Thoughts on Globalization
I attended a conferenced sponsored by the World Trade Center – Tacoma and the US Chamber of Commerce. The topic of the conference was trading with India. The presenters ranged from US and India government trade officials, corporations that are involved in trade between the US and India and investors that make major investments.
We were treated to a broad range of statistics (for example over 50% of the population is under the age of 25) and a range of opinions on the future opportunities/ future potentials/ issues that must be resolved.
One speaker did address the issue that we have all heard about, joked about, worried about … will all the good jobs move East??
While the movement of well paying white collar jobs is undeniable, the question is how much will be shifted?? Will all of the jobs move, 50%, 25%?? If our experience in the manufacturing sector is any indication, the answer is somewhere in between. As an example, consider the case of Toyota. We recently all read that Toyota has overtaken Ford as the second largest seller of vehicles in North America. Yet in the same breath, foreign automobile manufacturers have been announcing the construction of new manufacturing facilities in North America. How does this make sense? On the one hand the domestic automobile manufacturers are struggling, yet foreign automobile manufacturers are doing well using North American manufacturing facilities. It would appear that cheap foreign labor is not the panacea that we are all led to believe. I believe that the answer to this conundrum is the elementary marketing mantra … having the right products at the right time.
The foreign automobile manufacturers have built facilities in North America to be closer to the major North American market. They have organized themselves in manner which is able to respond more quickly than the domestic manufacturers to shifting market requirements. Several years ago, they missed the shift to SUV type vehicles. They responded quickly, introducing equivalent products. Currently, they are in a favorable position to respond to higher oil prices with hybrids and more fuel efficient engine designs.
I suspect that the answer is that white collar work which is capable of being specified in great detail will shift to the most economic resource. The talent to identify market changes and respond accordingly will remain close to that market.
As a side note, we must also remember that China, India, etc. have huge disadvantages in infrastructure, large populations that are very poor, and only a few educational institutions that offer human resource development that is competitive on a global basis (Why else do their best students come to North America to study?).