The Era of Ultracheap Stuff Is Under Threat

This isn’t Google. It’s a garment factory in Vietnam.

Asia, the world’s factory floor and the source of much of the stuff Americans buy, is running into a big problem: Its young people, by and large, don’t want to work in factories.

That’s why the garment factory is trying to make its manufacturing floor more enticing, and why alarm bells are ringing at Western companies that rely on the region’s inexpensive labor to churn out affordable consumer goods.

The twilight of ultracheap Asian factory labor is emerging as the latest test of the globalized manufacturing model, which over the past three decades has delivered a vast array of inexpensively produced goods to consumers around the world. Americans accustomed to bargain-rate fashion and flat-screen TVs might soon be reckoning with higher prices.

“There’s nowhere left on the planet that’s going to be able to give you what you want,” said Paul Norriss, the British co-founder of the Vietnam garment factory, UnAvailable, based in Ho Chi Minh City. “People are going to have to change their consumer habits, and so are brands.”

Workers in their 20s—the garment industry’s traditional labor force—routinely drop out of his company’s training program, Norriss said. Those who stay often work for just a couple of years. Norriss hopes that dialing up the workplace cool quotient might make a difference.

“Everybody wants to be an Instagrammer or a photographer or a stylist or work at a coffee shop,” he said.

In response to the crisis, Asian factories have had to increase wages and adopt sometimes costly strategies to retain workers, from improving cafeteria fare to building kindergartens for workers’ children.

Toy and game maker Hasbro said this year that labor shortages in Vietnam and China had pushed up costs. Barbie-maker Mattel, which has a large production base in Asia, also is grappling with higher labor costs. Both companies have raised prices for their products. Nike, which makes most of its shoes in Asia, flagged in June that its product costs had gone up because of higher labor expenses.

“For U.S. consumers that have been used to having goods at a certain and relatively stable part of their disposable income, I think that foundation is going to have to be rejiggered,” said Manoj Pradhan, a London-based economist and co-author of “The Great Demographic Reversal.”

Starting in the 1990s, China and then other Asian manufacturing hubs integrated into the global economy, turning nations of poor farmers into manufacturing powerhouses. Durable goods such as refrigerators and sofas became less expensive.

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