AKRON (July 19, 2011) — A maker of recycled rubber products, Tire International Environmental Solutions Inc., is relocating its manufacturing operation from China to South Carolina.
Yes, you read it correctly—an American rubber goods maker is moving production from China to the U.S.
Is this a sign of the coming Apocalypse? Or, more likely, a small example of what might happen in regards to rubber product manufacturing and China.
For the last couple of decades China has been busy eating U.S. rubber processors' lunch. As major customers charged into China to take advantage of its production costs and huge and rapidly growing domestic market, their rubber goods suppliers followed or lost business.
Much of the lower-tech rubber goods production migrated to China, as well as other low-cost Asian destinations.
So why is Tire International—which makes rubber pavers for home and garden, rubber mulch, tree rings, flooring and rubberized asphalt from scrap tires—moving its entire operation in China and 150 jobs to Moncks Corner, S.C.? Money, of course, is a major factor.
The company is getting financial support from various state and local government entities to help fund the $25 million project. This is nothing new for South Carolina, one of the most aggressive states in offering incentives to lure businesses away from their current locations.
A Tire International executive said the economics for manufacturing in South Carolina exceed that of China, and the access to raw materials is better.
This is just one case of an unusual east-to-west transfer of rubber goods production. But there are factors at work that signal it won't be the last.
The production paradise of China won't continue forever. As the nation develops, the cost of doing business will rise. It won't happen overnight, but eventually an equilibrium of sorts will occur between China and other developed nations, in terms of the real cost of doing business. Some forecasts say it will happen in about five years.
Then U.S. companies will complain about how other low-cost, emerging nations in Asia and Africa are hurting our domestic manufacturing. The threat won't end, just relocate.
This editorial originally appeared in Rubber & Plastics News, an Akron-based sister publication of Tire Business.