Buoyed by U.S. firms, Vietnam emerges as an Asian manufacturing powerhouse

May 21, 2016

In a campaign season that has renewed public anxiety about U.S. job losses to China, one Michigan shoe company stands as a stark example of how the economic dynamics are changing quickly in Asia.

Wolverine Worldwide exemplifies a sharp shift among American footwear and garment producers away from China toward an emerging manufacturing hot spot: Vietnam.

Over the past three years, the Rockford, Mich.-based maker of brands such as Keds, Hush Puppies and Saucony has more than doubled its production in the Southeast Asian nation, taking advantage of the lower labor costs there. Vietnam now constitutes nearly 30 percent of Wolverine’s output, while China’s share has fallen from 90 percent to 50 percent, company officials said.

Many other U.S. firms have made a similar move, brightening the economic fortunes of Vietnam, where President Obama will arrive Monday for a two-day visit to Hanoi and Ho Chi Minh City. If Obama has his way, the communist country will become even more appealing to U.S. capitalists through the Trans-Pacific Partnership (TPP), an expansive 12-nation trade deal that would phase out steep import tariffs on Vietnamese-made goods.

Obama has touted the pact as a vehicle to help embed the United States in fast-emerging markets in Southeast Asia and exploit global economic trends to America’s benefit. China, attempting its own economic transformation toward the service sector, is pursuing a separate trade pact that includes Vietnam and other Southeast Asian nations.

Administration officials have warned against ceding the region to the United States’ biggest economic competitor. Yet critics of the TPP trade deal, including the presidential candidates from both parties, have said the accord would further decimate U.S. manufacturing and cost domestic jobs. Congress has yet to ratify the accord, and lawmakers have been wary amid the anti-trade sentiment on the campaign trail.

For companies such as Wolverine, the deal could make an already lucrative business decision even more profitable.

Company officials said that eliminating an estimated $20 million in annual tariffs on Vietnamese-made products would reduce the cost of shoes for American consumers and boost sales. Furthermore, the officials said, declines in the company’s domestic manufacturing workforce have been offset by hiring in other departments.

https://www.washingtonpost.com/politics/buoyed-by-us-firms-vietnam-emerges-as-an-asian-manufacturing-powerhouse/2016/05/21/6f117876-1b6a-11e6-b6e0-c53b7ef63b45_story.html