• How to benefit from the sudden end of rising labor costs in China.
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    JADE builds injection molds in Zhongshan City for our customers in North America. Much has been written recently about China’s rising labor costs and the inflationary pressure on Chinese goods. That story has ended. Here are the facts:

  • The economy is worse than what is reported on the news. Expect to see revised estimates of Chinese growth from 7% to less than 3%.
  • Forget anything you’ve heard about rising wages and hard to find labor. Both large and small shops are closing all over leaving a surplus of workers. Near us, we know of 20 factories, from small to large, that have closed in the last six months. The largest and oldest manufacturer in our area is considering closing its doors. In our 8 years of owning a factory, it’s never been easier to find workers. We used to recruit aggressively to fill a position. Now we have about 20 applicants for each opening.
  • The rules of doing business in China have changed not only rapidly but significantly.

  • The market has gone from a sellers market, where high demand allows sellers to pick their clients, to a buyers market, where buyers can dictate prices, as sellers are eager for work. In the new China normal, buyers can be proactive about negotiation and executives should expect improvements to the bottom line.
  • In our business, prices for molds should are falling dramatically for you the buyer.
  • The RMB drop alone means that buyers should be paying 7% less for tooling – but there’s more.
  • Demand is way down. Mold bases, steel, ejector pins, services & components have all fallen 10% – 20%.
  • All these facts combined mean a savings of 15% – 20% for U.S. Buyers.
  • If you are not seeing these savings, talk with JADE, we can advise you on how to win negotiations with Chinese buy using their negotiations strategies. If you buy injection molds or any other products from China, now is the time to take another look at your business. The bottom line is tool makers and all factories are hungry, and there’s a “new normal” that you should take advantage of to improve your profitability.

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  • Jade Supports Plastics Education
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    Patrick Smith, president of Jade Molds, is proud to announce the sponsorship of a Society of Plastics Engineers Foundation Scholarship for US students studying in the plastics field. “We are committed to helping American companies re-shore plastics manufacturing, and to addressing the US skills gap in the industry. Lending financial support to students is one way that we can make a difference.”

    Another way that Jade is able to contribute is through volunteer service with the SPE Foundation. Jade’s Jennifer Snodgrass has been appointed to the Scholarship Review Committee. For 25 years, she has been involved with education and various non-profits which provided support and assistance for students, kindergarten through college. Snodgrass has also been working with Jade Molds to explore options for partnering with colleges, trade groups, and other plastics companies, to help promote plastics careers and education in the United States.

    “My personal passion is in helping young people acquire the tools and education to live fulfilling and independent lives. I was incredibly honored to be offered the opportunity to serve on this committee. Committee members must carefully review and evaluate hundreds of pages of student application materials. It is a hard-working and dedicated group of volunteers, devoted to aiding young people and upholding high standards in the industry. I am equally impressed by the talent, intelligence, maturity, and accomplishments of the students!”

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  • How will China’s Economic Slow-Down Affect the U.S. Plastics Industry?
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    China’s economic growth slowed to 7.4% in 2014, the lowest growth rate in 25 years. While this growth rate is stellar compared to most countries, it represents a potential for excess capacity in many areas including housing and manufacturing industries. Prices for commodities such as copper and iron ore have dropped significantly. These price decreases are due, at least in part, to China’s slowing economy. At the same time, the dollar has strengthened. How will this affect the U.S. Injection Molding industry?

    The top line take away is that China’s competitiveness is increasing.

    First, after several years of decline, the dollar is getting stronger against the yuan and that increase is expected to continue resulting in an increase in buying power of upwards of 5% for companies that source molds or parts in China.

    Second, the increase in labor rates has ceased or even reversed. Many young Chinese are finding it harder to find work so they are settling for less. Offsetting the labor excess in the manufacturing centers on the coast is a shift to more jobs available in the inner provinces, although at lower pay. This shift of workers to the interior may put upward pressure on labor rates in the coastal provinces.

    However, the smart factories in China already started looking at process and automation improvements to offset the increase in labor. Those factories will continue on that path whether or not labor rates stabilize or decrease. We toured a local injection molding factory in Zhongshan City where the owner focused on process improvements. He cut the labor per shift in half, from 50 to 25, by improving his tooling, adding robotics, and moving assembly into work cells at the presses. That reduction far offsets the 10-20% increase in labor over the last couple of years.

    The take-away is that China’s tooling industry is on a path toward lower costs, independent of labor rates. While tooling typically represents less than 10% f a project’s cost, the reduction of any cost is important in a highly competitive business. U.S. injection molders stand to benefit from lower offshore tooling costs in 2015.

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Jade Group International
143 South Main Street Second Floor
West Bend, WI 53095

Phone: 888-549-6014


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