But that’s not the point. Seven thousand miles on trucks, trains and
ships is — by the judgment of the MBA wizards at Bain Capital — way more
businesslike and cost-effective than 45 miles in a Dodge van on Route
This is apparently how the supply chain works nowadays. It’s not for dilettantes like me to plumb its mysteries.
then, I read about Apple’s plans to “reshore” to America a tiny share
of its computer manufacturing in China. Apple CEO Tim Cook suggested
that he’d like to do more, but he’s hobbled by a supply chain that’s
hard to lift up and move around. This reminded me of Dickens’ A Christmas Carol, where the ghost of Jacob Marley describes Ebeneezer
Scrooge’s burden of penance — for a lifetime of greed and selfishness —
as "a ponderous chain."
Still, I couldn’t help noticing a
paradox. On one hand, Apple can’t make stuff in, say, Freeport, because
putting together a new supply chain would cost a fortune and displace a
network of established links.
On the other hand, Bain Capital
and Sensata, for the sake of trimming the wages, benefits and pensions
of a mere 100 hourly workers, find it easy, thrifty and strangely
gratifying to cast aside a comparatively short and completely intact
supply chain — some of whose links are less than an hour away by Dodge
van — in favor of one that stretches some 7,000 miles over two
continents, requiring interaction among people who speak at least three
distinct languages. And in the process, they ship a whole factory —
lock, stock and heavy machinery — across the Great Plains, the
Continental Divide and the Pacific Ocean.
Far, again, out!
there’s a lot about supply chains that I don’t understand, especially
the rules for outsourcing. But it does occur to me that if shipping jobs
overseas were more like sending Christmas packages to my kids — the
heavier the box and the farther it goes, the more I have to pay —
companies like Bain might be less eager to back up the moving van.
--David Benjamin writes occasionally on technology issues from Brooklyn, usually from the Luddite point of view.
Short of a robust regulatory regime, expecting moral behavior from a corporation is naive. A corporation is an amoral tool designed for one purpose: to extract value for the shareholders. Which is not to say that corporations don't have a purpose in the broader context of society; they simply need to be regulated to fit that purpose.
Those espousing "deregulation" or "ethical business practices" are either fools or liars: there can be no such thing.
The jobs which require human inputs which can be reasonably faithfully reproduced after the first time will always find its way to the cheapest part of the world where it can be done. It's all about realizing cost cutting by volume. It works whatever others might feel with most of the rest of the world living of about a dollar a day it works mightily and will for many more years to come. A strategic shift is the only answer and companies which utilize that means will not need to offshore but are there any so far..
And what Foxconn may do for Apple in the U.S. as well? :)
I enjoyed this article. It gives food for thought on why things are done the way they are, how and why trends develop, and how long they last. It only takes one company to realize there might be a better way or place to build a mousetrap, and the whole thing comes to a screeching halt and changes direction.
Maybe that would be a good EETimes contest: design an improved digital mousetrap. What components will you use? What country will you build it in (hopefully a country with a large mouse population)?
True.I can`t imagine a US site that would allow a plant full of aluminum dust that explodes.Didn`t I read that the owners of that plant in China when confrounted by the local government,packed up the factory on trucks and moved it a couple hundred miles to another jurisdiction.
Thing about robots seems to be that the companys that are getting the jump on this are those that are flush with cash and orders. We sent our fabs overseas to shave costs.This next round we might just plain be behind the curve.
"Companies HAVE to operate that way, in order to stay afloat"
I agree. The very structure of corporations requires that they be both traitors and sociopaths. That is why we need to watch them like a hawk and regulate them every which way to Sunday.
The differences between management and front-line workers is that for managers, there are lots more opportunities to loot the company at investor's expense. What can I do as a grunt worker? Steal a few pens? I certainly can't pump my bonus by a few million by fudging some numbers and hiding the risks I am taking.
I am sure that when you read Wealth of Nations, you noted how dead-set Adam Smith was against the very idea of joint-stock corporations, precisely because of the large amount of moral hazard that corporate executives embody. Indeed, that is why Britain banned corporations for many decades.
You are right. Macro is the government's job. And that usually means holding corporations and their bad behaviors in check.
"Macro is government's job."
I agree with that, yet I'm guessing the OP's intent was to highlight that free markets don't optimize for societal well being as many on the right proclaim. Free markets optimize profit, anything else they do is purely collateral.
Companies HAVE to operate that way, in order to stay afloat. So the trick is for governments to carefully fine-tune their tax policies and regulations, including regs on pullution.
Managers have exactly the same motivations as anyone else in the work force (even though many are clueless about what they manage). They need to show results to their bosses, no different from what any other employee has to do.
"Society-wide optimization," aka macroeconomic considerations, cannot possibly be something your corporate managers can address, if they care to remain employed. At best, the top execs might utter nice-sounding platitudes along those lines, for the politicans' benefit.
Macro is government's job.