be a just reward.
An enterprising young company here in the U.S. could replace any of these companies, if banks would work with them on preliminary financing.
An enterprising young company here in the U.S. could replace any of these companies, if banks would work with them on preliminary financing.
debeda wrote:
D********g. President Trump made every effort to make the US a good place to manufacture. Maybe time to find out who these companies are and no longer purchase their products
Jul 14, 2019 23:16:21 #
If these socialists are allowed to c***t their way into total control in the future, we will all be serfs of the state, and the state will pass deterioration and disintegrate.
By e******n day, 2020, it should be clear to all citizens what is at stake.
By e******n day, 2020, it should be clear to all citizens what is at stake.
dtucker300 wrote:
As long as we have people like AOC and Sanders spouting all of the socialism nonsense I wouldn't locate here. CA and Gov. Nuisance are dreaming up ways to tax Social Security benefits. Democrats have never met a tax they didn't like. As long as they stay to the left things will deteriorate.
Jul 14, 2019 23:29:15 #
ImLogicallyRight wrote:
It's business. Many would have eventually moved anyway to cheaper countries. Some will return to America to avoid t***sportation costs. Others won't. We're at full employment and steaming along.
I would love to see the days when America was self sufficient return...And welcome to OPP
Jul 14, 2019 23:30:03 #
Jul 14, 2019 23:30:35 #
dtucker300
Loc: Vista, CA
Zemirah wrote:
Boyotting their products is a temporary solution, seeing them go bankrupt would be a just reward.
An enterprising young company here in the U.S. could replace any of these companies, if banks would work with them on preliminary financing.
An enterprising young company here in the U.S. could replace any of these companies, if banks would work with them on preliminary financing.
Unfortunately, bankers are as corrupt as politicians. Even our Federal Reserve is beholden to g*******ts.
Jul 14, 2019 23:31:27 #
Zemirah wrote:
Absolutely any provision to their own funding, private or for campaigning, will be of top priority, over love of country or service to the countrymen they were elected to serve, which has bee relocated to the back of the bus.
I agree completely!!! I wonder if our President Trump had any idea how deep and dark the swamp is when he took this on.....
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