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Posts Tagged ‘Manufacturing’

How COVID-19 Is Transforming Manufacturing

Posted by hkarner - 4. April 2020

Dalia Marin

Dalia Marin is Chair of International Economics at the University of Munich and a research fellow at the Centre for Economic Policy Research.

As the COVID-19 pandemic escalates, the advanced economies seem to be geared up for a manufacturing renaissance. But while this may reduce risks for large firms, it probably will not benefit very many advanced-economy workers, let alone the developing countries from which production is being shifted.

MUNICH – As the COVID-19 pandemic escalates, the risks inherent in global supply chains are more apparent than ever. Rather than await a return to business as usual, with manufacturing activities concentrated in countries where labor is cheap and plentiful, advanced-economy companies are shifting their focus to the lowest-wage workers of all: robots.

Firms began relocating production to low-wage countries in the early 1990s, aided by the fall of the Iron Curtain, China’s global integration and eventual accession to the World Trade Organization, and the rise of containerization. The period between 1990 and the 2008 global financial crisis has been called an era of hyper-globalization in which global value chains accounted for about 60% of global trade.The 2008 global financial and economic crisis marked the beginning of the end of this era of hyper-globalization. In 2011, global value chains stopped expanding. They have not grown again since.This reversal was driven by uncertainty. From 2008 to 2011, the World Uncertainty Index – constructed by Hites Ahir, Nicholas Bloom, and Davide Furceri – increased by 200%. Den Rest des Beitrags lesen »

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Apple Explores Moving Some Production Out of China

Posted by hkarner - 21. Juni 2019

Date: 20-06-2019
Source: The Wall Street Journal

Trade tensions prompt iPhone maker to consider diversifying supply chain

Apple has a longstanding dependency on China for manufacturing and as a market.

Apple Inc. is asking suppliers to study shifting final assembly of some products out of China, people familiar with the matter said, as trade tensions prompt the company to consider diversifying its supply chain.

While any major changes would be difficult and could take months to years to implement, Apple is looking into the feasibility of shifting up to around a third of the production for some devices, some of the people said. Destinations under consideration include Southeast Asia, the people said.

No decision has been made on such a move, some of the people said. Any such transition, they said, is unlikely to significantly affect the iPhone in the near term because the company relies on hundreds of thousands of workers available in China to manufacture the high-volume product, which depends heavily on human hands for assembling, as well as a deep network of suppliers there. Den Rest des Beitrags lesen »

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Manufacturing blame

Posted by hkarner - 6. April 2019

Date: 04-04-2019
Source: The Economist

The gloom hanging over the world economy is confined to manufacturing
Service industries have defied the sinking mood

Pessimism about the world economy has grown throughout 2019. Disappointing data, tumbling bond yields, the trade war between China and America and political crisis in Britain have all played a part. The only bright spot has been mostly buoyant stockmarkets. On April 9th the imf will probably report a downgrade to its forecast for global growth this year, which in January stood at 3.5%. But there has so far been only a deceleration, not a downturn, because economic weakness has been contained mostly to manufacturing, rather than afflicting the service sector (see chart). And a manufacturing rebound might soon lift the global mood.

Manufacturing’s woes can be blamed primarily on falling global trade growth. That is down partly to the trade war, and partly to Chinese policymakers’ attempts to reduce leverage, which slowed domestic growth late last year, curtailing demand for imports. The pain has been felt most in Europe, which is more exposed than America to emerging markets. It has been particularly acute in Germany. On April 1st a survey of German manufacturers, a preview of which buffeted bond markets in March, turned out even worse than expected. Industrial production has slowed even more sharply in Germany than in Italy, which is in recession, note economists at Goldman Sachs, a bank. Yet Germany’s service sector appears to be growing strongly, as does that of the euro zone as a whole. Den Rest des Beitrags lesen »

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Why a global manufacturing slump is a recurring threat

Posted by hkarner - 1. März 2019

Date: 28-02-2019
Source: The Economist: Free exchange

China’s on-and-off efforts to curb lending spill over to the rest of the world

THE GLOBAL economy had an inauspicious start to 2019. Markets went into a tailspin and America’s government was locked in a seemingly interminable shutdown. But matters have not played out as dismally as they might have. The government in Washington is open again. America and China appear close to a trade deal which, although modest in its achievements, would nonetheless reflect a welcome easing of tension between the world’s two biggest economies. Markets have smiled on these developments: the MSCI index of global shares has risen by 10% so far this year.

Good news notwithstanding, many economic indicators have undergone a remarkable downward shift since early 2018. Back then economists were celebrating the emergence of a broad-based expansion. When it assessed the world economy in January last year, the IMF hailed the “broadest synchronised global growth upsurge since 2010”. Now the progress on trade talks is occurring against a darker economic backdrop.

