Jeff Rubin -- "Why has Global Sticks, a manufacturer of wooden ice cream sticks, moving from Dalian, China to Thunder Bay, Ontario? It’s the kind of low margin manufacturing that is never supposed to come back after it leaves North America for cheaper labour abroad.
But wage costs are no longer everything they were cranked up to be. In today’s world of soaring energy costs, power rationing and export taxes on key commodities such as wood, wage gaps are less important. When the power goes off, it suddenly doesn’t matter if your labor is expensive. Factories don’t run on sweat alone."
Thunder Bay -- "The Global Sticks factory will produce up to six billion food-grade wood sticks each year from northern white birch, a species that is underutilized by the forestry industry. The decision to relocate to North America came as a result of the recognition that manufacturing wooden sticks in China was going to become a much more difficult and expensive process given increasing fuel costs. With assistance from the province, Global Sticks will switch from sourcing products from China to manufacturing products at a new, state-of-the art facility in Thunder Bay that created 50 construction jobs. The new plant will employ 130 permanent workers and produce a variety of wooden sticks used for ice cream bars, corn dogs, tongue depressors for doctors and nurses, and paint paddles (see photo above)."
MP: We can probably expect a lot more of this type of shift in manufacturing production from China back to Canada and the U.S. The Boston Consulting Group predicts that "Sometime around 2015, manufacturers will be indifferent between locating in America or China for production for consumption in America." Important factors include rising wages and prices in China, an appreciating yuan, and rising energy costs both for production in China and for shipping goods to North America.
HT: Brad Parkes
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