The U.S. As A Developing Country Manufacturer


Make of this what you choose.

From the NYT:

Suntech Power, China’s largest solar panel manufacturer, plans to open its first American plant near Phoenix, the company announced on Monday.

The plant is to begin production in the third quarter of 2010 and will initially employ 75 people, probably rising over time to 200, according to Roger Efird, a managing director of Suntech.

Mr. Efird said Suntech had been publicly considering a manufacturing site in the United States for several years. Solar panels are heavy, he said, so as the American market grows, the company decided to place a factory closer to its customers.

“As the price of solar panels has reduced dramatically in the last 12 months, the shipping costs have become a larger and larger portion of the overall cost of getting these projects to market,” Mr. Efird said.

The Phoenix plant will, however, make the panels out of solar cells shipped in from China.

Suntech estimates that it already has about 12 to 13 percent market share in the United States, according to Mr. Efird, with a goal of reaching 20 percent by the end of 2010.

Jesse Pichel, a solar analyst with Piper Jaffray, called the Arizona move a “very smart strategy for the company to embrace the U.S. market and have a ‘Made in the U.S.A.’ product.” In addition to the politics of manufacturing, he said, some federal buildings might require American-made panels.

At one point in time, the U.S. was the leader in developing complex systems for manufacturing high tech products. It wasn’t uncommon as industry searched for manufacturing economies to ship the valued added components overseas for assembly. It appears those tables have been turned.

There’s little doubt that this is a politically motivated bone being tossed by the Chinese. That makes it more galling. If you see any of the political types crowing about this try very hard not to lose your lunch. It’s a sad commentary on the state of manufacturing in this country. Earlier this evening I excerpted some thoughts from Ambrose Evans-Pritchard on the growing impasse between China and the U.S. on trade and currency issues. He had a particularly telling comment about job arbitrage that fits well with this story. Here it is:

Western capitalists are complicit, of course. They rent cheap workers and cheap plant in Guangdong, then lobby Capitol Hill to prevent Congress doing anything about it. This is labour arbitrage.

I hate to be a cynic but it does appear that the majority of us are being played for fools by the Chinese as well as our fellow citizens.

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