Moving production to the US despite lower Chinese manufacturing costs

An article in Bloombergbusinessweek (June 25, 2012) describes several examples of companies that moved production to the US from China, despite up to 30% lower Chinese manufacturing costs. For Lightsaver, the 30% lower manufacturing costs were compensated by costs of coordination and quality issues, making US manufacturing 2 to 5% cheaper. For Ultra Green Packaging, intellectual property concerns caused the move back to the US. For Unilife, a maker of syringes preloaded with medicine, moving to the US ensured lower costs to ensure FDA compliance. Given these examples, how much should costs in China drop below US costs to justify making products there ? Will manufacturing in China be for their markets or will intellectual property concerns justify importing to satisfy Chinese demand ? Are these moves to the US the result of dropping US wages too ?

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , . Bookmark the permalink.

One Response to Moving production to the US despite lower Chinese manufacturing costs

  1. This is such an awesome research problem. How do you monetize intellectual property, supply chain efficiency (lead time), and proper wages (must include worker efficiency, too)? Why not add the shelf life of a product (including seasonality)? Total shipping costs, too.

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