A North Georgia made a button manufacturer puzzling move: shut down the factory in China.

Scovill turn out cheap Chinese market withdrawal of the United States, this is a rare cautionary fable. China, not all manufacturing is paradise.

Scovill said the president was the first defeat of the people in mainland China. But really, that wages in China’s economic growth, business expectations and standards of living have increased, so that U.S. companies here (China) gain more and more difficult.

U.S. manufacturers mouth so-called “China price” (save 30% -50% of the cost) has ceased to exist. Scovill company out of China, it immediately found kallax Virgin (Ohio City) is more cost-effective than in China. Meanwhile, because of its withdrawal of the United States, 170 Americans to keep their jobs.

“But do not expect to be able to reverse the withdrawal of the United States from China’s employment situation”, experts said. Each company in the global market are faced with different challenges. For example, Scovill’s Mexican customers have not moved to China as expected.

“Five or six years ago, everyone rush to China, we thought it should go, in order to remain competitive,” plant manager MichaelLowery said, “We have therefore learned a bitter lesson. We have failed in China, we confused about their environment. But we decided to return to the United States would be a successful start. ”

Scovill is still operating one of the oldest. Founded in 1802, Waterbury, Conn., in 1812 produced the campaign for the U.S. Navy uniform.Virgin plant 90 miles north from Atlanta, opened in the early 50s of last century, ten years ago, which is situated in North Georgia, plant has 500 workers in manufacturing buttons, hooks, grommets, snaps and zippers .

Currently, Scovill Fasteners Inc. in Georgia with 250 employees. Their infant coveralls Production button, buttons for the Wrangler jeans production, also produces leather football helmet with the chin.

Since 2001 China’s accession to the World Trade Organization (WTO) later, Scovill infant coveralls customers moving into China, jeans customers also plan slice of China’s cheap labor market. In 2004, Scovill built in a factory in Shenzhen, blocks of houses and a restaurant. They employ about 500 people out of the hourly wage is 2.2 U.S. dollars, at the time of China, this is a very attractive figure.

“Manufacturers and management think that jeans are the future of production in Asia, but not entirely”, Scovill, president StewartLittle said, “the factory in Mexico has been very efficient. In the Western Hemisphere production of these jeans are still profitable.”

Scovill’s owner, a New York private equity firm, decided to become a bigger profit margins for foreign wholly-owned. This brought him into trouble. Scovill’s field manager is a highly educated, English-speaking people. But workers from Mainland China does not like the boss. Moreover, Chinese customs allow them to another surprise: Chinese New Year. On this day, tens of thousands of workers will spend a week’s holiday home.

“About 20% -25% of the workers will not come back, we lost a huge”, Lowery said: “In one year, we will lose most of the workers. This is beyond our expectations concern.”

China’s rapidly rising middle class incomes have higher requirements. Good people can choose to work in those highly competitive especially the special economic zones. In this process, Scovill lost a number of elite, they have to spend time training new employees.

In addition, not only Scovill, many companies have experienced macroeconomic problems. RMB appreciation, rising oil prices and transportation costs, resulting in Schovill jeans factory exports to Mexico increased by the cost. Lowery described as Mexico’s high tariffs “outrageous.”

Finally, Scovill closed the Shenzhen factory. Operates two manufacturing plants of the same product has no meaning for them. Since 2007 as CEO of Little said, Scovill in China lost millions of dollars. “Fortunately, we reluctantly at the last moment ‘flesh’,” Lowery said, “If we the hardest hit last 5,6 months, is bound to be annihilated.”

Scovill, like other multinational companies that have been considered as transferred to the cheaper labor in Myanmar, Bangladesh or Vietnam, but in the end they decided to still go back to Georgia. Virgin now operating a factory is relatively cheap. Wages reduced by 10%, about 13-14 dollars / hour. Productivity was also significantly increased these few years, the number of workers also cut in half.

Economic Policy Institute, a recent study reported that since 2001, Georgia lost 60,400 jobs. Scovill had planned to Georgia, the number of employees reduced from 250 to 80, therefore, the final decision to withdraw from the Americans to keep 170 jobs – the unemployment rate was 11.1% for a country that is a no small comfort.

“China is not a utopia,” Habersham County (Georgia) Chamber of Commerce President JudyTaylor said, “This event is an important message to convey to us: our own staff have a better than building blocks for the other countries, we should money and jobs stay in their own sites. ”

The same as the other respondents, Taylor is also suspected of other U.S. companies have been gradually withdraw from the Chinese market has. But no one – the United States, Georgia and Atlanta Chamber of Commerce, the National Association of Manufacturers or the Georgia Department of Economic
Development – able to list specific names of these companies.

“This may not be experiencing a” renaissance “, if not China, U.S. companies will find some other place,”, Little not deny the possibility of manufacturing back to Asia, “the unemployment rate will gradually stabilize and reduce. However, if those in China’s enterprises believe that it is now losing its competitive Li, they will move on to other developing countries of Asia Er not returning to the United States. “

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