The next few months are critical.
Here's the deal:
The hardest hitting and most insightful columnist the Roanoke Times ever had wrote the following on December 4, 2006:
Uh, that bubbly thing only applies if you didn't already close your doors and move your business to Honduras.
Silver lining in high fuel prices?
By Jerry Fuhrman
It cost less to ship raw materials halfway around the world and have low-wage, no-benefit employees work them into finished goods that were shipped (halfway around that same world) back here than it did to have those same commodities manufactured here. And the exodus of American jobs began.
The predominant factor in the decision-making over the last few decades has been the price of labor. Villagers in the jungles of Indonesia work cheap and don't demand dental and optical benefits. Far down the list of production costs are -- were -- transportation and utilities.
That's changing. Rapidly.
With the price of oil climbing once again, the cost of transporting raw materials is rocketing skyward, as is the cost of manufacturing itself (due to rising heating, cooling, lighting, energy bills). Thus both are becoming key factors with which to reckon.
It is soon going to be an expensive proposition to ship timber that was cut from the forests of Tazewell County to China where that Wal-Mart bookcase is made and then to ship the finished product back to Tazewell County for sale.
Looking back, it's easily understood why America's leading furniture manufacturers had processing and finishing plants in Southwest Virginia. This is where the raw materials are, and where the productive, skilled workforce is.
Perhaps, just perhaps, until that (inevitable) time when another cheap fuel -- and with it, cheap electricity -- comes along, our furniture companies will see expansion opportunities and prosperity once again.
Gasoline and energy prices are going up. So break out the bubbly. (read the entire column here)
As the wise columnist foresaw back in 2006, the global manufactory is now going through profound - and accelerating - upheavel. For our good.
To put it in terms everyone can understand, Tazewell Furniture will reach a tipping point soon at which it will find itself incurring more expense in procuring raw materials from Southwest Virginia (or the Philippines, or ...), ship the timber to China, where fine furniture is made, and then ship the finished goods to Southwest Virginia for retail sale, than if it were to simply manufacture the furniture in ... say ... Pulaski, Virginia.
OIl Shocker..Stung by Soaring Transport Costs, Factories Bring Jobs Home Again
By Timothy Aeppel, writing in the Wall Street Journal
The rising cost of shipping everything from industrial-pump parts to lawn-mower batteries to living-room sofas is forcing some manufacturers to bring production back to North America and freeze plans to send even more work overseas.
"My cost of getting a shipping container here from China just keeps going up -- and I don't see any end in sight," says Claude Hayes, president of the retail heating division at DESA LLC. He says that cost has jumped about 15%, to about $5,300, since January and is set to increase again next month to $5,600.
"In a world of triple-digit oil prices, distance costs money," [Jeff Rubin, chief economist at CIBC World Markets] said.
Edward Monser, [Emerson Electronics'] chief operating officer, says logistics costs, which include all the expenses associated with moving goods, became a worry about a year ago.
Last month, a pump manufacturer, which had moved more than $1 million worth of metal-casting work from Bremen [Indiana] to China two years ago, called "to reactivate everything [in Bremen]
Last fall, Crown Battery Manufacturing Co. decided to close a plant it bought in Reynosa, Mexico, and move the jobs to its Ohio home base ..." (link requires paid subscrition)
We may very well be reaching that tipping point.
Break out the bubbly indeed. Before you break out those FOR SALE OR LEASE signs to be sure.