Playing a Rigged Game
Manufacturing a product in a mature industry in a developed country can be challenging. Plastic injection molding is no exception. The technology, while always evolving and improving, has been around for over 60 years. Most developing nations have their own plastics manufacturing industry in place, and those companies benefit from a much lower wage scale that can make it hard for a developed nation, like the U.S. to compete in the global marketplace. We usually rely on making more technically challenging products; leveraging our edge in technology and productivity to produce parts that are difficult to mold, or difficult to make in the enormous volumes required.
Unfortunately, normal business and technical concerns are not the only barriers to success in the global market and to holding our own in our domestic market, especially when competing against America’s 2nd largest trading “partner,” The People’s Republic of China. In 2009, the US ran a 227 billion dollar trade deficit with China census.gov, by far the largest trade deficit not resulting from oil importation.
China’s handling of its currency has been a hot topic in recent years as they have grown in international trade. It was recently announced that China is planning to lift the peg of the Yuan to the dollar. In a controlled manner, of course, cnbc.com. The world, and in particular the U.S. will be watching closely as they have been highly critical of attempts to discuss their currency practices in the past. reuters.com.. While there is disagreement over the true extent of manipulation, estimates of the effective subsidy to Chinese products in recent years range from 10% on the conservative end, to upwards of 20% on the other. This has provided a dramatic price edge for Chinese manufacturers of every kind. Maybe they are seeing that it needs to be eliminated if they want to be able to supply all nations without the threat of retaliation or trade barriers. Only time will tell if their recent announcement moves them closer to this goal or is just another stall tactic.
Even in the face of this significant currency disadvantage, many companies, like Team 1 Plastics, still manage to compete successfully with their Chinese rivals. In fact, Team 1 currently is supplying a set of interior lens to a supplier in China. Please share techniques or methods you have employed to compete globally?
