According to Demographic Destiny, a labour shortage will
force retailers, especially Western brands to remake their China operations or pack
up and leave! “The changes will mark a new chapter in the history of
globalization, where automation is king, nearness to market is crucial” and
lives around the world are scrambled.
Laser technology are replacing dozens of workers who use to
scrub Levi’s jeans with sandpaper to give them that American worn out look.
Automated sewing machines and digital printers have cut the numbers of
seamstresses and pattern makers. This is because in short, “Labour is getting
more expensive and technology is getting cheaper,” says Andrew Lo.
Low cost production in China has helped suppress inflation
in the US, Europe and at home. The real question is whether or not, automation
can keep down the costs as effectively as Chinese labour has in the past.
One of the most fascinating and evolutionary ideas is the
invention of 3-D printing – where essentially printers can replicate solid
objects like copiers and produce a limitless selection of orders. “In 2050, you
could possibly have a 3-D printer at home that could produce all the fabrics
you want,” said Roger Lee, chief executive of Hong Kong’s TAL Group.
The shift in consumer demand is also leading to the diminishment
of China’s role as a global manufacture. The growing trend towards customized
goods are making huge quantities of goods less attractive and slow delivery
time is placing an increasing role as well.
Already, China’s rising labour costs of now $14.60 an hour, compared with $22.68 an hour in the U.S., according to BostonConsulting Group – after factoring in the cost of energy, China is now a more expensive place
to manufacture than Indonesia, Thailand, Mexico and India.
Levi has since abandoned the idea of “chasing the needle” –
whereby the company’s strategy was to relocate from one impoverished country to
another, in favor of other forms of cutting costs. However, none of this means
Levi is going to pull out of China, as it lists about 200 Chinese factories in
which they do business – about five times as many as any other country.
In
recent years, Levi has improved the efficiency of its manufacturing process and introduced the WaterLess method of production, since then Levi has saved more than one billion litres of water since 2011. Currently, Levi has cut costs in the number of suppliers by 40% and the
number of fabrics by 50%. Also, Levi has adapted their production to utilize
laser technology fro pattern making, reducing the cost of buying fabric – as each
pattern can be made to look like another.
Since, Levi is already experimenting with more localized
production. “When a line of so-called skinny jeans, which it made in China,
became a big hit in Europe, it turned to factories in Poland and Turkey to fill
the unanticipated demand and cut shipping time,” said O’Neill.
Most recently, Levi has launched its revolutionary jeans for women in Asia Pacific. Presently, our strategy includes expanding female consumer
markets in the Asia-Pacific region. "We believe there is significant potential
in this sector especially in the greater China markets. Levi's Revel is a new
collection which builds on our successful Levi's Curve ID Collection. Our women's
design team is especially proud of the revolutionary jeans technology of Levi's
Revel," said Roy Bagattini, Levi Strauss's Asia-Pacific president.
Fast forwarding to the future, we will see a dramatic change in how supply chain operations are carried out. The shift towards more localized supply chain's - closer to home - will lead to smaller more specialized manufacturing in all retail businesses.
Fast forwarding to the future, we will see a dramatic change in how supply chain operations are carried out. The shift towards more localized supply chain's - closer to home - will lead to smaller more specialized manufacturing in all retail businesses.
Read the whole article here: End of Cheap Labour: As China’sWorkforce Dwindles, the World Scrambles for Alternatives
According to Demographic Destiny, a labour shortage will force retailers, especially Western brands to remake their China operations ...