Listening to the radio this morning on the way into work, there was a report about the government releasing figures today for gross national profit and trade, or something like that.
Anyway, the long and short of it is that years ago a company would design a widget, invest in a plant to build it, ship it to the target market, sell it at a profit. Easy business model, it works and makes money. But not enough any more.
Today company designs a widget, no longer invests in a plant in the home country, or abroad for that matter, but subcontracts the manufacture out to a Chinese or Indian company to produce the widget. It is then shipped to a distributor that covers the target market and sold. So some of the profit comes back to the original company, but a greater percentage goes to the manufacturer and the distributor. But here's the thing, the original company that designed the widget still sees more profit than before.
A global market? or a Greedy nation that has created a workforce that needs more money to live and therefore can't be employed to produce stuff that others will produce for a fraction of the cost?
Is this a self perpetuating cycle? I can't see it being anything else at the moment. China will conquer the world, very soon at this rate.
If you look at call centres and what has happened to them in the UK recently it may be a short cycle. They were outsourced to India and all power to the Indians for being resourceful and making that work. But speaking to someone in Bangalor called "John" with an accent so thick and a line so bad you can hardly understand or hear what they are saying does not help customer satisfaction. Is this why a bunch of UK banks are making a huge thing of the fact they are now back to UK call centres?
That's all very well, but a colleague of mine recently was transfered from an Indian call centre to a UK one to order a replacment credit card. The person in the Scotish call centre had a very broad accent and my colleague had great difficulty understanding what was being asked of him.
But I can see this happening to the manufacturing industry. Soon people will see that we have to buy localy produced goods, or we are going to end up with masses of cheap goods in our stores and they will then be calling out for quality goods. By then we'll have to have another industrial revolution to recreate the manufaturing industry in this country and to get the quality back.