Kinda like it used to be ... but not exactly

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A recent New York Times article focused on the fact that increased shipping costs are starting to have a serious effect on globalization.

According to the article, the cost of shipping a 40-foot container from China has risen from $3,000 to $8,000 since the year 2000. This trend is expected to continue, so it is logical to expect these costs to rise even more. As it is, it is already sufficient to motivate manufacturers to consider moving their plants to the U.S. since the U.S. is the world's largest consumer and that's where most of the goods are sold.

Recently, according to the article, IKEA opened a large plant in North Carolina because with the huge increase in transportation costs, it was now cheaper to manufacture furniture in the U.S. instead of shipping it from factories in China. In many ways, this is good for us. I never thought the idea of shipping materials from the U.S. to China, having the manufacturing done there and then transporting the finished product back to the U.S. was very smart in terms of the "big picture". I guess I'm in a small minority because that's been the paradigm for a long time now. But with the fuel costs causing a reversal, we are now seeing the manufacturing move back to our shores.

What's funny about this is that North Carolina was always a big furniture making hub. The industry took a huge hit as companies moved their plants to other countries. Now, they seem to be coming back but with one not so subtle difference. The companies that are setting up manufacturing plants in North Carolina are now owned by the Chinese! It's going to be interesting to see how this plays out over time.

D.D.

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