Much of China’s manufacturing is located on the east coast of the country. As there isn’t enough labor based on the east coast, these factories rely on “migrant workers,” persons whose homes are in the center or other far away places of the country who then relocate, sometimes temporarily, to the east coast.
At the start of each Chinese New Year holiday (they call it the Spring Festival), migrant workers return to their home towns. In today’s economy, factories are springing up all over the country so more workers are not returning after the CNY – putting east coast manufacturers in a bind for labor until they can find replacements.
According to China Daily, In 1985, there were 60 million migrant workers. Today there are 250 million+, and factories are still facing labor shortage. This is placing upward pressure on prices through wage inflation.
After last year’s CNY holiday, when China’s economy was on fire, factories on the east saw a huge drop off in returning labor which cramped production times. We saw a number of delays last year for our customers’ orders from February through April.
This year the decline of returning migrant workers has been an issue… but the good news is that so far we haven’t see production delays. This may be because China’s manufacturing sector started contracting the end of 2011.