One year after the peak, the cost of made in the U

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One year later, the cost of "made in America" may be lower than that of "made in China"

At 3 a.m. on the 15th, the US dollar interest rate hike came as scheduled, and Donald Trump also held a round table meeting at the trump building in New York that day. According to previous expectations, trump will adopt the overall strategy of tax reduction + infrastructure + fiscal easing after taking office, which is likely to drive the resurgence of manufacturing industry

according to Bloomberg, before the meeting, the top three export markets were Hong Kong, China, the United States and Vietnam, IBM CEO Luo Ruilan described the company's vision to fill the vacancies in technical positions in the United States: 25000 new jobs in the United States, and will invest $1billion in the next four years

Luo Ruilan said in a commentary article published in USA today that many technical positions do not require too high academic qualifications, and she encouraged the government to invest heavily in vocational education and vocational training. This move was also interpreted by the outside world as a positive measure to cater to trump's manufacturing return policy

in this context, a truth that cannot be ignored is that the manufacturing cost gap between China and the United States is narrowing

two months ago (October 7), Cao Dewang, chairman of Fuyao Glass, a billionaire from Fujian Province, China, officially completed and put into operation the automotive glass factory built by moreen with an investment of US $600million. According to the data provided by Fuyao Glass to the daily economy yesterday (15th), the local government subsidized it at least US $30 million

on the one hand, the rising manufacturing costs in China, and on the other hand, the return of manufacturing industry pushed by the U.S. government. Some institutions predict that in 2018, the manufacturing cost in the United States will be 2% - 3% cheaper than that in China

I basically didn't spend money on buying the factory.

not long ago, shortly after the private plane landed in Ohio, Cao Dewang, the Chinese billionaire, set out to drive along Interstate 75 to the factory he gambled on. In this factory, he gambled on his heritage and the future of the sunset Industrial Zone in the United States

this is the beginning of a report on Cao Dewang on the front page of the Washington Post on October 27

▲ image source: Washington Post

Cao Dewang ranked 1198 with $1.74 billion on the Forbes Global billionaire list in 2016

according to the data provided by Fuyao Glass to the daily economy, Fuyao Glass entered the U.S. market as early as 1995. As the world's most important automotive consumer market and producer, the United States has always played an important role in Fuyao's development strategy. Fuyao, with annual sales of nearly US $400million in the US market, is a supplier of American brands such as Ford, general motors, Chrysler and caterpillar

the former site of the moreen factory of Fuyao Glass, which was put into operation on October 7, was once the factory of general motors. After the financial crisis in 2008, General Motors closed the factory and has been idle since then until it was bought by Fuyao in March 2014

at present, this factory is the largest single factory manufacturing automotive glass in the world, with an area of 180000 square meters. The whole plant covers an area of 675 mu. It not only adopts advanced equipment, but also has a higher degree of automation than the existing domestic factories. It mainly produces automotive supporting glass such as automotive front windshield, rear windshield, door and window glass and skylight. It has a production capacity of 4.5 million sets of supporting products and 4million pieces of accessories, It employs more than 2000 local workers. It was estimated that after all production, every four cars in the United States will be equipped with glass produced by Fuyao

when Fuyao Glass purchased the factory, the Obama administration had proposed the policy of returning the manufacturing industry to the United States. In order to attract Chinese manufacturing investment, the United States has actively taken measures from governments at all levels to private institutions to create an investment environment and social atmosphere suitable for the development of manufacturing, so that Chinese manufacturing enterprises can settle down at ease

so how much subsidy did Cao Dewang get from the U.S. government for his new factory in the United States

Cao Dewang once said in person: I spent 15million dollars on buying this plant and 15million dollars on reconstruction. The local government subsidized me more than 30 million dollars through various channels, so I basically didn't spend money on buying the plant

in addition, during the presidential election, Cao Dewang even received more preferential promises. The Washington Post pointed out that state officials, including Governor John Kasich (Republican), Trump's opponent in the presidential primaries, promised Fu Yao more than $10million in grants and incentives, which became one of the highest incentives on record

how many entrepreneurs are not excited about such generous subsidies

Fuyao Glass also revealed to the daily economy that in July 2014, Fuyao established Fuyao Illinois Co., Ltd. to acquire the Mangshan (on) plant of PPG, the world automotive glass giant, including land, plants, two float glass production line equipment, etc. In June 2016, the two float glass production lines of Manshan factory were upgraded. The advantages of the electronic universal material testing machine of Jinan experimental machine factory: the functional advantages of the computer universal material testing machine:, entered the formal production stage, with an annual output of 280000 tons

in addition to the above two projects, Fuyao Group has accessory assembly plants and product design centers in Michigan, and has set up sales departments in many states, forming a complete supply chain of automotive glass. In the future, Fuyao will continue to establish R & D centers and automotive glass production bases in the United States, with a total investment of US $1billion and 5000 jobs

the manufacturing cost gap between China and the United States is narrowing, but labor costs are still a challenge

according to the Research Report on the synthesis of a graphene crystal that can maintain conductivity in a larger scale jointly announced by the Research Institute of advanced technology of research 3 stars of Boston Consulting Company in 2013 and sungkyunk University of South Korea, the average cost of goods manufactured in the United States was only 5% higher than that in China at that time. In 2015, production in low-cost areas in the United States has become as cost-effective as production in China. What is more shocking is that by 2018, the cost of manufacturing in the United States will be 2% to 3% cheaper than that in China

this prediction is likely to come true, because the cost gap between China and the United States is narrowing

previously, the precise data of manufacturing cost comparison between China and the United States given by a Zhejiang manufacturing enterprise was also quite eye-catching. Zhejiang Cixi Jiangnan Chemical Fiber Co., Ltd., founded in 2000, has always been in the forefront of domestic exports

in 2014, Jiangnan Chemical fiber invested and set up a plant in South Carolina, becoming the first Chinese enterprise to establish a renewable polyester staple fiber manufacturing plant in the United States. It plans to invest $25million in phase I and $20million in phase II. Jiangnan Chemical fiber reported that the main reason for going to the United States to invest and set up factories is that the domestic comprehensive cost has risen year after year, which is quite difficult. Jiangnan Chemical fiber calculates and compares the costs of establishing enterprises of the same size in China and the United States, and provides a comparison table of some cost components. Among them:

land cost: China is 9 times that of the United States

logistics cost: China is twice that of the United States

many attributes are often the bank borrowing costs that cannot be coordinated due to conflicts: China is 2.4 times that of the United States

cost of accessories: China is 3.2 times that of the United States

labor cost: China's cost advantage is weakening

power/natural gas cost: China is more than twice that of the United States

depreciation cost: the United States is 1.7 times that of China

only the cost of plant construction: the United States is four times that of China

however, the Washington Post also pointed out that the two biggest challenges for Fuyao Glass are recruitment and salary. The starting salary of workers is about $12 an hour

in this regard, caodewang said: the wages and benefits of American workers will account for 40% of the total turnover of investment in the United States, which is indeed higher than that of China. However, the tax burden of manufacturing industry is less. Only income tax is levied, and there is no turnover tax. In this way, half of the tax burden can be saved. In addition, the energy of the United States is also cheaper than that of China. For example, the price of natural gas is only one fifth of that in China, and the electricity charge is one third of that in China. This is a great encouragement for our investment. At the same time, moving the production base to the forefront of the international market can reduce logistics and service costs

of course, even if the cost of making in the United States is really lower than that of making in China, it cannot be equated with selling cheaper. How to avoid, or how to deal with, such a day is worth deep thinking for all those who care about the manufacturing industry

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