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Foxconn workers  (Source: Kotaku)
A growing Chinese economy and a need to tend to manufacturing workers' needs has upped the cost of labor

Years ago, several U.S. manufacturers moved production plants to China in an effort to cut labor costs. However, the age of cheap labor in China is ending as annual wages for manufacturing workers continue to grow, and now, some of the larger plants in China are looking for a new home.

Originally, toys, footwear, and textiles were among the first to go to China decades ago. With 1.3 billion people, cheap labor in China seemed unlimited at the time. But in the last two decades, this began to change as a "frenzied" infrastructure and housing build-out caused a flourishing economy that has grown nearly 12 percent per year. In addition, the Chinese government raised the minimum wage 14 percent to 21 percent this year alone in the five largest manufacturing provinces. 

"We've seen our wage costs in China go up nearly 50 percent in the last two years alone," said Charles Hubbs of Guangzhou Fortunique, which is a medical supply company for some of the United States' largest health care companies. "It's harder to keep workers on now, and it's more expensive to attract new ones. It's gotten to the point where I'm actively looking for alternatives. I think I'll be out of here entirely in a couple of years."

But where will plants go to next? Countries like India, Laos, Cambodia and Vietnam are a few options for cheap labor. Also, some companies like Wham-O, a toy company, are returning to the U.S. Last year, Wham-O moved 50 percent of its Frisbee and Hula Hoop production to the U.S. According to a study by the Boston Consulting Group (BCG), China's average wage rate was 36 percent of the United States' in 2000, and by the end of 2010, this "gap" shrunk to 48 percent. By 2015, BCG predicts it will be 69 percent. 

"So while the discussion in the short term favors China, the spread is getting down to a smaller and smaller number," said Hal Sirkin, leader of the study and senior partner at BCG. "Increasingly, what you're seeing [in corporate boardrooms] is a discussion not necessarily about closing production in China but about 'Where I will locate my next plant?'"

Production in China will not close entirely for most companies because even though labor costs have increased, they're still cheaper than most other places. Right now, the average manufacturing wage in China is about $3.10 an hour, while it is $22.30 in the United States. In the eastern part of China, it is about 50 percent more than the average $3.10 wage elsewhere. 

China sees this new shift as a good thing. After the Foxconn suicides and high-profile labor protests last year, wages were increased. Also, many multinational and Chinese companies have relocated or even expanded inland for cheap labor, meaning that people in Henan or Sichuan can find jobs closer to home and do not have to live in a company dormitory. Manufacturing workers, like 24-year-old Wu Dingli, say they prefer working closer to home, even if it means making a bit less money than jobs further away. 

"Life is much easier for me here because I'm closer to home," said Dingli, who left an electronics factory job in Dongguan for a electric cable supply job in Chongqing. "I much prefer this job to the old one."

In addition to making life easier for employees, rising wages will give more money to the people, which will in turn increase Chinese consumption. This will benefit Beijing's major trading partners, who can then decrease "drastic imbalances" in global trade. 

While exporters like Hubbs will feel the effect of higher wages, the bottom line is that China is becoming wealthier with a stronger currency, and the time of cheap labor is coming to an end.



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RE: Good...
By EricMartello on 6/20/2011 2:38:15 PM , Rating: 5
Wow, the ignorance here is astounding. You think people are being paid "what they're worth" and not what government mandates and union policies force employers to pay? A factory job is not $20+ an hour work. The morons working at an assembly line perform one repetitive task over and over...in fact you actually need a sub-80 IQ to tolerate such tedious work. There is no reason they should be earning any more than a burger flipper at McDonald's...in fact, working at McD's takes more skill than working an assembly line.

There seems to be an overwhelming sentiment that people are entitled to higher pay simply because they work long hours or "work hard". No. If you perform a menial task and offer no real skill then your pay should reflect that. Assembly line workers should max out around $10/hr total. If they want additional benefits, let that be deducted from their pay.

The world does not need to cater to or support people who with no ambition and only a desire to scrape by doing the bare minimum. Unions are relics that should have been disbanded long ago, and keeping these overpaid, underperforming schmucks employed simply for the sake of "keeping jobs in america" is a failed policy that only drains our economy.


RE: Good...
By room200 on 6/20/11, Rating: -1
RE: Good...
By BansheeX on 6/20/2011 3:10:23 PM , Rating: 5
What he's trying to say, in summary, is that if pretty much anyone qualifies for a job, then it's a much larger pool of people underbidding each other in the sale of labor. Unions try to to defeat that process by collusion "psst, let's not undercut each other's prices." But you can only collude in your locality, so the company will go bankrupt or move.


