WSJ: USA at inflection point & USA is competitive with China

Wal-Mart Supercenter in Shenzhen, China

Wal-Mart Supercenter in Shenzhen, China (Photo credit: Wikipedia)

The Wall Street Journal’s Market Watch had a report titled, “Wal-Mart, GE execs say U.S. manufacturing becoming more competitive.” The article was publiched on August 22, 2013, by Andria ChengOn. Market Watch reported, “Thursday, Wal-Mart Stores Inc. WMT  gathered 1,500 attendees, including 500 manufacturers, both from the U.S. and overseas, along with U.S. Secretary of Commerce Penny Pritzker, Dallas Federal Reserve President Richard Fisher; eight state governors among officials from 32 states for a manufacturing summit. General Electric GE  CEO Jeff Immelt also spoke and announced it’s making more energy-efficient light bulbs domestically. Televison producer Element said it’s going to make some TVs back in the U.S. The manufacturing summit came after Wal-Mart said earlier this year it’s committed to buying $50 billion in additional U.S.-made goods the next 10 years. While that amount pales against the company’s global sales of $479.3 billion, it’s expected to gather some steam. Wal-Mart’s move is not altruistic. Having more jobs in the U.S. would boost the spending level of its customers as they’ve been hurt by the job market and the 2% payroll tax hike. Bill Simon, Walmart U.S. chief, said manufacturing in the U.S. makes total “economic sense.” The company said sales of U.S.-made towels sold 30% more than foreign-made stock when it switched this year. With wages in China, the world’s biggest manufacturing country, rising about 15% to 20% each year, China’s labor cost advantage is narrowing compared to the U.S., said Hal Sirkin, managing director at Boston Consulting Group. He said when factoring in components, raw materials and other product costs, China only has a 3 percentage point lead when it comes to product costs. Considering the rise in transportation costs, that has made Made in America sexier. “We are at an inflection point,” he said. “U.S. is competitive with China.” GE’s Immelt said U.S. on a relative basis “has never been more competitive,” helped by technologies and improved productivity. “High transportation costs mean you want to be closer. It’s not just pure labor arbitrage.” For instance, he said it only takes up to 3 hours to make a refrigerator, which makes the total cost lower to have it made domestically versus China or Mexico. Wal-Mart CEO Mike Duke also described U.S. manufacturing at “a tipping point,” especially when transportation cost is going to continue to rise. Luxury retailers including Saks Inc. SKS have also talked about stocking more U.S.-made goods. (Source)

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