Global manufacturing activity has slowed (see chart). Economies that are especially reliant on trade, such as Germany and Japan, have suffered. Industrial production in the euro area has fallen over the past year. Both Japan and South Korea reported tumbling exports in January. The World Trade Organisation’s global trade outlook index has been falling for the past year. In February it dipped to its lowest level since 2010. America’s economy, which is less trade-dependent, has been relatively less harmed, though industrial production contracted in January. Why does the world’s manufacturing upswing appear to have flopped? Den Rest des Beitrags lesen »

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Here’s Where There Could Still Be Value in Global Stocks

Posted by hkarner - 28. Januar 2018

Date: 27-01-2018
Source: The Wall Street Journal

Global manufacturers have real pricing power for the first time in a while

Everything in markets seems to be going up, but everything is richly valued. If you still want to buy in, what to do?

One way is to ask what has really changed recently in the global economy. The answer: Factories everywhere are now running very hot. Run rates notched post-GFC highs last quarter in the U.S. and the European Union, and a post-2011 high in China. At the same time, commodity prices, though rising, remain far below this decade’s highs: U.S. oil, at $65 barrel now, is still some 43% below its 2011 peak.

Cheapish raw materials and busy factories point to one asset class that may still have steam: industrial and manufacturing stocks, particularly in less pricey emerging markets. Den Rest des Beitrags lesen »

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Manufacturing Sector Starts Growing!

Posted by hkarner - 9. September 2017

Tuesday, September 5, 2017, Observing Greece

The latest report by IHS Markit about the Greek manufacturing sector has got to be the best news in ages! It says that:

* the Greek manufacturing sector growth, i. e. the Purchasing Managers Index (PMI), climbed to the highest level since August of 2008!
* it was bolstered by BOTH domestic and foreign demand!
* and the rate of jobs growth was the sharpest in over 17-1/2 years!

I am reminded of an article which a wrote 4 months ago, titled „The Gut Says: ‚Greece Is On The Rebound!‚“

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Good News: China Is Making Less Useless Stuff

Posted by hkarner - 26. Juli 2017

Date: 25-07-2017
Source: The Wall Street Journal

China’s fight against overcapacity is finally showing some results

One of Western politicians’ biggest complaints against China is that it invests and produces too much, consumes too little, and expects the rest of the world to absorb the remainder. But in the worst-offending sectors, including global trade flashpoints like steel, aluminum and petrochemicals, the picture is brightening at last. That could help put a floor under commodity prices, even if Chinese overcapacity is far from cured.

The recent improvement partly stems from an uptick in construction at home taking in more steel and cement. But there is also evidence that China’s endless campaigns against dirty steel and aluminum plants have been working, slowing the country’s reckless overinvestment. Den Rest des Beitrags lesen »

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Eurozone Manufacturing Adds Jobs at Fastest Pace in 20 Years

Posted by hkarner - 25. Mai 2017

Date: 24-05-2017
Source: The Wall Street Journal

German business sentiment also improves, reflecting a ‘euphoric’ mood

The latest PMI figures are the first to cover the period since Emmanuel Macron, above, was elected president of France on May 7, defeating the anti-euro Marine Le Pen.

The eurozone’s economic recovery maintained its recent, stronger momentum in May as the currency area’s manufacturing sector added jobs at the fastest pace in 20 years while German businesses were more optimistic than at any time since 1991.

Data firm IHS Markit said its composite Purchasing Managers Index for the eurozone, based on a survey of 5,000 companies, was unchanged at 56.8 in May, remaining at a six-year high. A reading above 50.0 signals an increase in activity, while a reading below signals a decline. Economists had expected the measure to fall very slightly. Den Rest des Beitrags lesen »

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Where US Manufacturing Jobs Really Went

Posted by hkarner - 4. Mai 2017

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Competing with the Chinese Factory of 2017

Posted by hkarner - 17. März 2017

Date: 17-03-2017
Source: Technology Review

Deep manufacturing expertise and extensive supply chains give China a lead that will be tough to overcome.

During his presidential campaign and since moving to the Oval Office, Donald Trump has spoken a lot about manufacturing in the U.S. and its competition with China. Now that China is the hub of so many technologies, from cell phones to drones and solar panels, how do U.S. factories compare?

Harvard Business School professor Willy Shih has visited China many times over the course of a long career in business and teaching, and in January he returned from touring the country’s manufacturing center with a group of students. He spoke to MIT Technology Review about what he saw.

The following excerpts of that interview have been edited and condensed for clarity. Insider Premium subscribers can listen to the full interview here.

What stands out to you about Chinese manufacturing today?

Complex interdependencies. A smartphone typically has 2,000 components, and some of them are large—like the LCD touch screen—and a lot of them are much smaller, from tiny machine screws to capacitors to all kinds of discrete components that might go on the circuit board. The primary assembler of a product might have a number of suppliers who supply primary components, but then each one of those suppliers in turn has a next tier of suppliers, and sometimes a third and sometimes a fourth, and all of these suppliers provide components on relatively short notice. I think the strength of manufacturing in China is the density of suppliers and the ability to draw on them. Den Rest des Beitrags lesen »

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