Willie was ahead of his time: with all the back and forth between the Administration and China regarding tariff, uncertainty has prevailed. Will there be a 25% supplemental tariff on all China produced goods, or will interested parties find a middle ground?
A great economist said, “the consequence of market uncertainty is… uncertainty.” Several responses spring to mind, but it is absolutely accurate, if not trite and obvious.
It’s hard to believe that government can be responsive enough to out-wit the global market. In fact, over the last several months, companies who manufacture or source parts in China, are looking for alternatives. In our space, many cut and sew businesses in apparel or travel goods, have made the switch to Vietnam or other Asian countries. The footwear industry long ago moved deeper into Asia. Companies across the spectrum with high labor content in their products are seeking alternative resources as well. Sadly, very few companies are returning manufacturing the US.
MANY companies, small and large, are taking a hard look at our neighbor to the south. Many like the global leader in acoustic guitars, Taylor, have been there for several years... I view Mexico as potentially the “new China." It's 15 time zones closer, and it enjoys a well-educated labor force with average wages lower than China. It also has a large emerging middle class of consumers, many of whom share the same interests we have here in the North.
So, July 17, we have been invited by Baja Fulfillment to tour their facility on both sides of the border. It's a half day trip that can answer a lot of questions about how we could use the proximity of Mexico to the benefit of our business. Among the topics is transporting goods in bond from the Port of Long Beach to Mexico: how it works and why. I am sure we will see some significant opportunities to assess 3PL (Third Party logistics) costs vs our in-house tactics…and many other topics that always arise when we get a group of executives thinking about opportunity!
Members, email Nick to reserve a space.