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This article in The Detroit News this morning helped explain to me a bit of why some U.S.-based tool businesses are angrier than others when it comes to Chinese outsourcing.  I always thought it was the inexpensive labor, but tool and die manufacturers are particularly peeved about China’s currency manipulation.  From the article: 

That manipulation is among the factors ravaging tool and die businesses — one in three automotive tooling shops in Michigan has gone under in the past decade. The toolmakers charge the Chinese are allowed to vastly undercut their prices, forcing many American shops to go out of business.  […]

The Chinese fix the value of their currency, the yuan, a system that lets them offer lower prices for their goods here and makes U.S. goods in China more expensive.

As you can imagine, this his the tool and die folks especially hard since they sell to China as well.  Not only can Chinese companies produce tooling at lower cost than U.S. equivalents, Chinese companies must pay extra for tooling made in the U.S. — effectively cutting U.S. tooling manufacturers off from the largest growing market in the world.

Personally, I have no issue with Chinese tools.  I own quite a few — some with quite American names, even — and I like them.  I suspect that as time goes on we’re going to see more and more of a “global” tool market, with tools conceived, designed, manufactured, and marketed in separate countries around the world.  We’re going to have to get used to it — and we’re going to have to deal with trade inequities somehow.

Anyway, give this article a read when you get a chance.  It’s educational.

Mich. Toolmakers Fight Trade Group over China [DetNews.com]


One Response to Fixed Chinese Currency Rates = Bad News for Michigan Tool & Die Factories

  1. eschoendorff says:

    It’s embarassing. Really, it is. We are supposed to be the most powerful nation in the world.

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