Chip Starnes, head of Specialty Medical Supplies with a molding factory in Beijing, was held captive in his own factory for six days by his workers. Mr. Starnes was moving 30 of his 100+ employers jobs from China to India due to the rising labor costs, the strengthening Chinese yuan, and lack of skilled workers in Beijing. Everyone in the plant knew this, from upper management to the machine operators, and each of the 30 workers being let go were receiving a severance. Not a bad deal, right?
Unfortunately for Mr. Starnes, some of the Beijing upper management spread rumors of the whole plant closing down. His workers panicked and went on strike, while demanding a severance like the other 30 who were actually going to lose their jobs. Mr. Starnes tried to reassure them and said a severance payment of that magnitude would bankrupt the company; however, that did not matter to the police or government officials. "
The government only cared about calming people down. The government had no concerns about the business." After six days he agreed to pay half of what employees originally demanded and ended their employment contracts.
The whole fiasco made Specialty Medical Supplies $500,000 poorer and left a rattled Mr. Starnes to pick up the pieces. Plus it's safe to assume that during the period of strikes, production halted, racking up even more costs for the besieged Specialty Medical.
This occurrence emphasizes the trend that Chinese labor is starting to expect more.
Chinese workers are no longer satisfied with the low cost wages for which China has notoriously been recognized. Their dissatisfaction is resulting in lower quality products.
According to the Bureau of Labor and Statistics, the U.S. is the "most productive [country] in the world, far surpassing the worker productivity of any other major manufacturing economy." Chinese manufacturing surpassed the US purely in numbers when the recession hit in 2008, but
the U.S. is slowly creeping back as manufacturers are realizing all the additional costs and quality/time issues with producing in China.
Producing stateside significantly reduces extended shipping costs and time. American manufacturers are also regulated by the government and held to a higher standard of quality through stringent certifications and procedural controls.
With rising labor costs in China and a strengthening Yuan as well as other costs, it's about time for American companies to re-shore, returning their manufacturing back to the heartland.