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Chinese Opening Factories in America

August 3, 2015
Plain English Version
Chinese textile factory in South Carolina. Photo by Travis Dove for The New York Times.

Chinese textile factory in South Carolina. Photo by Travis Dove for The New York Times.

What has America got that China wants?

The answer has to do with two other questions. How much money does it cost a company to make something? And then, how much money can the company get from the sale of the finished product?

For years, manufacturing jobs went to poor countries like China, Pakistan and Bangladesh. Then wages started to rise in those places. Also, the cost of electricity, transportation and marketing went up.

Foreign automakers have been making cars in America for years. Now Chinese companies are opening factories in the American South. The South was the home of textile companies for many years.

One big reason is the size of the North American market. Chinese companies say factories here will increase the volume of their sales.

American workers are also willing to take pay cuts to get their jobs. And technology has changed. Fewer workers are needed to make the goods.

A study shows how much $1.00 in manufacturing costs in the U.S. compares with cost in China. Ten years ago, it cost 87 cents to make the same product in China. In 2014, the cost in China rose to 97 cents. It is clear that China is no longer the bargain it was ten years ago.

Another reason is that states and towns are showering the Chinese with tax breaks and other good deals as incentives.

The last cotton mill in Lancaster, South Carolina closed in 2007. The man who put a recent deal together to bring textile jobs back said, “I never thought the Chinese would be the ones bringing textile jobs back.” Keer (the Chinese company) received about $20 million in subsidies, including infrastructure grants, revenue bonds and tax credits.

Things will never be the same for manufacturing jobs in the U.S. But it is hard to predict the future.

Source: The New York Times August 3, 2015

 

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