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China Helps Save U.S. Manufacturing Jobs? Really?

Since 2000, the U.S. manufacturing sector has lost 4 million jobs, or 27 percent of its work force. Many people blame these losses on countries where manufacturing labor can be obtained at lower wages, such as China and Mexico.

While certainly its true that cheap foreign labor has made an impact, its equally true that the global economy is not going to become un-global anytime soon. Therefore, savvy contract assembly services must find a way to use the global system to their advantage.

Making China a Partner, Rather Than an Adversary

People in China dont need as much money to live, so they can work for lower wages. Companies seek to pay less for assembly services, so they contract with foreign companies to do assembly work. Consumers then receive lower prices for products. Works great for everyone except for the American assembly worker, who is all too often priced out of an job.

But lately, some American assembly companies are turning cheap foreign labor to their advantage. By working within the global system, these assembly services are saving American jobs.

Forbes magazine recently profiled the poster child for this movement: Doug Smith, of SmithCNC-USA. Mr. Smith helps American manufacturers stay competitive by locating cheap foreign suppliers of parts. By keeping parts costs low, assembly services can stay competitive on the final products.

These parts can include anything from integrated circuits to plastics, but the principle is always the same: get the raw materials cheaper, and then do something with them. This strategy gives American assembly services an ability to add value in the assembly process, rather than competing purely on price from the raw materials stage.

This strategy also renders China a business partner, rather than an adversary.

Assembly Services Can Add Value Without Adding Cost

In the assembly services business, low cost is great, but quality work is the ultimate prize. In fact, thats the reason the aforementioned Mr. Smith is so popular: he scouts out Chinese suppliers to see which ones are running a professional operation and which ones cant be counted upon.

Quality work, for an assembly service, obviously entails putting together a quality final product. But the great contract assembly operations stand out far before any final product is seen.

Great contract assembly services distinguish themselves by creating a powerful process that keeps costs low but quality high. Important considerations in such a process include:

  • Maintaining control of intellectual property, such as designs and blueprints
  • Using software and hardware systems to track assembly performance
  • Hiring and retaining skilled, experienced assembly workers
  • Partnering with fulfillment and distribution houses to move product to market
  • Fixing problems to the clients satisfaction, every time

Assembly services that achieve those goals, whether theyre located in the U.S. or not, offer a compelling value proposition to the contract assembly client. In order to create that value, it is often necessary to work with suppliers in low labor cost environments such as China and Mexico.

In that sense, investigating how well, or how poorly, an assembly service works with foreign firms may be an important part of deciding which assembly service to hire.



Wall Street Journal

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