Can we keep from racing to the bottom…?
Manufacturing no longer pays. Ask Detroit autoworkers, men who used to forge steel in Pittsburgh, or the blue collar grunts who used to make motorcycles in Japan.
What, even Japan faces a blue collar crisis? The home of monozukuri or the culture of manufacturing?
An excellent piece in the FT today
points out
the plunge in global demand and a sharp rise in the yen have thrown Japanese manufacturers into crisis, and reignited a debate about the country’s reliance on the sector. That is because it was not finance that transmitted this recession to Japan – it was manufacturing.
Japan, where manufacturing was THE basis of prosperity faces a new crisis, as blue collar jobs are being outsourced to China and Southeast Asia, or cheap workers from Brazil are being imported into the country to do the dirty jobs young Japanese are no longer interested in performing.
In America, we believe the service economy — think software, accounting, insurance, health care and yes finance — will be the ultimate savior of our troubled employment picture. But in Japan the service at banks and department stores may be impeccable…look at the 12 people who wait on you at a department store…but it doesn’t earn the firms any money. So without manufacturing…what will be left?
It also doesn’t help Japan’s search for reinvention that its inflexible, hierarchical and often silo-ed system of development doesn’t really help boost national innovation. Need we be reminded that Sony, the company that invented the Walkman, has never been able to compete with the I-phone and I-pod, which so seamlessly mesh lower-value hardware with high-value software? Or that Panasonic and Sony are now being out-muscled by Samsung and LG from Korea?
So even though the roots of financial crisis in Japan and the U.S. came from different places — Japan suffered because we American consumers got too indebted chasing overpriced real estate — the way “out” of the mess may be surprising similar: looking for innovative products that boost sustainability and lower energy uses.
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Perhaps this will all turn out to be a kind mobius strip. We were the best in manufacturing, but then outsourced to Japan and then China, etc. By the time these “3 rd world” countries have reached their zenith WE will be low man on the totem pole and all the manufacturing will come back to us.
Maybe we have to realize that increased efficiency of manufacturing through automation and the elimination of middlemen throuh improved communications have eliminated the need for full employment. The First World can get all the material possessions we need or want without requiring us all to work. While it may seem obscene to say so in the face of starvation and misery in the undeveloped world, we have to come to grips with a post-scarcity economy.
If resources aren’t scarce, classical economics doesn’t work. We need to come up with a new way of distributing the surplus value from technological efficiency.