Worried about the Chinese New Year? A growing number of American businesses are. This year, the annual tradition of workers returning home for the holiday may yield disruptive effects on supply chains that provide “Made in China” products to American stores.
Already short on labor, the Chinese factories that will lose droves of workers for the 15-day holiday may not see those workers return. Many of these workers are believed to be hoping for new jobs as they approach the New Year. Factory jobs just do not hold the appeal they once had in this massive country. A loss of factory workers in China will snowball into a shortage of goods on American shelves. Any such snowballs ultimately land red on the bottom line of American businesses that source from the factories, which just may start the New Year sharply below capacity.
With the growing strain on workforce supply in China, American companies are beginning to reexamine ways to hedge against over-exposure in this sourcing market. “Made in China” is likely here to stay, but businesses will be sharpening their sourcing strategies.
The rising energy demand that has made China the world’s largest energy consumer is another concern floating around the water coolers of sourcing departments and in executive hallways. Why? This rising demand is driving a responsive rise in energy costs.
We may not know yet what will happen after the Chinese New Year. We do know, however, that China is looking to address its long-term energy needs. A major component in China’s energy management plan: nuclear power.
Nuclear energy is building quite the buzz among the energy professionals milling around our WaterCooler these days (see here and here). Wyatt Taylor started the conversation by noting that the American nuclear revolution has cooled. This cooling has occurred as economic climate shifts have erased projected profit margins now under pressure from low traditional commodity costs and decreased energy demands.
With energy demand projected to continue its rapid growth in China, the Chinese are not being slowed by the same economic pressures. Committed to reducing their energy outsourcing, they are moving forward with their aggressive nuclear energy program. Already with 40 percent of the world’s current nuclear power plants under construction, the nation is hoping to see a ten-fold increase in nuclear capacity by 2020 and a fifty-fold capacity increase by 2050.
Going forward, American shelves may end up shedding some of their products once manufactured in Chinese factories. Nuclear energy, however, will only continue to grow its “Made in China” footprint.