Don’t give up on global markets

A column ran recently in the New York Times asking “Is Manufacturing Coming Back to the U.S.?” It cited several reasons that might be happening, most relating to developments in China.

1. The Chinese government has started allowing the value of its currency to fluctuate,
2. Chinese workers have begun striking to increase their wages.
3. Both of those developments are likely to increase the cost of manufacturing in China,
4. The costs of shipping containers are going up.

The author concluded that the ability to offer U.S. customers just-in-time delivery and better quality controls may make U.S. manufacturers more attractive.

In the meantime, while U.S. manufacturers gear up for stronger domestic business, James Tompkins, internationally-known supply chain consultant and CEO of Tompkins Associates, told Modern that it would be a mistake for them not to think globally. That means setting their sites on customers in China as well as in the U.S.

“Manufacturing will shift some in China (go west young man) and out of China to other low cost countries,” he said. “But more important is the need to have strategies on being global and selling into as well as buying from China.”

Tompkins is convinced shipping capacity will return and pricing will continue to ebb and flow as market forces play out. He suggests keeping an eye on what happens in the consumer electronics and pharmaceutical sectors. As these categories flourish internationally, he predicts, so too will the sale of material handling automation, including warehouse management and transportation management systems.

The latest Material Handling Equipment Manufacturing Forecast (MHEM) released by Material Handling Industry of America (MHIA) supports Tompkins’ prediction. In contrast to the 34.4 percent contraction in material handling equipment shipments in 2009, this industry should see 1.0 to 2.0% growth in 2010, both domestically and internationally.