China Costs Increase...Time To Look South?

Continuing cost increases (both wage increases and transportation increases) related to products sourced in China, are driving companies to look for alternate (read less expensive) countries. This will have an impact on the current low prices for office furniture.

Based on a story from Bloomberg.com, electronics makers are already beginning to look at Mexico as an alternate labor source. The story quotes Flextronics CEO; "As China moves up, up and up and up, for five straight years, it’s been moving up heading towards Mexican pricing...Mexico’s been the same labor cost for the past five years, it hasn’t moved up at all.”

Aside from direct imports which accounted for approximately 24% of the total office furniture market last year, every major domestic manufacturer sources components from abroad (primarily China). This is going to be an important story to watch over the next 18 - 24 months.

Read the Bloomberg.com story (HERE).