This is a Short Note.
Bloomberg Businessweek reports that a Chinese company will be opening a T-shirt factory in U.S. Yes, you read it right – United States. The company will be making T-shirts that cost it 33¢ per unit. It has used automation to take out the labor cost which has made it very challenging to make apparels in U.S.
“By early 2018, Tianyuan Garments Co., based in the Suzhou Industrial Park in eastern China, will unveil a $20 million factory staffed by about 330 robots from Atlanta-based Softwear Automation Inc. The botmaker and garment company estimate the factory will stitch about 23 million T-shirts a year. The cost per shirt, according to Pete Santora, Softwear’s chief commercial officer: 33¢.”
Softwear Automation was founded in 2007 by a group of engineers from Georgia Tech, and its sewbots will produce one T-shirt about every 26 seconds, Santora says.
Millions in economic incentives persuaded China’s Tianyuan to set up shop in Little Rock, where it will create 400 jobs, mostly for machine operators. Given America’s supply chain, infrastructure, consumer market, and skilled workforce, “the U.S. is undeniably an attractive production base if labor cost is taken out of the equation,” one researcher says.
This looks very scary when you consider that Africa has been banking on bringing industrial era jobs to jump-start its job creation. But when robots can be deployed in this way, it does mean that we have to go back to the drawing board. Simply, the jobs may not be coming.
As noted in the article, when automation takes over, jobs can actually move from the low-labor cost countries like Indonesia to the advanced ones like U.S. where the highly skilled manpower needed to operate the equipment could be found. There is no human element that can beat 33¢ for producing a T-shirt. Add to the advantage that the advanced countries are where the markets are located, a huge dislocation evolves. Once you automate out labor, the few ones needed to operate the equipment can be easily paid. Factory Jobs could end up being localized in countries like U.S. and UK in the near future. So, Africa needs to update its job strategy as machines are coming.