Looking back at the erosion of manufacturing jobs in the U.S., Zachary Karabell identifies information technology as one of the culprits. When companies confronted a slower growth in the developed world, computers, customer management software systems, and faster communication links allowed them to do more with fewer people, he elaborates, in ‘Superfusion: How China and America became one economy and why the world’s prosperity depends on it’ (www.landmarkonthenet.com).
Just-in-time manufacturing, which had been perfected by innovative organisations like Dell, meant that companies could keep very lean inventories and gather parts from a supply chain that stretched around the world, the author narrates. “If parts were cheaper when sourced to Malaysia or China, then they were made there.”
Studying the statistics of U.S. productivity – around 4 per cent growth in late 2003 and into 2004 – even as job creation was weaker and wage growth was minimal, the author sees productivity as a perfect proxy for the gains generated by information technology.
Acknowledging that India siphoned certain types of American service jobs, Karabell adds, however, that India’s global footprint was much smaller than China’s. Call centres throughout the US were being closed and relocated to India, which had the advantage of an English education system, but democratic India had more barriers to global commerce than Communist China, he distinguishes.
“There were multiple restrictions on how much business foreign companies could do in India, especially retail companies, and the sorry state of national infrastructure, especially transportation, made it unfeasible for global corporations to relocate manufacturing there.” Perhaps, some of this is now changing.
The author has an interesting view about the loss of call centre and software programming jobs. These were vital to parts of the US, but in the national consciousness, the loss of these jobs didn’t strike the same chords as the continued decline of US manufacturing employment, he observes. “In self-image, the US had been built on the backs of the steelworkers and the autoworkers, not the ‘yes, can I help you?’ anonymous voices on the other end of a warrantee call.”
Rewards of China’s growth
While governments continued to think of the world in binary terms – my country, their country, our goods, their goods – companies and capital had a different perspective, Karabell chronicles. Among the examples he lists is Nike, which expanded its presence throughout China, opening on average 1.5 new stores a day in 2004.
Its factories, which once produced shoes primarily for export to Europe and the US, made shoes and apparel for sale to the Chinese, with special styles and signature footwear marketed purely to a Chinese audience, the book informs.
“The company cultivated its image by turning to the Internet for advertising, and started embedding ads in the middle of those hugely popular video games. It sold a promise of individuality to a young, urban market that was looking for new identities in a fast-changing world.”
A quote cited in the book is of Nike founder Phil Knight exhorting his staff: “There are two billion feet out there. Go get them.”
“Whenever the boss asks us to call him on any of his five mobile phone numbers, we know he is suffering from a severe headache.”
“He distracts himself from the pain by talking to all of you?”
“No, he keeps the handsets vibrating around his head!”