An Optimistic Future for Blue Collar America
The combination locks that are frequently used by American high schoolers are manufactured in clusters at Master Lock`s 90 year old factory, where every 2 seconds one set of locks are manufactured and produced.
Recently with the increase in working hours of machinery and labor, the level of productivity has drastically improved with there being three shifts per day everyday of the week. Before this change was enforced, the machine was only being used for a couple of hours on a daily basis as the Fortune Brands Inc was ordering padlocks from China rather than self manufacturing them.
There were contrasting views on why production and manufacturing of locks should be moved from China where wages were 6 times cheaper than in US. The reason behind moving production back to Milwaukee was due to efficiency as the machinery and factories were 30 times faster than Chinese factories which were a huge advantage.
Bob Rice a senior vice president of the largest U.S. padlock manufacturer was quoted saying that he could produce locks at a cheaper price in Milwaukee compared with China.
The U.S. manufacturing sector has been in decline for a long time. However the fact that manufacturing of locks was now going to take place on U.S. soil was good news to the people of an area affected by 2 million job losses. Apart from Master Lock, other companies such as General Electric Co and Boeing Co are also increasing production at their U.S. factories.
Daniel Meckstroth who is the chief economist at the Manufacturers Alliance stated that the change in economics is now shifting more in favor of United States as compared to any other country where production and manufacturing costs are low.
The recovery period that the United States`s economy is going through has come at such a time when the BRIC countries especially China and India are enjoying substantial levels of growth which makes it easier for U.S. manufacturers to reduce the cost gap that it has with its foreign rivals.
When comparing inflation rates of China and United States, we see that China`s inflation rate at 5.5% is much higher than U.S. inflation rate which is 3.6%.Due to this, wages in China are increasing at 15 to 20 percent per year leading to an increase in labor costs.
Advancement in technology also tilts the balance in U.S.`s favor. Bruce Crass, the general manager of Master Lock stated that on an average each worker at his plant oversees six high speed machines that produce 24,000 locks on a daily basis which is one-sixth the number of workers need by its Chinese suppliers.
Master Lock produces about 55% of padlocks in North America with its factories located in Milwaukee and Nogales, Mexico. There has been improvement from a 50-50 split whereby production was divided between Master Lock and China about 2 yrs back.
There has been a substantial increase in production of locks in U.S which has benefited the economy a great deal.