RE: Good...
By room200 on 6/20/2011 3:04:59 PM , Rating: 1
quote:
Wow, the ignorance here is astounding.


I though the same thing as I read your post. Problem is, you wish me to take your OPINION as fact.


RE: Good...
By guffwd13 on 6/20/2011 4:19:26 PM , Rating: 2
quote:
Problem is, you wish me to take your OPINION as fact.


Don't bother preaching that one here, I keep trying to say argument is what makes the world go round and I constantly get voted down for it.

I actually agree with some of the things he said, but I don't agree with the idea that there's only one right answer.


RE: Good...
By room200 on 6/20/2011 4:46:07 PM , Rating: 2
Frustrating, ain't it?


RE: Good...
By MrBlastman on 6/20/2011 4:55:38 PM , Rating: 4
I argue that to pay someone what they are worth is instead not a function of their IQ, but instead a function of the percentage of work they contributed to the total net sum required to put the good to market.

i.e. Say one guy invents the product--well, his net sum contribution is great indeed, as far so as possibly 50% the net sum if he funded his research entirely himself. The remaining 50% is the actual manufacturing of said product.

Now, say the creator invented it, but, he hired some basic individual with a high school education to manufacture the product. The creator then outlines a process for the laborer to follow to a T--all he needs to do is follow the instructions. As such, when the product is indtroduced, only the single laborer is needed to make the product.

Now, without the creators instructions, the laborer would have been useless, so, we can net the creators manufacturing contribution to be 25% total net sum and the laborer to be 25% total net sum.

Once it is all finished, we have the creator's portion of the net sum at 75%, the laborer's at 25%. Thus, once the product is sold and the material and marketing costs are deducted, the creator receives 75% of the proceeds, the laborer receives 25%.

Wait, that's preposterous! The laborer only performed menial labor. That is the case, but, as production scales up they will potentially receive less--they will still receive a fair portion of the proceeds from their contribution to the overall efforts. The creator would be nothing without the laborer as the creator wouldn't have time to run the assembly-line, so, the laborer provides a very real contribution to the process.

Call them dumb, call them ants, call them peons--call them whatever, just don't discount someone because you think their role in the workplace is minscule. I would hate to work with or around you. EVERYONE I work with, large or small, is important to me. They're people, like you and I--and I don't refer to them as morons or look down upon them.

Of course, my view is idealistic--as it does not account for ownership. It is a raw scenario. The function of ownership--or, the percentage paid out in profits, would be based on the amount they relied upon the creator to come up with such good and their overall financial contribution to get the system running. In the end, the creator's net portion could be reduced to something like 40% and the laborer would also need to be reduced proportionately as without the investors, the laborer wouldn't be making squat, thus--the proportionate figure for them would be 13.3%.

I feel a system like this is far more fair than just saying--you're scum, you're useless, but hey! Make my product for me please. With a system such as this, the people working for you feel they have a real value and can clearly see how their contribution influences the overall process and product. If they work harder, their contribution makes a direct impact as more product is made and sold (assuming 100% sellthrough)--but, as you see, they would potentially share in the profits and this is a true motivator.


RE: Good...
By EricMartello on 6/20/2011 8:11:47 PM , Rating: 2
quote:
I feel a system like this is far more fair than just saying--you're scum, you're useless, but hey! Make my product for me please. With a system such as this, the people working for you feel they have a real value and can clearly see how their contribution influences the overall process and product. If they work harder, their contribution makes a direct impact as more product is made and sold (assuming 100% sellthrough)--but, as you see, they would potentially share in the profits and this is a true motivator.


I don't have a problem with people who want to work at a factory or some other blue collar job...but I do have a problem when these same people expect that job that can literally be filled by just about anyone demanding that they get paid more, either because they worked there for a long time or simply because they feel they deserve more.

Let's say that you start doing a menial job for minimum wage. It doesn't matter if you stayed there for 10 years doing that job because the value of the work you are doing is unlikely to change, and as for supply and demand - a job that can be performed by anyone offers very little in terms of security.

People have the freedom to choose their way of earning a living in the USA and many other countries in the world, for the most part. Performance-based compensation is a good motivator for people whose contributions can have a meaningful effect on a company's bottom line, but it doesn't matter if Joe Bob screws on 10 doors per hour or 12 doors per hour at the Ford factory - there's still a low ceiling as to how much additional effort can improve a one-dimensional job. Even if Joe could work faster and slap on 14 more doors in his 8 hour shift, the entire assembly line would need to speed up for his contribution to have any effect on Ford's production rate.


