Many manufacturing companies in the developed world find it increasingly difficult to compete with the countries of the developing world. Because levels of pay are higher in the developed countries, inevitably wage costs are higher.
To a certain extent this can be counteracted by improvements in productivity, but in the manufacturing sector this is almost always accompanied by a requirement for very large capital investments. And is this investment not just putting off the unavoidable decision to relocate? The same money invested in a new factory in a developing region will buy considerably more.
Countries or regions can put up tariff barriers to protect their industries, and this may delay their decline and put off the inevitable to a later date (at the expense of higher prices to the consumer), but ultimately it can only be a delaying tactic. History has shown that this never works in the long term.
So what is the answer? Are factories in the developed world doomed to close while we import all our goods? Well, for a lot of industries, progressively and ultimately, probably yes. It is an inevitable part of world development, and always has been. Industries in one part of the world have flourished, and then faded when faced with cheaper imports from elsewhere.
The developed world retains its advantage by its capacity to remain always one step ahead. When it can no longer compete in one industry it turns to another. Coal mining, steel, and shipbuilding have been superseded by oil exploration, the development of nuclear power, the discovery of composite materials, and the aerospace industry.
Computers and robot manufacturing have replaced armies of shop floor workers. When the developed countries can no longer compete by brawn they use brain. They develop the new techniques and processes and develop them for use. And when in turn these technologies become available to the developing countries, it is the developed countries that provide the consultants to advise, the trainers to train, and (initially at least) the managers to manage.
So ultimately the survival and continued success of the developed world is dependent on the expertise of its specialists and the competence and flair of its managers. We don't need to make the goods, we just need to know where to get them made and how to do it.
This is where the resources need to be applied if we are to stay ahead of the game -- in training in technical and managerial skills, and, unfortunately, many companies do little or not enough in this regard.
There are of course outstanding examples of excellent companies that stand out as shining examples of what can be done, but many of the smaller or medium sized enterprises are still lagging far behind in the standard of their management. Sadly we have seen in recent months that even some of the largest and seemingly successful companies have been deficient in their standards of management. Their future is often now in doubt.
All these companies need to be convinced of the vital necessity to maintain high standards of management, to encourage and train their staff, and to foster and invest in their future managers.
If they don't, then of course their best people will look to their own future and go elsewhere, leaving these short sighted companies to go the way so many others have gone -- nowhere (or bust).Arthur Cooper
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