Tag: U.S.

OM in the News: The Supply Chain of the Future

“The supply chain of the future will look like a multiheaded dragon,” said the CEO of a Vietnamese industrial-park. “The era of sourcing from one global manufacturing base in the world is completely over.”

Workers stitching apparel at a factory in Ho Chi Minh City, Vietnam

Under the current U.S. tariff plans (which are subject to change, of course), certain countries with lower tariff rates are set to emerge as relative winners. Mexico, Brazil and India would step up to a bigger role linking China’s vast supply chain to the U.S. market. Those countries would draw investment to replace the current “connector states” in Asia, led by Vietnam and Cambodia.

Products vulnerable to tariffs are toys, videogames, computer parts and smartphones. Vietnam and China supply more than half of the furniture imported by the U.S. Vietnam supplies a third of the sports shoes and a quarter of the solar cells imported by the U.S. China, Vietnam and Thailand make much of the world’s portable computers.

 Businesses such as Apple, HP and Nike have invested heavily in Asian countries outside China and moved assembly there, reports The Wall Street Journal (April 6. 2025). This strategy is termed “China plus one.” It was designed to sidestep tariffs imposed by both the Trump and Biden administrations.

Apple, Taiwan Semiconductor, and the South Korean automaker Hyundai have announced large factory investments in the U.S. this year, in line with the administration’s goal of rejuvenating American manufacturing.

But it would be unrealistic to expect labor-intensive businesses such as apparel to return to the U.S. It lacks workers skilled in those industries and a nearby supplier network to keep costs down. U.S. manufacturing employees earned around $103,000 on average in 2023 (including benefits). That is around four times the wage level in China and 2.5 times that in South Korea. Chinese factories could seek to cut costs by sourcing such components as resistors and transformers from parts of China where labor is cheaper.

Many Chinese factories have already relocated to Vietnam. The next place is jumping to India where tariffs are lower.

Classroom discussion questions:

  1. What is your supply chain strategy if you are an Asian manufacturer?
  2. What if you are a U.S. toy company with most production coming from China?

OM in the News: The Top 10 Manufacturing Countries in 2020

chinaA new study on future global competitiveness, reported by Industry Week (Dec.9, 2015), predicts that the U.S. will dislodge China as the most competitive manufacturing nation in the world in 2020. “Manufacturing competitiveness, increasingly propelled by advanced technologies, is converging the digital and physical worlds, within and beyond the factory to both customers and suppliers, creating a highly responsive, innovative, and competitive global manufacturing landscape,” says the report. While emerging markets continue to push the leaders, the manufacturing powerhouses of the 20th century (the U.S., Germany, and Japan),  hold 3 of the top 4 positions currently and in the future. The study also suggests that Brazil and Russia seem to have lost their allure as highly competitive manufacturing locations today. Here are the rankings:

# 1 The U.S.: By 2020, the U.S will overtake China to earn the top spot for the most competitive nation in the world, due the country’s investment in research, technology, and innovation.

#2 China: Shenzen is a large manufacturing center that has sprung up quickly (see photo).

#3 Germany: Germany is pushing its leadership in industrial production research and development toward “smart production.”

#4 Japan: The manufacturing sector accounts for 19% of Japan’s GDP.

#5 India: It has a large population of engineers and factory workers, its intellectual property is widely respected, and it is easy to find English-speaking managers there.

#6 Korea: The biopharmaceutical industry is an important manufacturing sector to South Korea.

#7 Mexico: Electronics manufacturing activity in Mexico is widespread. In the last 15 years, $14 billion in investments have been made to make production stronger and more efficient.

#8 Taiwan: Five of the world’s largest producers of TFT-flat screens are Taiwan-based.

#9 Canada: Montreal’s aerospace sector is comprised of more than 210 companies which employ 43,500.

#10 Singapore: More than 30 biomedical sciences companies have established regional headquarters in the country.

Classroom discussion questions:
1. Why not Brazil and Russia?

2. What makes U.S. manufacturing more competitive than 30 years ago?