Every industry tends to evolve from making things at low cost and low margins to making things with higher costs and higher margins. As the industry the demands for the employees change from human interaction to machine interactions to technological interactions. The first stage humans are needed at a lower wage rate, the second stage workers are paid more and the final stage are the highest paid workers, and somewhere a competitor somewhere is beginning stage one.

In an article by Alex Travelli and Hari Kumar of the New York Times News Service, 30 years ago China was the first stage building things at low costs. The economy and institutions of China has evolved that Apple President Tim Cook said to build the products we need, in America there are a handful of people who could do it, in China there are football fields of talented people.

The competitor is India. For the past number of years, as China has begun to focus on higher margin products, companies have looked towards Vietnam, South Asian countries and India for the lower margin products. India has a desire to be the alternative to China.

The Indian government has paid incentives to companies producing goods in strategic sectors, budgeting more that $26 billion and tried to attract companies who do not want to be only rely on China. India’s goal was to create 100 million new manufacturing jobs by 2022.

There have been some successes such as Foxconn moving the manufacturing of iPhones to India.

Yet, the role of manufacturing in India over a decade has shrunk relative to services and agriculture from 15% to 13%. China’s manufacturing is 25% of their economy.

India similar to China has been investing in infrastructure, however with manufacturing there is a need for skilled workers and many companies have a hard time finding those workers. An example is LiKraft which manufacturers lithium-ion batteries. Viram Bathla said he can buy the equipment, the plant depends on imports and skilled workers. He is playing catchup with companies that have been in business a decade longer.

Even Apple which produces iPhones in India, 20% are coming from India, they would like it to be 30%. There is still much to do.

Linking to dividend paying stocks, while President Trump’s goal of more domestic manufacturing is admirable, the reality is the infrastructure to do it does not exist. For those who believe it is a quick fix, without billions of dollars in investments and a buildup of infrastructure to support the plants, playing catchup is all that can be expected. In the meantime, some companies will announce plans but will they actually do something is the question.

There are more questions than answers, till the next time – to raising questions.