‘Chinese Labor Cost is Not That Big a Factor’

We lean advocates tend to rant about how so many businesses wrongly believe they need to outsource production to other countries, especially those in Asia, in order to be competitive. We argue that a lean strategy, along with recognition of the problems and costs of a far-flung supply chain, can make up for lower costs overseas.

But maybe some businesses are smarter than we think.

These thoughts came to mind after I read an article in The New York Times about the Obama administration’s lack of a coordinated policy to revive manufacturing in the United States.

The article includes comments from Douglas Bartlett, who is closing a circuit-board factory in Illinois. Bartlett says he was done in by cheaper products from China, and he contends that the Chinese products are cheaper because the Chinese undervalue their currency.

“I can compete against Chinese entrepreneurs, and Chinese labor cost is not that big a factor,” he said, “but I cannot compete against the Chinese government’s manufacturing policies.”

Currency manipulation is a serious issue, though it is not my intent to address it here. What I find fascinating is the first part of that quote, in which Bartlett says he CAN compete against the Chinese if there is no government interference.

I am saddened by the closing of Bartlett’s factory, and I agree that currency manipulation issues need to be addressed.

I simply wish to make the point that Bartlett made so well – U.S. businesses do not have to go running after cheap overseas labor in order to compete.

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