China to the United States to set up a factory to bring about a manufacturing renaissance Lenovo

China to set up a factory to bring about a manufacturing renaissance Lenovo It is no longer news that American companies have moved some of their facilities overseas and returned to their home countries, but there are also companies in China that have moved their factories to...

Jay Parker, president of Lenovo North America, said the company is doing this because it is expanding into the U.S. market and needs the flexibility of its assembly facilities to speed up delivery.

Another key factor is the increase in labor costs in China, which is famous for its low wages, in recent years. Although Chinese labor is still relatively cheap, Parker said we have reached a tipping point where logistical savings can offset some of the labor costs in the United States.

U.S. companies have long been making similar moves: Caterpillar, GE and Ford have all announced plans to move some manufacturing facilities back to the United States. Economists are debating whether the stories are just a blip or a sign of a renaissance in U.S. manufacturing.

>It is easy to question. So far, the number of jobs created by the return of manufacturing to the United States has been limited. According to figures from the Reshoring Initiative, an industry organization, since January 2010, the U.S. manufacturing industry has added 520,000 jobs, including 50,000 jobs created by "returnees" or foreign companies in the United States. That number looks good at first glance, but it doesn't compare to the Bureau of Labor Statistics' figures for manufacturing job losses over the past decade - more than 6 million manufacturing jobs disappeared across the United States between 2000 and 2009.

But optimists believe there are good reasons for a revival in U.S. manufacturing. In addition to the narrowing of the wage gap between the United States and China, U.S. worker productivity has been rising, and new shale gas technologies have provided the United States with a large amount of cheap energy. As a result, U.S. factories have become more competitive. Not only do they have advantages over Europe and Japan, they are also able to compete with manufacturing giant China.

Such a shift will certainly not prompt the United States to once again build a manufacturing army of 19 million people – as it did in the 1980s. One of the main reasons is automation. The jobs that reappear are also different from the jobs that disappeared. But any uptick in domestic manufacturing could support the economy and spur innovation after decades of decline.

Scott Paul, president of the Alliance for American Manufacturing, said that the big change may not have turned into concrete data yet. But we are laying the foundation, and we will see the results in the next three to 10 years.

Many analysts believe that the narrowing wage gap between the United States and China is the most important factor. China is getting richer and factory workers have been demanding higher wages. Dan North, an economist at credit insurance company Euler Hermes, said the wage gap between workers in the two countries could fall from $17 an hour in 2006 to $7 an hour in 2015.

For U.S. companies, the $7-an-hour pay gap may be an incentive to stay home, North said. "If I stay at home, I can reduce inventory expenses and reduce transportation expenses. I am also close to the market, I can maintain high-quality production, and I can protect my technology."