RE: Good...
By Taft12 on 6/21/2011 11:54:57 AM , Rating: 1
quote:
I don't have a problem with people who want to work at a factory or some other blue collar job...


But just earlier in the thread you called them morons, said they had no ambition and that a factory worker needs to have an IQ less than 80.

You certainly think you're a lot better than these people. It sounds to me like you do have a problem with them.


RE: Good...
By EricMartello on 6/22/2011 2:31:48 AM , Rating: 2
quote:
But just earlier in the thread you called them morons, said they had no ambition and that a factory worker needs to have an IQ less than 80.


Most people are morons and I'd say your average blue collar peon qualifies as "moron". Now show me where I said I have a problem with them solely based on that fact?

quote:
You certainly think you're a lot better than these people. It sounds to me like you do have a problem with them.


I already explained what I have a problem with. Morons being overpaid for unskilled labor due to unions or government mandates...and for the morons taking advantage of that situation, I most certainly have a problem with them.


RE: Good...
By MrBlastman on 6/22/2011 10:21:26 AM , Rating: 2
It seems you know a lot about morons; what does that make you, genius?


RE: Good...
By EricMartello on 6/22/2011 10:43:47 PM , Rating: 2
I've got to wonder...are the people who fixate on my identification of morons rather than the entirety of the post feeling insecure about themselves???


RE: Good...
By 91TTZ on 6/20/2011 5:48:56 PM , Rating: 3
quote:
There seems to be an overwhelming sentiment that people are entitled to higher pay simply because they work long hours or "work hard". No. If you perform a menial task and offer no real skill then your pay should reflect that. Assembly line workers should max out around $10/hr total. If they want additional benefits, let that be deducted from their pay.


It's supply/demand. Being a jizzmopper at a porn shop isn't a very intellectual job but I bet the pay is high because it's an undesirable job with relatively few people willing to do it. The job still needs to be done so supply/demand dictates the wage. I bet nobody wants to do that for $5 an hour, but for $20 an hour you probably have enough people willing to do it.


RE: Good...
By foolsgambit11 on 6/20/2011 9:55:35 PM , Rating: 2
quote:
in fact you actually need a sub-80 IQ to tolerate such tedious work.

If that's true, then only about 10% of the population can really do the work - meaning that supply and demand would indeed push up the wages for those jobs, just as much as they push up the wages for jobs that require an above-120 IQ. Boom! Logic bomb dropped on your head!


RE: Good...
By Zoomer on 6/21/2011 10:08:43 AM , Rating: 2
Not quite, other people can do the work too. It doesn't quite work the other way around though.


RE: Good...
By Raiders12 on 6/21/2011 12:29:34 PM , Rating: 2
Thank you! While we want everyone to afford the same luxuries as their neighbors, it's just not that easy. America is a diverse economy or different skills and different job types. People working assembly lines getting $20-30/hr and all the bells and whistles of benefits due to Unions is what killed this countries' industry. It didn't work before, and it won't work again. KNOW YOUR WORTH. If you work a GM assembly line putting in front seats all day, do you deserve to be paid what a mechanical engineer makes? No. Thats the way it crumbles. People will yell and scream that "you need to get off your high horse, you don't know what you're talking about!" Well the article just said avg factory wages here are $22/hr. GM average line worker's wages was somewhere near $33/hr when I looked it up last. I'm just starting out as an engineer, after busting my @$$ for 4 yrs in schooling, just in college, and am barely earning $20/hr. That is a job and skill this country NEEDS, science.


RE: Good...
By MrBlastman on 6/21/2011 12:43:20 PM , Rating: 2
I just thought I'd point out--historically speaking, the field of science was never sought after for accumulation of wealth. It was sought after for furthing the knowledge of mankind. If science ended up bringing an individual wealth, great; however, if not monetary wealth, if science brought knowledge that could change the world--that was worth far more.

You don't become a scientist to be super-wealthy. If you do, then you're in it for all the wrong reasons. Money clouds judgement. A true scientists mind needs to be pure to the method first and foremost.

With that said--you are absolutely right... America needs science more than ever before. It is bright minds and our historical lust for creation of new ideas and technology that helped make us great... along with our industrial and manufacturing prowess.


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