Another issue is labour arbitrage. Although taking advantage of lower wages abroad, especially in poor countries, has been important, in practice MNCs consider many factors when they think of locating activities offshore. A study by
Boston Consulting Group in 2011 (Economist, 2011f) found that pay for factory workers in China increased by 69 per cent between 2005 and 2010. On current trends of annual wage growth of 17 per cent in China, modest appreciation in the
value of Chinese currency and existing productivity growth rates, by 2015, they argue, manufacturers producing for consumption in America will be indifferent to locating in America or China on cost grounds. Factories take time to build.
The behaviour of MNCs has therefore already started to factor in such trends. Caterpillar and NCR have already begun to move some manufacturing from abroad back to the USA. General Motors is investing US $2 billion and adding
4,000 jobs at 17 American plants. Complex supply chains at risk of disruption, energy prices, inventory costs associated with importing all require consideration.