Slashdot Mirror
Tech Manufacturing Is a Disaster Waiting To Happen
Hugh Pickens writes "Peter Cochrane writes that since globalization took hold, geographic diversity has become distorted along with the resilience of supply so we now have a concentration of limited sourcing and manufacture in the supply chain in just one geographic region, south-east Asia, amounting to a major disaster just waiting to happen. 'Examples of a growing supply-chain brittleness include manufacturers temporarily denuded of LCD screens, memory chips and batteries by fires, a tsunami, and industrial problems,' writes Cochrane. 'With only a few plants located in south-east Asia, we are running the gauntlet of man-made and natural disasters.' Today, PCs, laptops, tablets and smartphones are produced by just 10 dominant contract manufacturers, spearheaded by Foxconn of Taiwan — which manufactures for Apple, Dell, HP, Acer, Sony, Nokia, Intel, Cisco, Nintendo and Amazon among others. The bad news is that many of the 10 big players in the IT field are not making good profits, so economic pressure could result in the 10 becoming seven."
What is so wrong with making $13 billion a year and keeping the workers, especially those that gave a significant part of their lives to that company.
That's an important point only in a rhetorical sense, not an economic one. When a company like GM employs more people than it needs, the obvious effect is that those people get to keep their jobs. Everyone can see those people. The media can interview them. They are very easy to identify and sympathize with. But the billion dollars (or whatever) that GM would have to spend to keep them around doing work that GM has apparently deemed to be worth less than what they were paying these employees has to come from somewhere. The effects of that billion dollar waste would be invisible to most onlookers and, for that reason, wouldn't seem like a big deal. But the reality is that GM's shareholders would collectively lose a billion dollars. (By the way, shareholder isn't a code word for billionaire fat cat. Most of them are ordinary people who have invested for their own retirement, to send their kids to college, or whatever.) GM's cars would all cost incrementally more, money that purchasers could have saved, invested, or spent elsewhere, helping to keep people in other industries employed. GM would pay taxes on a billion fewer dollars. Etc. In other words, that needless billion dollar expense would reverberate outward into the economy and result in difficult-to-trace but nonetheless real destruction of wealth and jobs elsewhere.
And the important thing to keep in mind is that the loss of jobs and wealth born by these other faceless people probably wouldn't be equivalent to the loss of jobs and wealth of the fired GM employees. It would actually be larger. GM wanted to fire them because they weren't needed. Continuing to employ them would use resources that could be put to more efficient use elsewhere in the economy. To use an example the typical slashdotter can readily grasp, it's like continuing to build buildings you don't need in a real time strategy in order to keep your worker units fully employed when you could be using your finite resources to produce units that you actually need.
So, it's all very well to talk about corporations "treating their workers with respect." But your idea of respect isn't free. It takes resources, and those resources have alternative uses elsewhere in the economy. If those uses generate greater wealth and jobs for other people, it no longer seems quite as obvious that GM should have kept people they didn't need on the payroll out of loyalty or kindness or whatever.
The unions gave that incentive but their own decadence has greatly ruined their own power.
Unions may help all workers in some sense, but there ways in which they particularly help some while harming others. If the cost of labor in a union shop is 30% higher than in a non-union shop, the company has that much greater incentive to (for example) automate and eliminate low-skill jobs. That might be great if you have the intelligence or training to run or maintain machines, but not so great if all you're really capable of doing is standing in one spot and putting the same part on every car that comes by in exactly the same way. It's also not so great if you are one of the workers who was laid off because the union has made you artificially more expensive to employ than your labor is worth to the company. There's a concrete example of this principle at work at my local McDonalds. When I order a soda, my cup is no longer filled manually by an employee. A robot does it. That robot replaced some fraction of a job that a high schooler or other very low skilled worker could still be doing because the cost of the robot was less over time than the cost of employing a worker at the government-mandated minimum wage.