Month: January 2012

Manufacturing Away, Not Home

China – Not US – More Efficiently Producing iPhones

Although there has been talk about Chinese jobs returning to the United States of America due to the fact that sending them there is no longer proving to be such a money-saver, when it comes to the manufacture of iPhones, it seems this is not the case.

While still working on the iPhone, Apple CEO Steve Jobs was incredibly demanding and it seemed his desires could only be met in China, not America.  He wanted a perfect glass screen to be developed in as little time as six weeks.  The Chinese didn’t let Jobs down.  Within 96 hours, its facility employing 8,000 workers putting in 12 hour-days had produced over 10,000 iPhones.  No American plant would be able to achieve that.

So, unlike other manufacturing plants, it seems that Apple will not be moving its operations to America any time soon.  If it did, figures show that it could take up to nine months to find the close to 9,000 industrial engineers to produce the iPhone in America.  In China it would take just 15 days.  The figures thus speak for themselves.

Japan’s Yen Versus the Euro

For nearly a decade now, Japan’s Finance Minister, Jan Azumi has been warning that the yen’s escalation against the euro have happened rather too quickly.  Europe has been battling to solve its debt crisis which has resulted in a 15 percent appreciation of the yen against the Euro during the last six months of 2011.  This has continued into 2012 which has witnessed a further 2.4 percent yen increase.

Impact on Japan’s Economy

Unfortunately, it’s not just Europe that is suffering from the debt crisis.  According to UBS foreign-currency strategist, Daisaku Ueno, it is negatively impacting Japan’s economy.  He pointed out, “in

dollar/yen, companies are adjusting to yen strength. But as Japan exports more to the Eurozone than it imports from it, it is more difficult to adjust to euro weakness.”

However, this has not been affecting overseas investors.  They are still purchasing Japan’s bonds which is thus elevating the appreciating pressure on the yen.  As well, the currency was 2 percent stronger at the end of last week than the figure for October 31 – the most recent dollar/yen intervention.

Chinese Manufacturing Jobs to Return to US?

At one time, the United States of America seemed to be sending all its manufacturing jobs east.  But now it looks like these positions might be boomeranging back to the west.  Why?  Because it is no longer all that inexpensive to outsource such positions to China, so there does not seem to be as much point.  According to experts from the Boston Consulting Group (Douglas Hohner, Harold Sirkin and Michael Zinser) industries such as furniture and auto will be returning to America as it no longer pays to have them in China.

At one point it was the case that labor was cheaper there – less than $1 per hour – but this has changed along with the significant expansion in China’s economy.

China’s Environmental Efforts

China is making significant environmental efforts. As the leading carbon polluting economy around the world, the country intends to impose a carbon tax in an effort to decrease greenhouse emissions. That’s great but it should not lead us to believe that the whole world is going green.  In Australia, the government has been pleased about the carbon tax – anticipated to be put into practice within the next three years – given that it is working on its own climate change policies and shows that internationally, countries are working hard to decrease greenhouse emissions.

China has been working on different ways of working with cleaner energy sources but it remains uncertain as to exactly how this is going to work and what effect it will have on the country’s emissions or those throughout the world. At last month’s UN Climate Chance Conference held in Durban, SA, the mega economies of the world decided to come up with a legally-binding treaty within the next three years on this matter. Yet the conference was still unable to commit to drastically reducing emissions throughout the world.

Australia’s Concerns Vis-à-vis China

Australia remains concerned though about China’s green efforts. Since the starting price of the increase to China’s plan to price carbon is $1.55, this is just a tiny fraction of Australia’s starting price of $23 per tonne.  Thus is causing the Minerals Council of Australia to think that it could hurt the competitiveness of Australian businesses.  This might suggest that Australia is a bit too ahead of the game on global green acidity which ultimately puts its economy in a more vulnerable position.  Time will tell.

America Taking Pride in Economy Again

The US has definitely had its issues with its economy in the last few years.  But now it seems that things are looking up, especially when analyzing economic activity over the last year.  The country’s S&P 500 Index is said to be doing better than its counterparts in Frankfurt, Hong Kong, Sao Paulo, Shanghai and Tokyo by at least 15 percent.  As well, Dow industrials increased 135.63 points on housing and employment.  In addition, figures for overall employment are good too with less Americans filing jobless claims.

The Only Way is Up

In truth, things were looking pretty dreary for the American economy a few years ago.  It all started to go disastrously wrong in 2007 with the mortgage crisis. Thereafter, there was the plummet in stocks.  This was followed by high levels of unemployment, and the collapse of the motor industry.  Banks closed, and it seemed at one point that it was becoming almost impossible to hang on to any job. So, truthfully, the situation had no place else to go but up.

Asia Helping America

Today, in 2011-12, America’s economy is definitely going in the right direction.  This is in spite of Europe’s debt crisis. Further, since there are now worries about inflation along with a drop in growth in Asia, this is positive for America’s economy too.  Japan’s auto industry is suffering somewhat since until recently it was a world leader. This changed due to the overpriced Japanese Yen.  But again, this is good  news for America as Honda has decided to move four of its manufacturing units out of the country, to America and Mexico.  And what this has translated to, is sales of Honda (in America) being just a tad behind those of Korean Hyundai vehicles.  Great news for Americans working with Asians leading to the hope of more business deals ahead.