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A Manufacturing Exodus Due To Tariffs Puts Companies That Rely On U.S. Sales At A Disadvantage

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Tabling manufacturing innovation until after supply chains move risks ceding significant competitive advantages to those who aren’t as impacted by changes in global trade – and ultimately a step backwards for Industry 4.0 as a whole.

Employees and Smartphones seen on the assembly line at the OnePlus manufacturing facility in Dongguan, China, on Thursday, Dec. 17, 2015. OnePlus is part of a crop of upstart Chinese companies that are intensifying competition throughout the industryWhen tariff hikes began in the spring of 2018, companies associated with manufacturing immediately went on alert. Over the last year and a half, continued escalations have increased pressure on U.S.

That means less investment in quality improvement, robotics, digitalization, and connectivity in their factories. Mark Jagiela, CEO of Teradyne, a leader in automation for the semiconductor and electronics manufacturing verticals, shared “Some clients began moving quickly when tariffs first came up and that meant some sales lost momentum. Because of the move and upheaval they didn’t want to implement quickly [in the new location] so that slowed things down.

Lost human resources will also create higher costs. Depending on where the final assembly factory is relocated, the local labor itself might actually be lower cost than in some parts of China. There won’t be, however, enough mechanical, electrical, antenna, test, and production engineers in place – so new ones will need to be trained, or moved from elsewhere, a costly process.

 

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