Trade wars and the coronavirus pandemic aren't prompting companies to bring manufacturing back to the United States, as some expected, because supply chains in China and other Asian countries are too ingrained to shift within months, if at all.
"The fact is that China has bounced back really quickly," said Doug Woodward, director of research and professor of economics at the Darla Moore School of Business at the University of South Carolina. "They're supplying everything that they were before and even more so because their economy is performing so well. It's not easy to move that supply out of Asia and back to South Carolina. There's been some talk of that, but we see absolutely no movement in that direction."
Woodward, speaking last week at USC's annual economic forecast, said China over several decades has built a strong network of low-cost and efficient suppliers that can't easily be duplicated.
"Nobody else can do what China does," he said. "And in this age of uncertainty to make big investment decisions for suppliers to come to the United States — it's just not happening."
Joey Von Nessen, a research economist at the university, said supply chain disruptions — common in the early stages of the pandemic — are largely nonexistent now. That's because China's economy has largely recovered from the coronavirus even as the U.S. economy is still sputtering, he said.
Imports at the Port of Charleston are picking up while exports continue to lag. Loaded inbound containers are down 8.9 percent through the first two months of this fiscal year, which started July 1, but the August total was the second-best for that month in the port's history. Loaded outbound containers, meanwhile, are down 14.8 percent.
A trend that could work against the U.S. reliance on a Chinese supply chain is China's growing middle class and need to produce goods for its own consumers.
"China is going to turn inward," said Peter Brews, dean of the university's business school. "Most of its growth historically was through export-led growth. There was not a lot of consumption going on inside China. I expect that to change over the next generation. And as that happens, it could be in China for China instead of in China for somewhere else."
That means U.S. manufacturers would have to find new ways to produce for themselves.
"A more domestic regionalization of our economy might result from that," Brews said, adding it's something that will take years to occur. "These are long-term trends that you won't see in six months."
Last week's economic forecast, the university's 40th, was an opportunity for business school economists to chart a course forward for South Carolina's economy as it struggles to move past the coronavirus. Von Nessen said the Palmetto State will likely be in recovery mode throughout much of the coming year.
Apparel maker Gildan is considering an expansion at its warehouse and distribution center off Clements Ferry Road. File/Staff
Activewear activity
Canadian apparel maker Gildan Activewear Inc. is again considering expanding its Charleston distribution center off Clements Ferry Road.
Berkeley County Council last week gave supervisor Johnny Cribb authority to enter into a memorandum of understanding spelling out terms of tax incentives the company is seeking as part of an amendment to its existing property tax agreement. The company was not identified at the meeting and for now is going by the code name "Project Eagle." Gildan previously applied to the Army Corps of Engineers under that moniker for a permit that would allow expansion of its distribution center site.
Gildan last looked at expanding the site more than a year ago. The company has a contract to produce private-label men’s underwear for Walmart, which is building an import distribution center along Interstate 26 near Ridgeway. Gildan also has contracts with other retailers for underwear and activewear as a growing number of online and brick-and-mortar stores are pushing their own private-label brands as a way to boost profits and stand out in the crowded activewear market.
The council said it won't announce Project Eagle publicly until after negotiations are completed.
Gildan opened its Charleston warehouse in 2010 to distribute its socks, T-shirts, underwear and other products imported through the Port of Charleston. The Army Corps permit application asks for permission to fill about 2 acres of wetlands for construction of an 850,000-square-foot warehouse and parking area.
The existing warehouse was originally built as an import site for Mikasa, which sells china and other tabletop products.
The U.S. military has awarded AirBoss Defense Group a $36.5 million contract to provide support for Husky 2G mine detection and clearance vehicles sold to foreign countries. Provided
Husky support deal
The U.S. Army has signed a two-year, $35.6 million contract extension with AirBoss Defense Group to provide spare parts and training in support of the Husky 2G armored mine detection and clearance vehicle sold to foreign military customers.Â
Work for the contract will be performed out of the company’s Critical Solutions International facility in Charleston.
"This extension is a testament to the U.S. government’s commitment to supporting our international customers with the most advanced route clearance package available," said Patrick Callahan, CEO of AirBoss Defense Group. "International demand for adaptive route clearance and C-IED (counter improvised explosive device) capabilities continues to grow. This contract extension allows for a streamlined acquisition process ... to continue providing solutions to our customers’ global needs."
CSI previously delivered 41 Husky 2G systems with features such as ground penetrating radar and 360-degree cameras. Some of the vehicles have been delivered to military customers in Egypt, Saudi Arabia and Jordan. Husky 2Gs will also be provided under the contract extension to Ukraine and Iraq as part of efforts to counter the ISIS terror group.
CSI became part of AirBoss Defense Group as part of a merger last year. Its offices are on Clements Ferry Road near Daniel Island.
