69.5 F
San Diego
Monday, Jul 15, 2024

San Diego Manufacturers Search for Ways to Compete With Asia

As the economy recovers from the recession, manufacturers in San Diego County are looking for ways to better compete with their counterparts in Asia, who have lower labor costs.

Stephen Austin, chairman of the World Trade Center San Diego’s governing board, said he has observed the problem firsthand.

“I have clients in China,” said Austin, managing partner at Swenson Advisors LLP, which provides accounting, tax and consulting services. “Over there the labor rates are a fraction.”

‘How Do You Compete With That?’

On a recent walkthrough of a General Motors plant in Shanghai, Austin asked his guides what the workers made. His guide replied, “They get $10,000, $15,000 a year, and they are very happy to get that money.”

Austin said, “How do you compete with that?”

One way to compete, he said, is to offer quality U.S.-made products that the rising middle class of Asia wants to buy.

Despite a steady decline in U.S. manufacturing jobs during the last several decades, Austin said the U.S. has maintained its reputation for making good quality products. Overseas, where there is less government regulation, manufacturers are held to lower standards. As a result, quality goods are harder for consumers to find.

Appealing to Asia’s Middle Class

“The middle class in China, India and Vietnam is very enamored with

American-made products for two reasons,” he said. “One is safety, and the other is efficacy. Things work. Where do the Chinese want to get their baby formula? The United States.”

It’s important for San Diego manufacturers to take advantage of the growing demand for quality American goods, he said.

“If we are smart, we will make sure we find a way to produce products that are sold to that marketplace.”

Asian consumers now have the capital to buy U.S. products because for the past two decades they have been manufacturing products that once were made here, he said.

Access to Cheap Labor Is Declining

Stephan Aarstol, founder and CEO of Tower Paddle Boards in San Diego, recently visited China. He said access to cheap labor there is declining somewhat. He said he has heard of Chinese companies that are contemplating moves to Vietnam to find employees who will work for less money.

Collaborating with Mexico

San Diego companies can compete with Asian manufacturers if they take advantage of the lower labor costs just across the U.S.-Mexico border, Aarstol stressed. No other major U.S. city has such ready access to Mexican workers, he added.

“Mexico isn’t too far off, and being immediately adjacent to San Diego creates a perfect storm for manufacturing in the San Diego region,” he said. “Accessibility is key, and San Diego has a natural geographic advantage in the U.S.”

Large Talent Pool Here

Sprigley Allan is the online marketing manager at XM Works Inc., a San Diego-

based company that consults with companies that export their goods.

“Any company that wants to sell internationally we work with to spread the word,” he said.

Allan said he remains optimistic that manufacturing here will grow because of the large talent pool that has been created by local universities. Another reason to be hopeful is San Diego’s strong appeal to workers and entrepreneurs as a place to live and work.

“Manufacturing in San Diego will become more and more important,” he said. “It will be competitive.”


Featured Articles


Related Articles