technology is the leading element of today’s consumer marketplace. and it’s very difficult to name a product that isn’t made in China today. it’s the continuation of a trend that saw Japan rise out of the defeat of the Second World War by copying western products at rock-bottom prices to boost its fractured economy. that was the birth of industrial outsourcing.
China was soon to take over that lead after Japan’s manufacturing costs became too high. But now, like Japan before it, wage inflation and demands for a share of Japan’s prosperity is beginning to erode China’s cheap manufacturing costs. turmoil in the world’s markets after Covid and terrorist attacks on shipping is making western nations begin to think again. could we restore our own workforce to manufacture at home again. is this the end of the globalisation bubble?
the tragedy of a once great industry shuttered
the rationale behind the UK abandoning its position as the workshop of the world can be found by examining the competition within Europe’s manufacturing base and the self-destructive race to the bottom for the lowest market price. but in a civilised economy, workers demand a fair living wage and shorter working hours. any western nation attempting to breach that common threshold bookended by those two factors will see its leaders lose their place in government should they try.
if the West can’t make a product cheaper, then it must look beyond the West to countries with less restrictive practices – states with sweatshop conditions, a sub-optimum attitude towards worker rights and an authoritarian regime to determined to protect that brutal status quo. a state like China.
but what happens when the Chinese workers begin to aspire to gain western levels of prosperity and manufacturing cost begin to edge up? western manufacturers are all in the same boat literally and industrial stagnation beckons. its is the final resting place at the end of the race to the bottom.
what happens when every race-to-the-bottom competitor has crossed across the finish line?
islamic terrorism throws a grenade into the wheels of globalisation
while western companies struggled to find a solution to this industrial stalemate formed by the lack of differentiated production costs, forces as far outside of the boardroom as you could imagine have thrown something more deadly than their hats into the ring. this was disruption of the worst kind. open sea piracy for political motives.
man the lifeboats – a modern day titanic encounters a desert iceberg
China knew it could only justify its low margin factory costs by shipping in great quantities on the same platform. that required delivery to be sent in single shipments from many suppliers to a single destination using the cheapest form of movement. by sea. this required three stages. firstly, ports of origin in China equipped with a giant packing box, we now know as containers. secondly, specifically designed vessels stacked full of identical sized containers. thirdly, destination ports, such as Rotterdam, specifically set up to deal with each shipment with a method to onward-distribute each container.
This method of shipping would see the vessels travelling from China then through the Red Sea and along the Suez Canal. this stretch of water created a deadly environment where Muslim terrorist forces could attack the West that it hated like shooting fish in a barrel. this was for the first time, a war the Islamists could win.
just as the Germans nearly won World War Two by disrupting allied shipping of vital cargo with U-Boats, all the terrorists had to do was buy a few rockets and missiles from a more than willing, war mongering Iran and they could bring the West to its knees. There would be no pro-active defence, only reactive reprisals into the desert where the land pirates could vanish into that arid wasteland and ready their next attack.
how can foreign outsourced factories produce if they can’t deliver?
this brings us to the point of this story. for the West to survive, it must meet consumer demand and produce products that can be delivered, quickly, safely and cheaply. short of time-travel, there is no way China can continue to make products that cannot be delivered and satisfy all that criteria. the only solution is for the West to start to make what it needs at home again, to end the outsourcing and de-globalise its market.
the UK’s manufacturing sector has jumped to the world’s 8th largest manufacturer, with a global revenue of over £884 Billion in 2023, employing 2.6 million people in the UK, providing 49% of all UK exports.
figures from UK statistics group MakeUK
a new industrial regime
The West under pressure has shown it can ramp up industrial production in a matter of months. with automation helping fill the skills gap, there is a shorter training and skill creation stage manufacturing sector staff. the benefits to the working population of UK and Western countries generally is huge, both financially and from a health and wellbeing perspective. to be making things again brings pride and a reason to get up each day.
this is not to say the UK had ever totally abandoned its manufacturing sector; as one of the greatest innovating nations globally, along with a thriving small business economy and a talent for world-beating precision engineering, it is the country everyone turns to to produce specialised and critical products.
manufacturing locally will never be as cheap as China, but the opportunity to adapt from short-termist, rampant consumerism to quality goods that last longer that customers will be happy to pay for may be the new paradigm. this may well herald the death of destructive globalisation.
maybe we will finally see a race to the top. let’s hope so. it’s been a long time coming.