Here is the harsh truth: China has no obligation to help make the West competitive. Western businesses fired up China's manufacturing engine by investing billions into the country, but the communist country itself fostered the environment that made it a magnet for foreign investment.
So don't look to China for help in the struggle to regain or stem job losses to Asia. Governments, businesses, and employees must become more aggressive in developing steps that will make North America and Western Europe competitive. The steps will involve slashing total production costs, including wages where necessary, and implementing further productivity enhancing actions.
This is not a message some would like to hear, but going by the results of the latest EBN poll it seems employees are already onboard with the lower wages; almost two out of three respondents (approximately 60 percent) said they agreed lower “labor costs [will] make the West more competitive vs. China while 33 percent of the 158 respondents (as of Tuesday, Nov. 30) disagreed. Another 7 percent were uncertain. (To take the survey or see results click Labor Costs, East & West, Part 1.)
Here's what I propose: First, stop the handwringing and start thinking; the jobs that have been lost cannot be frog-marched back. Some of these can be won back — and future losses stemmed — through diligent planning by businesses and governments.
Workers in the West must stop the servile “Aye, Aye, Captain,” response whenever a CEO, investors, or bondholders demand plants be relocated to lower-cost locations. Instead, draw up cost-effective alternatives that a chief financial officer can use to make the case for keeping those facilities in local centers. You won't win every argument, but by being active in the process of matching Western costs against the China-cost you could safe some jobs and keep the enterprise profitable.
Also, don't accept the twisted logic that Western workers should go for high-level design work and let low-level design and manufacturing operation move to Asia. Why? Chinese and Indian engineers, assembly line workers, and even the lowliest cleaners don't want to stay stuck at the lowest rung of the corporate ladder. They want the fat pickings just as much as you do, and, in any case, low-level manufacturing jobs represent the best training grounds for future leaders.
This is not a rah-rah motivational article. Some of the actions that will be needed to safeguard manufacturing jobs in the West will be controversial. Those who agreed with me in a previous article (Stop Gorging on China) may hurl rotten tomatoes this time, but regardless, Western costs must go down and productivity must ratchet up so we can ensure jobs proliferate where needed — at home.
And the blame-China game must stop. Political and business leaders haranguing China or bullying it to jack up the Yuan's exchange rate, for instance, need a different strategy. A comprehensive program to redress the situation is preferable — let's say, through tax credits for corporations willing to expand operations locally.
And finally, we must lure Chinese companies to our shores. We did it with the Japanese, and now Toyota makes cars in the United States. Chinese companies have huge foreign exchange reserves at their disposal; let's help them spend it here to invest in or purchase Western companies. Then let's seal the deal by ensuring jobs created in the West by Chinese companies stay right here in the West.