WCA November 2016

From the Americas

In a separate survey by BCG last year, 24 per cent of respondents said they were actively shifting production home from China or were planning to do so over the next two years, up from only 10 per cent in 2012. “It just makes economic sense,” Hal Sirkin, a senior partner at BCG, told the Times . “The US right now is in a very favourable position.”  And it is not just the USA that is taking jobs away from China, observed Mr Schuman. Rising costs are driving many companies in a variety of sectors to relocate to a wide range of other countries. He cited the most recent survey from the American Chamber of Commerce in China, in which a quarter of respondents said they had either already moved or were planning to move operations out of China. The top reason? Rising costs. Of those respondents, almost half are moving into other developing countries in Asia. But, tellingly – if presidential aspirant Donald J Trump had happened to be paying attention – nearly 40 per cent are shifting to the USA, Canada and Mexico: the three signatories to the North American Free Trade Agreement (NAFTA), which Mr Trump has called the worst deal in USA history. An American company is implicated in an airbag-related fatality Airbags made by ARC Automotive (Knoxville, Tennessee) came under heightened scrutiny in August after a rupture in one of its bags was linked to the death of a driver in Canada the previous month. The National Traffic Safety Administration (NTSA), the USA regulator, is investigating hybrid airbag inflaters made by ARC that use both a gas and the explosive compound ammonium nitrate. The fatal rupture raised the prospect of adding millions of cars to the already extensive recall of exploding airbags made by the Japanese manufacturer Takata. According to the Canadian auto safety regulator, Transport Canada, the driver of a 2009 Hyundai Elantra died when the driver-side airbag inflater exploded after a low-speed collision in Newfoundland on 8 th July. The NTSA had already opened a preliminary inquiry into at least eight million airbag inflaters made by ARC for use in Chrysler, General Motors, Kia, and Hyundai cars through model year 2004, but the agency said its new, formal, investigation will go beyond that population of inflaters. The death in Canada was the first known fatality linked to a rupture in an airbag from a supplier other than Takata. The NTSA said on 4 th August that the ARC and Takata airbag inflaters had “significant design differences” and that the fatal ARC rupture probably had a different cause. With over 380 million connected cars expected on the road by 2021, automakers and tech companies make a new dynamic duo A connected car is able, by means of connectivity with the Internet and usually also with a wireless local area network Automotive

Presidential politics USA Is China taking jobs away from Americans? Or are Chinese workers losing out to their counterparts in the United States? Even in an electioneering season rife with expressions of concern for the American worker, the claims of presidential candidate Donald J Trump stood out. Throughout his campaign he asserted that China is stealing American manufacturing jobs. In his speech to the Republican National Convention on 21 st July, Mr Trump – the party’s nominee – said that “disastrous trade deals” had hurt factory workers in the USA. He also said that American support for China’s embrace of free trade has been a “colossal mistake.” Writing from Beijing during the week of the convention, Michael Schuman of the New York Times reviewed the supposedly baleful Chinese effect on US workers and was led to a very different – indeed, opposite – conclusion from Mr Trump’s. Workers in today’s China, Mr Schuman reported, are losing their jobs to a slowing domestic economy, rising costs and stiffer foreign competition – including from the USA. (“Is China Stealing Jobs? It May Be Losing Them, Instead,” 22 nd July) In short, wrote Mr Schuman, China’s labour market has changed sharply, with manufacturing for export “getting harder and harder.” Jim McGregor, chairman of the consulting firm APCO Worldwide’s Greater China operations, put it succinctly. The presidential candidates, he told the Times , “are screaming about yesterday’s problems.” The agents of change are clear enough. As the Chinese economy has expanded, creating opportunities in many sectors, assembly line jobs have become less attractive, causing managers to raise wages to attract workers. At the same time, local governments in Shenzhen and other industrial centres have steadily increased the mandated minimum wage to improve the welfare of working families and pressure companies to produce more expensive, high-value products. That combination, noted Mr Schuman, has pushed wages for Chinese factory workers higher. Their monthly pay now averages $424 – approximately 29 per cent more than it was just three years ago. Labour costs in China are now significantly higher than in many other emerging economies. Factory workers in Vietnam earn less than half the salary of a Chinese worker, while those in Bangladesh are paid under a quarter as much. USA manufacturing reshoring picks up What that means, wrote Mr Schuman, is more jobs for American factory workers. Half of the respondents in a 2015 survey of large USA manufacturers conducted by the Boston Consulting Group reported expecting the number of manufacturing workers they employed in the USA to increase over the next five years.

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Wire & Cable ASIA – November/December 2016