Whiskey drinking men of the old west were smacked on the head, snatched off their bar stools and forced onto boats bound for China to serve as cheap labor on the high seas in the 1800s. Those folks were “Shanghaied.” I can’t help but poke at my frozen dinner these days and wonder if that little slab of meat has been “Shanghaied,” too. Some of our meals travel thousands of miles to our forks.
“Where you been, you little frozen shrimp?”
The global market certainly gives the old “Shanghaied” term a new definition. These days, we think of the Shanghai factory workers making our T-shirts for just pennies on the hour. It’s a powerful force that can bring so much stuff to us so cheaply from so far away, while simultaneously pulling so many of our jobs across the ocean.
These are massive economic tides.
But the global market runs on fuel. So, what in the world does a $4 gallon of gas mean for the $4 T-shirt? And could companies that sought cheap labor abroad bring jobs back home as rising fuel costs take bigger bites into their profits?
Are we seeing the tides turn?
The New York Times explored that possibility Sunday in an article, “Shipping costs start to crimp globalization.”
“Globe-spanning supply chains — Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, Calif., and then trucked to appliance stores in Chicago — make less sense today than they did a few years ago,” wrote NYT reporter Larry Rohter.
The writer noted that a barrel of oil sold for $125 on Friday, compared with lows of $10 a decade ago. He pointed out that the cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade.
“Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages,” wrote Rohter.
The New York Times article opens with an interview with a Tesla Motors representative. The reporter notes that when the company set out to create a luxury roadster, it “planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for installation, then bring the mostly assembled cars back to the United States.”
“But when it began production this spring, the company decided to make the batteries and assemble the cars near its home base in California, cutting more than 5,000 miles from the shipping bill for each vehicle,” the article stated.
Of course, the cost of fuel is only one factor in a company’s decision on where to locate. The lure of 57-cent an hour labor may draw companies to Asia for years to come. But the inflation in fuel costs will certainly complicate what has been a relatively easy decision to flee America for so many businesses over the past two decades.
Yes, rising fuel costs are hard to stomach. But the return of some jobs to our soil might be a nice antacid to some of our sour feelings.
Speaking of Maalox, I felt like I might need some, too, after my eyes crossed this paragraph:
“What may be coming to an end are price-driven oddities like chicken and fish crossing the ocean from the Western Hemisphere to be filleted and packaged in Asia not to be consumed there, but to be shipped back across the Pacific again,” the article stated.
No, I don’t believe I’ll seek out today’s “Shanghai special.”
“Home-grown” has never sounded so good.
Zach Mitcham is editor of The Madison County Journal.