The Difficulties of SPC Manufacturing in US

SPC flooring has become very popular in the United States in recent years. However, with the rising production costs in China, some manufacturers in the United States are also gradually considering building factories in the United States to produce SPC flooring. But they ran into all kinds of problems. At present, very few factories have been successfully set up and put into production. So why is it so difficult to build a factory to make SPC flooring in the US? This has a lot to do with the overall state of manufacturing in the US. This article will take a macro look at the difficulties of producing SPC in the United States.

Essential reason:

The financial globalization strategy that the United States has been advocating:

Before the vigorous deindustrialization, the big capital groups in the United States absorbed huge amounts of capital from the world through the issuance of financial products, and also made fat profits. On the other hand, the accumulation of foreign capital has pushed up the cost of all kinds of manufacturing in the United States. And the United States decided to develop financial services so that other countries could make goods and sell them to the United States. Therefore, the United States could exchange its free dollar bills for the material wealth that other countries had worked so hard to create, and still dominate the world’s economic system.

Two direct causes:

1. Labor issues

Due to the long-term “virtualization” of the economy, young talents in the United States are more eager to finance, Internet, technology and other service industries. While it is difficult to find suitable management and technical talents for manufacturing industries. In the United States, labor shortages are also a problem. With blue-collar workers “aging” and manufacturers hiring only older workers, which is a drag on productivity. What’s more, labor costs in the United States are also very expensive. About eight times that of China. For the United States, the first difficulty in reviving manufacturing is the shortage of human resources.

The Federal Reserve’s Beige Book report released in early March 2019 said that consumption growth slowed in most regions of the United States. But the overall picture was “mixed,” mainly because labor shortages limited job growth in some regions. And weak job growth naturally led to consumption growth in some regions.

The “labor shortage” in the United States may be getting worse. According to the Federal Reserve’s latest economic data and documents, Reuters reported. Analysts also pointed to labor shortages in recent supply managers’ reports as the reason for rising backlogs of orders for manufactured goods.

In addition, according to a report published by the Pew Research Center in 2020. If there were no immigrants in the United States, the number of people aged 25 to 64 in the labor force would fall from 173.2 million in 2015 to 165.6 million in 2035. America’s immigrant population will need a steady replenishment over the next 20 years to sustain the growth of its Labour force, or there will be a severe shortage of workers.

2. Supply chain problems:

There are certainly a number of trends that are pushing U.S. companies to move some of their production to the U.S. These drivers include higher Labour costs overseas, particularly for Chinese workers. Pressure from rapidly changing markets to shorten supply chain processes and improve response times.

The adjustment of US tax policy encourages and attracts the return of manufacturing industry. It imposes tariffs on imported products, forcing the manufacturing industry to move to the US.

Companies are paying attention to these trends, and many are moving production back to the United States. But the journey home for manufacturing is often neither easy nor cheap.

In the context of economic globalization, the industrial division of labor becomes more and more detailed.  Enterprises seldom focus on producing everything. Especially in the field of manufacturing. Manufacturing enterprises tend to gather together with upstream and downstream supply chain enterprises. Due to years of deindustrialization, the supply chain layout of various industries in the United States has been imperfect. That will bring a lot of inconvenience to the reflow of manufacturing enterprises. In addition, at present, the trade share of intermediate products has exceeded that of final products in global trade. That is to say, the global trade is mainly in the form of raw materials, spare parts, fuels, etc. That means the return of manufacturers to the United States could lead to a range of problems, including reduced quality and efficiency of production, and shortages of parts.

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