As with any war, there are winners and losers. That is also the case with the U.S.-China trade war.
As the two countries battle, companies affected by high tariffs are looking to manufacture their products elsewhere, and businesses outside of the U.S. and China are seeing economic booms.
Two factories in Vietnam currently make electric bicycles for Pedego, an American company based in Fountain Valley, California. Eighty percent of Pedego’s bike parts used to be from China, but not anymore.
“Now, we’re probably 70% in Vietnam, and 30% in Taiwan,” said Don DiCostanzo, Pedego’s co-founder and CEO.
Return manufacturing to US
Manufacturing and outsourcing in a global economy is a fickle business, however. Any weather disruptions, political instability or the emergence of a cheaper competitor can cause businesses to shift to a different manufacturing hub.
“Manufacturing has shown itself to be mobile in a way that we never could have imagined years ago,” Klowden said.
Some companies in the U.S., such as Pedego, eventually would like to manufacture their products in America.
“A number of companies would like to move manufacturing back to the U.S. just because of proximity to market because of stability. The catch is that manufacturing that moves back to the U.S. employs dramatically fewer people than it would have 20, 30 years ago,” Klowden explained.
Any business that manufactures in the U.S. and can successfully compete in the global economic would use automation and robotics.
“These robots, you don’t have to pay them overtime, and they don’t have to take time off, and they work 24/7,” Pedego’s DiCostanzo said. “So, the idea of robotics and the efficiency of a robot could actually drive the prices down.”
DiCostanzo is part of a coalition of American bike manufacturers that is pushing for legislation to exempt bicycle assembly-related components from tariffs for 10 years, action that could spur the opening of automated bike factories in the U.S.