Manufacturing in China

Someone had this video at work so I copied it to put on here. Have a look at this:



It's hard to imagine being in this kind of work environment. It seems like a scene from the beginning of the industrial revolution where Europe and North America had child labourers and all sorts of poor conditions for workers. Wages were also pretty low.

A lot has happened in the west in terms of workers rights since then. Some would argue that unionized workers have it too good and point to examples in GM or Chrysler where the unions have pretty much choked companies through fat pensions and high wages. Beyond that, however, there are a lot of safety regulations, inspections, quality assurance auditing, paid vacation, minimum wage, and other basic benefits that are a given for people working here in Canada. The cost for all of these, along with taxes, electricity, water, building maintenance, and other administrative departments, are carried by any company in the form of overhead costs. They work to increase the cost of any product or service being sold.

In the video, apart from the obvious lack of safety measures, there are 6 people running a single machine. No North American company producing similar products can afford to put that many people on a single machine. The hourly wages of the people alone would make the parts too expensive. Instead, automation and other methods are used to reduce the manpower hours on a production line to produce parts at a lower cost. Machines are significantly cheaper than people in the long run.

What can we do to compete with Chinese labour then? That's too big a topic to write about now. In the meantime, please consider that India has close to a billion people right now and, like China, has a large pool of cheap labour to draw on. Also consider that they are growing rapidly in the IT industry and now have the 5th largest steel company in Tata Steel. So the question now becomes, how do we compete against both India and China ?

As a final note, here's a little example on the reality of cheap Chinese labour:
During one interview that I had in Kitchener, Ontario, the company was having welded metal carts manufactured in China. I asked them why, since it was a pretty basic item and there are plenty of local companies that could produce these carts. The interviewer said that the cost of having them made in China was 30% of the cost of having them made locally in Canada...and that included the cost of shipping the carts half-way around the world.