Slowly Understanding the Impact of Globalization

I n 1984, I joined a boutique consulting firm, an offshoot of BCG. We had two major clients: GE and Volvo. For GE, we assisted the appliance division and their small motor business understand how to globalize their manufacturing.

We used a methodology similar to this one.

We would start with a detailed analysis of our own production economics. I spent days walking and mapping out production lines. Through product tear downs, vendor interviews, and even counting cars in parking lost, we determined how productive a competitor was in producing basically the same product,.

Returning to the analysis of our client’s production process, we conducted a detailed decomposition of a production process into tasks. From this analysis, we found what jobs could be moved to lower cost manufacturing locations in Mexico or Asia.

Amazingly, no one in the government really understood this dynamic. They did not understand the stakes…the hollowing out that would occur as companies deconstructed jobs into tasks and then moved less skilled, manual, repetitive tasks to lower wage countries.

This failure to understand and respond adequately has led directly to our current mess. To those who say that government has no role to play in the market economy — the typical supply side talking point — I say, “not so”. Government does a good job pioneering new technologies that companies later commercialize. Think semiconductors, the Internet and GPS just for starters. The government does an absolutely lousy job as the other end of the S-curve, helping workers and communities jump the curve. Look at our rural broadband: pathetic.

The fact that an article like this could appear 35 years later is, well, disappointing. But I am an optimist. Perhaps we can learn lessons from the past 35 years.

Ed Morrison is Director of the Purdue Agile Strategy Lab. He is also an adjunct professor at the University of the Sunshine Coast in Queensland, Australia. For the past five or six years, he has been developing new, agile approaches to strategy in open, loosely joined networks, a discipline he calls Strategic Doing. Prior to starting his economic development work, Ed worked for Telesis, a corporate strategy consulting firm. In this position, he served on consulting teams for clients such as Ford Motor Company, Volvo, and General Electric. He conducted manufacturing cost studies in the U.S., Japan, Mexico, Canada, Italy, Sweden, and France. Ed started his professional career in Washington, D.C., where he has served as a legislative assistant to an Ohio Congressman, staff attorney in the Federal Trade Commission, and staff counsel in the US Senate. He holds a BA degree cum laude with honors from Yale University and MBA and JD degrees from the University of Virginia.

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