Here's the good news: China already is showing signs of losing its status as the low-cost producer of automotive components.
Now the bad news: Other, even lower-cost nations, are stepping into the breech.
Ever since China began implementing its communist government/capitalist economy experiment, auto makers have embraced the country as a source of components. American auto companies-U.S.-based, but really global businesses, meaning their allegiance is to shareholders, not their homeland-demand their suppliers compete in the world market. Quality being the same, a part made at a plant in Michigan has to match the price of one made in Guangzhou, China.
For many companies, that has been an impossible task. Shipping rates and tariffs are factors when producing goods overseas. But foreign production still has a distinct cost advantage when firms in America have to deal with higher taxes, environmental and workplace regulations, and paying the going rate for workers who live in a developed nation. In case after case, a U.S. rubber product maker has had to shift production abroad or lose the business.
Lower-end rubber goods migrated overseas first, and more technically complex components have followed.
Changes in China are altering the situation. China now has 300 million middle-class people. The nation is getting no break on material and transportation expenses, wages are rising, overall costs are increasing, and the government isn't subsidizing production of lower-end goods as it once did. The aim now is to make higher value-added products.
The labor rates in Vietnam, for example, are half that of China. The shifting of production of lower-end auto parts to that nation from China is ongoing.
Where will it all end? It won't. Some nation always will be at the bottom of the economic scale. And if you want to follow the migration of production, check the label of your athletic shoes. They lead the way.