COVID helps ‘Made in USA’ products compete with Chinese exports

As the closure of COVID content in China puts products on the way to price-conscious US consumers, Mitch Cahn, a manufacturer in New Jersey, finds traces of gold in the worn-out chains of the international supply chain.

Eleven miles from Manhattan, business is on the rise at Cahn’s textile company, which boasts a 100% local supply chain.

“We’ve been producing from scratch here in northern Newark. We’ve been in business for 30 years, now we have about 155 employees and we hope to hire another 25 immediately,” said Cahn, founder and president of Unionwear.

Founded in 1992, Unionwear manufactures custom baseball caps, scarves and backpacks in North Ward, New York’s most populous city.

“Business is very solid this year. We have seen an increase in business from companies that can no longer import goods and now they are buying goods domestically,” Cahn told VOA Mandarin.

For its customers, the “Made in USA” price is just after decades as American stores were filled with cheaper Chinese products.

Its buyers are not alone in their support for US products. In a 2020 survey by the Reshoring Institute, which recommends the return of production to the United States, about 70% of American respondents said they preferred American products. Among them, 83% said they would pay up to 20% more for domestically produced products.

COVID clicks off supply chain

China has imposed strict COVID containment restrictions that disrupt the supply chain. Export goods go nowhere as shipping companies raise freight rates and epidemic-related labor shortages worsen delays.

According to BR Logistics’ website, container prices for China-US routes are now between $ 15,000 and $ 18,000 dollars per 40-foot container, or two to three times higher than pandemic prices.

In addition, the Ukraine crisis has disrupted global energy supply, putting pressure on oil prices and thus higher shipping costs. Cahn’s baseball caps and other products gain an advantage because his products travel shorter distances to reach American buyers, a cost saving that helps offset China’s lower labor costs.

Cahn said that before the pandemic, his baseball caps cost about 30% to 40% more than imports from China.

At present, a baseball cap purchased for $ 2.50 in China will eventually cost $ 8 to $ 9 per unit when it arrives in the United States, he said, adding tariffs, shipping costs, packaging and the cost of meeting testing requirements for overseas products. . The 10% to 15% US tariff imposed on textile products explains part of this price difference, according to just-style.com, the industry’s website.

On average, Unionwear baseball caps cost about $ 8 to $ 10 per unit.

“Now we are competitive,” Cahn said.

Now focusing on the resilience of the supply chain due to the pandemic, companies larger than it see the benefits of using suppliers closer to their customers. “Many US companies are realizing that it can be much more reliable and safer to keep processes closer to home,” according to a Thomasnet.com article in April.

General Motors announced on January 25 that it would invest $ 7 billion in its plant in the state of Michigan in the United States to boost production of electric and self-propelled vehicles by 2025, according to a press release from the Michigan Economic Development Corporation.

Although the announcement did not mention China, it said the investment would strengthen and strengthen the Michigan supply chain, long known for its concentration on automotive manufacturers and suppliers. As Governor Gretchen Whitmer praised, this is “the place that put the world on its wheels.”

Some companies outside the United States have also promised to invest in the United States to serve their customers in the North American market. Samsung from South Korea announced in November that it would invest $ 17 billion in new facilities in Texas to produce advanced semiconductors and ensure “the stability of the global semiconductor supply chain”. The factory is expected to be commissioned in late 2024.

Samsung, which has been operating a memory chip factory in China since 2014, is part of a larger development. According to the latest Kearney Reshoring Index released in 2022, “79 percent of China’s manufacturing executives have either already moved part of their operations to the United States or plan to do so over the next three years, and another 15 percent estimate a similar actions.”

Triple mentality at the bottom ‘

William Reinsch, an expert in international trade at the Center for Strategic and International Studies, a think tank in Washington, said many US companies have been considering locating their supply chains for quite some time.

“This is nothing new, at least it is [a] 10 years of development. [The companies] want shorter supply chains. They want to be close to their customers. “They are worried about fluctuating energy prices and rising shipping costs, both sea freight and air freight,” he told VOA Mandarin.

The tariffs imposed by the Trump administration on most Chinese imports have created price increases that have made it more expensive to import these products, Reinsch said, and COVID-19 has revealed flaws in the supply chain for companies.

Harry Moser is the founder and president of the Reshoring Initiative, an organization that focuses on bringing production back to the United States. their margins, by analyzing all the costs they previously ignored. “

Some examples of products that are mature for renewal, Moser said, are those that carry high excise duties or involve frequent design changes, or those that have volatile demand, such as seasonal clothing.

“The idea here was to shorten supply chains,” said Nick Vyas, associate professor of operations and supply chain specialist at Marshall University of Southern California.

Customer-centric supply chains would benefit companies in many ways, Vyas told VOA Mandarin. “It will be much more resilient and it would certainly be much more sustainable. We will have a much smaller carbon footprint than what we have produced in the last 30 years.”

Vyas said that over the past three decades, business leaders have run companies with a mindset that only targets production costs.

“We have to get into a threefold basic thinking: cost is one variable, but we also need to think about resilience and sustainability,” he said.

Cahn at Unionwear is optimistic about his return. He believes that the era of cheap imports is over and has some advice for companies that want to strengthen their supply chains: “I think it is sensible to develop relationships with domestic suppliers” and also develop relationships with suppliers “in places like the Caribbean, South America and Canada. With tighter links, manufacturers can “isolate [themselves] from the ever-increasing cost of transporting goods across the oceans. “

COVID helps ‘Made in USA’ products compete with Chinese exports

Source link COVID helps ‘Made in USA’ products compete with Chinese exports

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