Effect of globalization on manufacturing Essay
Effect of globalization on manufacturing, 495 words essay example
Today's manufacturers face a wider range of challenges than ever before-most notably, greater, more varied competition and the complexities of a globally extended supply chain. At the same time, the opportunities for success have never been more far-reaching. There are over 7.2 billion people on the Earth. And because geographical borders rarely act as a boundary to sales, nearly everyone has the potential to become a customer. Just consider the changes happening around the globe and the effect they're having on how goods are produced, distributed, and sold. And this is the effect of globalization. People around the globe are more connected to each other than ever before. Information and money flow more quickly than ever. Goods and services produced in one part of the world are increasingly available in all parts of the world. International travel is more frequent and international communication is commonplace. Globalization is an economic tidal wave that is sweeping over the world. There is no question that globalization has been a good thing for many developing countries who now have access to our markets and can export cheap goods. But there will be winners and losers. And It can't be stopped. This is pretty complicated issue which has pros as well as cons.
The biggest problem for developed countries is that jobs are lost because transferred to lower cost countries." According to conservative estimates by Robert Scott of the Economic Policy Institute, granting China most favored nation status drained away 3.2 million jobs, including 2.4 million manufacturing jobs. Moreover, building products overseas in countries like China puts the technologies at risk of being copied or stolen, which is in fact happening rapidly. And the worst thing that because of moving manufacturing factories abroad which is called outsourcing, the negotiation signed by unions may lose its power. This in its turn may affect the world economy and cause political instability. Moving manufacturing activities abroad requires time, proper preparation, selection of a country that not only provides the advantage of reduced production cost, but also has access to reliable and feasible transportation of goods and has lower taxation rates than origin place. It is very rare a company to decide to move in another country just because its labor unions are "strong". Such decision that requires also large investment must fall within the strategic planning of the company and satisfy many other advantages such as lower wages in the country they will move, lower taxation, political stability etc. And even if a company used this argument as a "threat" unions know that it takes a lot of time to be implemented, so in reality they continue to "push" towards their demands. However, if the movement happens, it has beneficial sides as well. Labor can move from country to country to market their skills. And what's important, such companies that outsource their factories to countries which usually have lower wages than average, provide employment for the workers in those countries often getting them out of poverty.