[Marxism] Reshoring Trend?

dave x dave.xx at gmail.com
Sun Dec 9 01:00:14 MST 2012


Assembly of some Apple Macs is now being moved to the US from China.
There are some (limited) indications this is part of a wider trend or
reshoring industrial production to the US from Asia. Possible factors
mentioned below include: Rising labor costs and labor strife in Asia
(think Foxconn), stagnant or declining labor costs in the US (though
still much higher than in Asia), costs of transportation and proximity
to the US consumer market, the shale energy boom lowering
manufacturing costs in the US, and increased automation (in response
to rising labor costs in Asia) further reducing the labor cost
differential.

Some speculation: If this is true, I wonder if another component of
this trend might end up being the ongoing destruction of industrial
unionism in its heartland the US midwest. Perhaps in the aftermath of
all the ongoing destruction the midwest will end up getting remade as
some sort of home grown neoliberal free trade zone for multinationals.
This would jibe with some of the observations of geographical Marxists
like Harvey who have long pointed to capitalism's 'territorial' logic
(accumulation by disposession) or as Deleuze/Hardt/Negri might put it
'deterritorialization'.

-dave

----------------------------------------------------------------------------------------------------------------------------
http://www.nytimes.com/2012/12/07/technology/apple-to-resume-us-manufacturing.html?

"Apple plans to join a small but growing number of companies that are
bringing some manufacturing jobs back to the United States, drawn by
the growing economic and political advantages of producing in their
home market.

On Thursday, Apple’s chief executive, Timothy D. Cook, who built its
efficient Asian manufacturing network, said the company would invest
$100 million in producing some of its Mac computers in the United
States, beyond the assembly work it already does in the United States.
He provided little detail about how the money would be spent or what
kinds of workers might benefit.

...

" Some analysts are hopeful that the move by a big, innovative company
like Apple could inspire a broader renaissance in American
manufacturing, but a number of experts remain skeptical.

“I find it hard to see how the supply chains that drive manufacturing
are going to move back here,” said Andre Sharon, a professor at Boston
University and director of the Fraunhofer Center for Manufacturing
Innovation. “So much of the know-how has been lost to Asia, and
there’s no compelling reason for it to return. It’s great when a
company says they want to create American jobs — but it only really
helps the country if those are jobs that belong here, if it starts a
chain reaction or is part of a bigger economic shift.”

Over the last few years, companies across various industries,
including electronics, automotive and medical devices, have announced
that they are “reshoring” jobs after decades of shipping them abroad.
Lower energy costs in America, rising wages in developing countries
like China and Brazil, quality control issues and the desire to keep
the supply chain close to the gigantic American consumer base have all
factored into these decisions.

“Companies were going abroad in pursuit of cost reduction, and it
turns out there were a lot of unintended costs,” said Diane Swonk,
chief economist at Mesirow Financial. “America has been looking a lot
more competitive lately.”

Even so, the impact on the American job market has been modest so far.
Much of the work brought back has been high-value-added, automated
production that requires few actual workers, which is part of the
reason America’s higher wages are not scaring off companies.

American manufacturing has been growing in the last two years, but the
sector still has two million fewer jobs than it had when the recession
began in December 2007. Worldwide manufacturing appears to be growing
much faster, even for many of the American-owned companies that are
expanding at home. General Electric, for example, has hired American
workers to build water heaters, refrigerators, dishwashers and
high-efficiency topload washers, but continues to add more jobs
overseas as well. "
...
--------------------------------------------------------------------------------------------------------------
Followup piece discusses the possible role of automation in this trend:

http://economix.blogs.nytimes.com/2012/12/07/when-cheap-foreign-labor-gets-less-cheap/

"Nick Wingfield and I had an article in Friday’s paper about how some
American companies are “re-shoring” manufacturing they had previously
sent abroad. The scale of these efforts is still more anecdotal than
widespread at this point. Still, it’s worth examining why the United
States might be a more attractive place to locate your plant today
than in the past.

Cheap energy costs in the United States (thanks to shale gas
extraction), concerns about keeping the supply chain close to the
American consumer base, quality control issues and intellectual
property concerns have all encouraged American companies to produce at
least some of their products at home. But so have rising wages in some
manufacturing bases abroad.

Inflation-adjusted average wages in China, for example, more than
tripled over the decade from 2000 to 2010, according to a report
released Friday by the International Labor Organization.

This table, taken from the report, shows that in Asia,
inflation-adjusted average wages have about doubled since 2000. In
Eastern Europe and Central Asia, average wages almost tripled:"
...
"In the developed world, wages are just barely higher than they were
in 2000. In the United States, other studies have shown that median
household income is lower today than it was in 2000.

That does not mean that American wages are anywhere close to those in
countries in East Asia or other places where American imports come
from. As of 2010 (the latest year available), hourly compensation
costs for manufacturing in the United States were about four times
those in Taiwan, and 20 times those in the Philippines, according to
the Labor Department.

But the narrowing of that wage gap does mean that the labor cost
advantage some of these other countries have enjoyed is eroding a
little, particularly if there are other cost-based advantages to
producing in the United States (like access to cheap natural gas or
being closer to your consumers)."
...
"On the other hand, as wages in many developing countries rise,
companies also have a big incentive to automate more of their
production.

The most valuable part of each computer, a motherboard loaded with
microprocessors and memory, is already largely made with robots,
according to my colleague Quentin Hardy. People do things like fitting
in batteries and snapping on screens.

As more robots are built, largely by other robots, “assembly can be
done here as well as anywhere else,” said Rob Enderle, an analyst
based in San Jose, Calif., who has been following the computer
electronics industry for a quarter-century. “That will replace most of
the workers, though you will need a few people to manage the robots.”
----------------------------------------------------------------------------------------

All of which causes Krugman to say (hah!):

http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/

"Twenty years ago, when I was writing about globalization and
inequality, capital bias didn’t look like a big issue; the major
changes in income distribution had been among workers (when you
include hedge fund managers and CEOs among the workers), rather than
between labor and capital. So the academic literature focused almost
exclusively on “skill bias”, supposedly explaining the rising college
premium.

But the college premium hasn’t risen for a while. What has happened,
on the other hand, is a notable shift in income away from labor:"
...
"If this is the wave of the future, it makes nonsense of just about
all the conventional wisdom on reducing inequality. Better education
won’t do much to reduce inequality if the big rewards simply go to
those with the most assets. Creating an “opportunity society”, or
whatever it is the likes of Paul Ryan etc. are selling this week,
won’t do much if the most important asset you can have in life is,
well, lots of assets inherited from your parents. And so on.

I think our eyes have been averted from the capital/labor dimension of
inequality, for several reasons. It didn’t seem crucial back in the
1990s, and not enough people (me included!) have looked up to notice
that things have changed. It has echoes of old-fashioned Marxism —
which shouldn’t be a reason to ignore facts, but too often is. And it
has really uncomfortable implications.

But I think we’d better start paying attention to those implications."




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