Wednesday, August 13, 2008

Impact of closing the manufacturing in china

Olympic Impact

It has arrived, the impact of closing the factories in China.
Today, the BBC have reported that in the global manufacturing industry, raw material price have gone up. Shortages of medication are also starting to grow.
Most factories have started using their buffer stocks, and they are sourcing the materials from other places such as india, America.

What causes this impact?

This is largely due to the closure of manufacturing plant in and around Beijing. As Beijing is trying to create a fog free environment for the Olympic, it have closed the factories in and around Beijing two weeks before hand, to reduce the smog, so that the athletics can have a cleaner air and perform well, as what the Olympic committee are complaining about.

According to the BBC, medication and some manufacturing parts, mostly made in china, are cheapest to make in china rather than from other country. With the closure of the lower end production line, the higher end production line are starting to feel the pain. Especially for the steel manufacturing plant. Once the Olympic is over there is still a certain days of lead time, this is for the furnace to get warm up. Some furnace can take 2 days to warm up, certain takes 2 weeks.

But this is also a good news, because although the factory bosses are feeling the pain in the wallet, but it is the best opportunity to shutdown the plant, and do some major uplifting and modification for the production line, so that the efficiency can be improved. It also creates a cleaner environment because less electricity is required.

So brace for higher price there.


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