On the Train to Nanjing

We need to bring some manufacturing back to the US...but very carefully. We want skilled jobs that pay a living wage and don’t pollute the environment.

By ·

I took the bullet train from Shanghai to Nanjing a couple of weeks ago, a journey in a pleasant First Class, sparkling clean rail car at 200 km/hour, for about $30.  It’s a two-hour journey where you see things you would never see from an airplane.

Along the way, in every direction, are miles and miles of factories.  They come in all shapes and sizes - small and squat to miles-long facilities and enormous smokestacks.  All of these factories are apparently producing simple assembled products, electronics, plastics, castings and everything you can think of in between.  The smokestacks are producing energy to serve China’s insatiable appetite for growth.

Chinese Finance Minister Lou Jiwei told the G-20 meeting in 2014 that manufacturing accounts for nearly 60% of Chinese GDP, an unsustainable share which has created the problems of pollution and overcapacity, he said.  This is very evident as I traveled through the manufacturing areas between Shanghai, Wuxi and Nanjing.  The pollution was overwhelming; the skies were thick with a smoky fog and the sun was a muted disk low in the sky.  I could smell the air that made my eyes sting and my throat sore. The pollution gets so bad from time to time that people wear surgical masks during the most dangerous periods.  I brought along some drugstore surgical masks this time too, as the pollution rates were reported to be off the charts.

This is the Chinese Industrial Revolution on steroids. Europe and the US went through significant periods of pollution as we industrialized our economies.  But in China, it is happening very rapidly.

The Chinese government is no longer shying away from or denying allegations of the horrendous air quality.  In fact, in the latest government Five Year Plan, China is finally putting real muscle and money into environmental clean-up.  I expect to see substantial improvement over the next few years. 

Americans need to work on balancing the difference between the Chinese economy supported by 60% manufacturing and the US economy where only 11-12% is based on manufacturing.  Manufacturing is the fundamental backbone of a healthy economy.  We need to bring some of it back to the US- but very carefully.  We want skilled jobs that pay a living wage and don’t pollute the environment.

Rebalancing global supply chains is not a step back to your father’s manufacturing of the 1960s. Instead, it is a strategic leap forward with manufacturing consideration given to all of your global growth markets.  Consider manufacturing the appropriate products in countries where you sell those products, including China, the largest target market in the world.

What you bring back to the US matters. Through automation, innovation and localization your US operations can be cost-competitive for products sold in the US.  We are helping clients consider Reshoring part of their production, but not all of it.  After all, China is the largest target market in the world and some of your manufacturing should be left there to serve the local market.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

All Topics
Latest Whitepaper
How Lean is your Lean Quality Program?
Avoid quality program bureaucracy that can sap logistics productivity and increase costs
Download Today!
From the September 2016 Issue
Indecision revolving around three complex supply chain elements—transportation, technology and organizational structure—finds many companies waiting to commit to a strategic path. However, waiting too long will only result in a competitive disadvantage that will be difficult to overcome in today’s fast-paced, global economy.
Time for Asia’s ports to rebuild
Is the freight recession upon us…again?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Supply Chain Best Practices: Visibility to In-Transit Inventory
During this webcast you'll learn on how various organizations have gained instant access to in-transit parcels and given access to this information to stakeholders.
Register Today!
EDITORS' PICKS
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...

Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....