Good Reasons For Any Country To Manufacture Goods Locally
This blog space has been sitting on my website idle so I thought it would be a good space to write some of my views and opinions instead of being so selective and stiff on what I post here. So, here’s my first post in a long time but expect some more in the coming days/weeks. Sorry it’s so long but that’s a bad habit I have, which you already know if you’ve read through the website.
¶ At one time, a long-long time ago I wrote a list of 12 Reasons Why Governments and Private Investors Should Invest in Manufacturing. All of those reasons are still valid but the world we live in now is a lot different than we I wrote that so I thought I’d write an update to that.
There are a couple of thousand plus cultured marble (engineered stone) factories in the USA supplying bath and kitchen construction materials to their local construction market. A builder will go to a local marble shop because they know the manufacturer can make them exactly what they need. Every home builder has designers who create specs for their bathrooms and kitchens. They choose colors, choice of stone (marble, onyx, granite, etc. –see the ‘Formulas’ page) sizes, design, styles and more so they’re prohibited from buying these building materials from a box-store. They just won’t work.
Back in the day we used to spend a lot of time and effort on Search Engine Optimization, SEO, on our website. This generated thousands of leads for us from all over the world but they were from entrepreneurial-minded young men and women who were desperately looking for an opportunity but didn’t have the financial capability to set up a cultured marble factory.
This is how we got to know so many people from developing countries. We naively, but not regrettably, worked with many of these individuals, making personalized presentations, business plans and spreadsheets for various scenarios. So, along the way, we learned a lot about many countries and why we’ve seen it difficult to sell factories in some regions. We’ve set up factories on every continent and in many countries; South and Central America, Europe, Australia, Asia including China who saw a huge opportunity and was very eager to jump into this growing industry. It came with free training so they didn’t have to ‘invent the wheel’. They came, they liked, they bought. Period! We shipped, went to China to set up their factories and train their people. I’ve been to ever region in China, north to south, east to west. I ate more types of Chinese food than I knew existed. I’ve been to the Forbidden City, the Great Wall, toured the Hutongs, visited the Summer Palace, walked Tiananmen in Beijing, saw the biggest Jade Buddha in the world at the Jade Buddha Palace in Anshan and go to hug and pet a real Panda Bear at the Sichuan Wolong National Nature Reserve. Our clients in China were the best hosts and I had great experiences there.
But, selling factories was that simple, everywhere, except in Africa where we've been hearing African leaders say for 10+ years, with slight variations, “We have to quit exporting raw materials only to import them as expensive goods. Here's one of my favorites.
Now we see the same factories we set up in China exporting these building materials to Africa and African leaders continue to say they have to quit exporting raw materials only to import them as finished goods. Give it up and do something.
1. In the meantime, it’s the unemployed in Africa who are hurt the most. There are many reasons manufacturing is crucial to every country’s economy and job creation is the most obvious reason and manufacturing creates more jobs than any other sector. That’s why my X (formerly Twitter) bio says “Poor countries that don’t manufacture and spend their money on imports will always remain poor.” If you watch an ounce of news you’ll see Jobs –Jobs-Jobs in the news every day. Here in the USA we have Employment Situation Summary, U.S. Bureau of Labor Statistics, Labor and Labor Reports. Job Openings Report, Labor Turnover Survey and the list goes on and on. It’s not my job to know but I’m pretty certain China, Germany, the UK, France and every other developed country gathers their statistics through their various agencies too. Have you ever wondered why? Does your country track Jobs or Manufacturing statistics? Does your government make job creation a priority? Taking a look at your unemployment rates will give you that answer. If they’re high, I’m betting they don’t. I’m always amazed at how many young men I see gathered around under a shade tree in the middle of the day. We all know they’re just hanging out because there are no jobs.
2. We’ve all heard the term trickle-down economics. You need crushed limestone from the quarries that also employ people. You need a driver, a truck, and fuel to move these goods, etc. Your workers now have a few dollars to eat more nutritionally so your local food market benefits. Furniture is needed at the factory and your employees homes so your (hopefully) local furniture manufacturer sales increase and it’s all repeated again.
3. The multipliers that I mentioned above add to the GDP. Local production keeps the value-add, in country, (like the leaders talk about in my above comments) by way of wages, profits, supplier spending and even taxes for the government, rather than sending these jobs to foreign countries and then importing the finished goods. Manufacturing and exporting goods is what increases a country’s GDP more than anything. Look at Vietnam. Here in the USA, everywhere you look now you see “Made in Vietnam”. You didn’t see so many Vietnam imports 5 to 8 years ago. They went from $57B to $517B in the last 20 years. That’s a whopping 792% increase! That’s all due to manufacturing. There are many countries who are following suit and it’s time Africa joined this manufacturing bandwagon.
4. Manufacturing locally eliminates supply-chain disruption risk. Relying less on distant suppliers lowers vulnerability to political blow-ups, shipping crises, natural disasters, trade disputes, geopolitical shocks or simply contract misunderstandings with foreign suppliers.
5. Local manufacturing improves trade balance and foreign-exchange savings. Local manufacturing cuts imports; eases pressure on currency reserves, and can support a stronger current-account position—particularly important for developing economies. Also, many emerging economies experience volatile exchange rates. (Ask Nigeria) When local currencies drop in value, the cost of imported goods can sky-rocket which can restrict importing goods, in our (your) case, building materials. What good is it to build a house if you can’t buy a lousy sink, bathtub, shower or toilet due to hugely inflated prices?
6. I’ve read many articles from developing countries talking about IT, Infotech, computing, etc., but before you delve into your next high-tech project you’ll want to invest a little of your time with your sanitary ware. It’s called a sink or wash basin. Sure, computing is important and without it I would not be here flying across my keyboard giving you this, but look around you and find some simple things you can ‘manufacture locally’.
7. I’ve seen some of the building materials being imported in some developing countries. Acrylic sinks, bathtubs and shower pans are worthless. They crack easily, stain and turn yellow after a short period of time and ceramic breaks too easily and need to be replaced. The products we’ll show you to manufacture will never stain and they are four times the tensile strength of ceramic or natural marble. Your local building code regulators and customers can more easily inspect your facilities and products to see the unlimited selection of products and colors that you can produce and won’t be seen with imports.
8. For those who are most concerned about the environment, keep in mind that a single 40 foot container accounts for about 1.1 to 1.4 tons of CO2 for a trip between China and East Africa and even more going to West Africa.
9. Every country should reduce their reliance on foreign suppliers. When you rely on foreign manufacturers, they can manipulate you and may eventually own you. Keep your government’s feet to the fire as they may be the personal beneficiaries of imports. Reduced reliance on foreign suppliers limits exposure to sanctions, export controls, sudden policy shifts by exporting governments or deliberate supply coercion.
