Mitch Free, MFG.com founder, writes in to Forbes as a Forbes Contributor. See article below.
The stock market took a big hit last week and one of the reasons being cited was manufacturing data coming out of China. While that is certainly indicative of soft consumer demand, it is not necessarily bad news or reason to short the stocks of U.S. product companies.
In fact, the weakening of manufacturing in China could be a positive sign for U.S. manufacturers. As I have written about previously, there is a shift in how supply chains are organized and the impact that digitalization is having on manufacturing. Making products in a county half way around the world to sell to consumers in America is an old model.
China is a good option for manufacturing when you have products they need a lot of low skilled labor to produce them and you’re going to mass produce millions of the same. But smart companies are leveraging technology and automation to produce nearly on demand in lockstep with their customer demand. Further, they are increasing their margins by letting customers customize products to their specific needs and taste, just like Starbucks does with coffee.