Comeback predicted for Latin America manufacturing
An expert says Latin America factories may soon get busier.
An economist specializing in the metalworking and fabricating industry says Latin America, which has been a manufacturing slump, will soon pick up.
“The once-formidable benefits provided by manufacturing in China, India and other Asian states are eroding,” said Chris Kuehl, Ph.D., an economic analyst for the Fabricators & Manufacturers Association International.
Kuehl made the comments in the FMA’s June newsletter, “Fabrinomics.”
“The most important factor is cost of transportation, and it’s feeding what’s being referred to as ‘near shoring,’ ” Kuehl said. “This means hauling cargo across the ocean in a diesel burning ship isn’t as cheap as it once was. It’s now more cost effective to be closer to the U.S. market, which has sparked a wave of relocation plans.
“Other costs are rising as well,” he said. “Chinese labor isn’t as cheap as it once was, especially in the fast-growing coastal cities. The cost of energy is increasing, and China is contending with 8.3 percent inflation percolating through its economy. The same pattern is developing in other Asian supplier states.
“And, now, we’re seeing a lack of capacity in many Asian states,” Kuehl added. “There may be a large labor pool, but there is not a large enough pool of skilled labor and capable managers. This has established limits to what can be accomplished there.”
An economist specializing in the metalworking and fabricating industry says Latin America, which has been a manufacturing slump, will soon pick up.
“The once-formidable benefits provided by manufacturing in China, India and other Asian states are eroding,” said Chris Kuehl, Ph.D., an economic analyst for the Fabricators & Manufacturers Association International.
Kuehl made the comments in the FMA’s June newsletter, “Fabrinomics.”
“The most important factor is cost of transportation, and it’s feeding what’s being referred to as ‘near shoring,’ ” Kuehl said. “This means hauling cargo across the ocean in a diesel burning ship isn’t as cheap as it once was. It’s now more cost effective to be closer to the U.S. market, which has sparked a wave of relocation plans.
“Other costs are rising as well,” he said. “Chinese labor isn’t as cheap as it once was, especially in the fast-growing coastal cities. The cost of energy is increasing, and China is contending with 8.3 percent inflation percolating through its economy. The same pattern is developing in other Asian supplier states.
“And, now, we’re seeing a lack of capacity in many Asian states,” Kuehl added. “There may be a large labor pool, but there is not a large enough pool of skilled labor and capable managers. This has established limits to what can be accomplished there.”
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