I may be a dummy and just don't see the obvious answer here, but why haven't we tried to move the majority of our critical manufacturing to Mexico and Latin America? Is the answer as simple as "the cartels"?

I know it's cheaper to manufacture in Asia right now, but I think we all can agree that it's probably not a sustainable long-term model.

Surely people smarter than me have been banging this drum for a while….

100% agree. It would solve a lot of problems including immigration. Plus, if push came to shove and we needed to takeover manufacturing facilities for something critical like medication, we could do that much easier in Honduras or Mexico than China.

I assume the answer is cartels and crooked governments; however, that seems like that could easy be solved.

China has slave labor, but highly unskilled labor force.

I don't remember where I read/heard this, but Mexico has one of the most skilled work forces combined with cheap labor making it a premier destination for manufacturing.

I assume the barrier to entry is the Mexican government corruption.

Two big obstacles are raw materials and infrastructure. China has done a great job controlling many raw materials. And not many countries have the infrastructure to handle a huge increase in production or exports. At least not on the scale that would be required to take a significant bite out of the consumer goods coming from China. They also have quite a bit of automated manufacturing, it's not all just sweatshops.

Labor in China isn't really "cheap" compared to at least some other places at this point. And while there is some slave labor, I would bet it's a very small percentage of their output. Plus the major US retailers are pretty strict on checking supply lines. I would think more of the goods coming out of those areas are going to other countries.

And if you manufacture with steel, the ongoing steel tariffs make manufacturing here tougher. It's not just steel from China that is tariffed, it's like 11 countries. The US steel mills aren't any cheaper than tariffed steel and they tend to not be easy to work with.

Economics Explained on YouTube recently did a video about why Mexico won't be the next China. I'm sure there's more to it than this, but a high level overview

Aggie1205 said:

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And if you manufacture with steel, the ongoing steel tariffs make manufacturing here tougher. It's not just steel from China that is tariffed, it's like 11 countries. The US steel mills aren't any cheaper than tariffed steel and they tend to not be easy to work with.

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I was in a meeting yesterday in Houston at an O&G plant and they said they were getting the pipe for an expansion project from Germany.

That was the first time I had heard that.

This isn't a new idea....nearshoring has been a very hot topic recently.

I think a lot of manufacturing's ultimate destination will be the US.

Nafta
Cafta-Dr
Usmca
CBI

If by "we" you mean the US govt, then we've had a finger on the scale towards regionality for decades. But industry will favor lower cost with consistent quality and high volume, despite govt incentives, and those aren't found in our hemisphere for a lot of stuff (i.e. containerized cargo.) MX and CA make a ton of our cars and trucks, but asia has the lions share of containerized. China has been shooting itself in the foot for a long time with its IP theft though and a bunnnnch of US sourcing has moved west of China as a result.

Automation and robotics will bring a decent amount of manufacturing back to the US.

Here's an example of a group working on it.

https://addtronics.com/

We have been increasingly adding cobot technology. For the items they're welding, they're about 3x as productive as our welders. There are more complicated welds that aren't suited for the cobots yet but we're getting there.

There's a distinction to be made - manufacturing will onshore likely at a faster pace than manufacturing jobs

Sims said:

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We have been increasingly adding cobot technology. For the items they're welding, they're about 3x as productive as our welders. There are more complicated welds that aren't suited for the cobots yet but we're getting there.

There's a distinction to be made - manufacturing will onshore likely at a faster pace than manufacturing jobs

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Absolutely. I don't anticipate much of an increase in manufacturing jobs. Just the way it is.

1. China Manufacturing - not as cheap as it used to be, India is now the 'stereotypical' China of the past.

I've been to China roughly 20 times in my short career, just got back after not being there since Covid this last Sunday. unskilled labor, yes. skilled labor, yes. We have the same here, just not a billion people....

2. Ive implemented factories in Mexico. Unfortunately, most steel/aluminum hardware or textile is still purchased in China and only assembled. US still pays a tariff if the imported good has a certain percentage of China raw material when imported from Mexico

3. Mexico is an 'assembly' labor force

4. The Chinese tariffs killed and is still killing small-midsize business. Those fees go straight to the government when they could be used elsewhere; raise, bonuses, infrastruce, capital investment, hiring more etc. I thought Biden would have lifted them.

Camo said:

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1. China Manufacturing - not as cheap as it used to be, India is now the 'stereotypical' China of the past.

I've been to China roughly 20 times in my short career, just got back after not being there since Covid this last Sunday. unskilled labor, yes. skilled labor, yes. We have the same here, just not a billion people....

2. Ive implemented factories in Mexico. Unfortunately, most steel/aluminum hardware or textile is still purchased in China and only assembled. US still pays a tariff if the imported good has a certain percentage of China raw material when imported from Mexico

3. Mexico is an 'assembly' labor force

4. The Chinese tariffs killed and is still killing small-midsize business. Those fees go straight to the government when they could be used elsewhere; raise, bonuses, infrastruce, capital investment, hiring more etc. I thought Biden would have lifted them.

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The guy standing on the UAW picket line? Nah.

We tried Mexico. It wasn't just labor rate. The quality coming from the Mexican factories was way worse than the products coming out of our Chinese and India factories.

JSKolache said:

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Camo said:

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4. The Chinese tariffs killed and is still killing small-midsize business. Those fees go straight to the CONSUMER government when they could be used elsewhere; raise, bonuses, infrastruce, capital investment, hiring more etc. I thought Biden would have lifted them.

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Trump tariffs are a 25% tax on consumers in a period of generational high inlfation. Bad idea.

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You really think that 25% is passed on to the consumer in their sale price? Yea, that's not true

Camo said:

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JSKolache said:

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Camo said:

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4. The Chinese tariffs killed and is still killing small-midsize business. Those fees go straight to the CONSUMER government when they could be used elsewhere; raise, bonuses, infrastruce, capital investment, hiring more etc. I thought Biden would have lifted them.

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Trump tariffs are a 25% tax on consumers in a period of generational high inlfation. Bad idea.

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You really think that 25% is passed on to the consumer in their sale price? Yea, that's not true

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That's not how what he's describing works. The 25% is paid by consumer via the price differential between what they were paying before for the admittedly subsidized foreign steel and what they are paying after to the now price protected domestic mills.

The domestic steel producers absolutely raised prices after Trump's 232 tariffs were announced, higher profitability followed.

It's one of the places where folks that push protectionist tariffs fail in messaging. Yes they protect American producer jobs but in the larger economic analysis, also adversely impact American consumers and value added companies. They fail because they don't tell the whole truth.