How Chinese Holidays Impact US Business and Manufacturing

Have you ever considered how Chinese holidays impact US business and manufacturing?

Since 2002, several worker holidays have been added to the Chinese work calendar. As China does so much business with the US and Europe, the country has added a one to two-day holiday over Christmas.

In addition, China also has national holidays that do not occur in the US. Two examples are China’s May Day on May 1 and the Dragon Boat Festival on June 20-22, 2015.

Chinese holidays impact US manufacturing because of the large amount of trade between the two countries, which is growing in the area of manufacturing. For this reason, US manufacturers doing business in China need to be aware of the holidays there.

US manufacturers can be most efficient by planning their work schedules around Chinese holidays when the overseas businesses will not be open. American manufacturers also need to keep in mind that holidays sometimes change. An example is Chinese New Year (CNY), which is based on the Lunar Calendar so exact dates change year to year.

Whether you are a customer or vendor, take note of Chinese New Year. It is part of the Chinese celebration that extends from February 18 to 24 this year. The Chinese New Year is traditionally a family time similar to US Christmas. A worker usually requires 2-3 days of travel time to get home; expect many Chinese workers to take extended February leave of 7-8 days.

Due to Chinese New Year closures, your US business will not receive its usual number of shipments from China. Plan at least two months ahead for any orders you need to fill in February and March. Shipping ports will close beginning February 18 and usually reopen within 5-7 days.

Also, prepare for delayed or potentially lower-quality shipments than you normally receive from China following CNY. Workers may take longer leave than expected, decide to quit or operate at reduced capacity when they return to the manufacturing plant as they are still in holiday mode.

Can the US Manufacturing Sector Handle a Full Economic Recovery?

The manufacturing sector is on an upswing as our first quarter comes to a close. With the popular consensus being that the US economy will continue to improve, an important question comes to mind. Is there capacity in the US manufacturing sector to handle a full economic recovery?

The increase in manufacturing activity became readily apparent at Universal Polymer in December of 2014. In previous years, for every market we served there has been a downturn toward the end of the year. Traditionally, December is 60-70% of normal sales, with March and April being pretty consistent.

At the end of 2014, however, we noted at Universal Polymer a sizable boost in manufacturing activity. This trend is continuing now as we reach the end of our first quarter. The increase spreads across each of our major markets, from the automotive OE supply chain to the construction and pipe manufacturer’s market.

The increases in the manufacturing sector are at least partly due to the strength of the automotive market, with upwards of 17 million cars built in North America in 2014 alone. The forecast was for the auto market to continue to strengthen in 2015. However, the news is not all positive. There is a big looming question of whether the manufacturing sector can meet with the economic changes.

For example, consider the housing market. While it has incrementally risen over the last few years, if you compare the housing market today to 50 years ago, as was done by Wisconsin Real Estate Viewpoint, it is still in the lower 5% of that period. The capacity has been taken out of the housing market in every level. Housing starts are the lowest per capita that they have been since the Viewpoint study began collecting the monthly data in 1959.

What will the next 50 years hold for the manufacturing sector? Universal Polymer will continue to update you and consider the implications as they relate to the US economy.