Saturday, August 8, 2009

Carrier to Shutter Israel Factory & Move Production to China

Are there implications for domestic air conditioning production when a manufacturer moves production from a profitable factory to China?

This is from the Jerusalem Post...

Tadiran Carrier, an Israeli manufacturer of air-conditioners, announced Thursday morning it was transferring all production to China, where labor is cheaper. Consequently, some 350 employees of the factory, all over the age of 50, will be fired.

Tadiran Carrier is considered one of the last emblems of locally designed, produced and made products.

The plant, located in Afula, was making profits, but its owner, a US company, decided to move it abroad.

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Union leaders from the factory appeared to take the closing in stride. The head of the local union told the Globes newspaper, "To tell you the truth, if I was the owner, I'd also move production to China, even though the factory is still profitable. Production costs are half as much over there, which adds millions to the profits."

So what does this mean for U.S. production? Probably nothing. The transportation costs for unitary products go a long way towards equalizing any labor and regulatory savings from Chinese production.

Fortunately, no one can transfer service and installation work to China!

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