GAIA and Your Money

Rethinking Globalization – the next manufacturing landscape

According to the Globe and Mail, Monday, June 25, 2012, page B3, Japanese automobile manufacturers are moving some manufacturing totally outside of Japan.  Honda now makes its Fit vehicle in China, and Toyota is ending the manufacture of its Yaris subcompact in Japan, instead setting up shop in France – of all places. Currency exchange rates (the Yen is too high) and the cost of shipping are given as the reasons for job outsourcing.

The above 2 excuses, however, do not hold up.  The Yen has often ‘risen’ in value against the U.S. dollar and other currencies and oceanic transportation costs should be dropping as the price of oil collapses by 1/3.  So what is the real reason or reasons?

I suggest that a new strategy and direction – a fundamental ‘rethink’ of how to manufacture goods has emerged.   The Fukushima Daiichi Nuclear Power Plant disaster and more recent flooding in outsource component hub Thailand   disrupted Japanese auto production and sales around the world-- as needed components were not available for weeks.

So, globalization is fine for expanding one’s markets, but not for manufacturing anything with numerous components when Gaia gets upset and burps. 

While Thailand or China may have the skilled labour to produce a certain component cheaply, the benefit is lost in the TIME for long distance transport and the RISKS of ‘just in time’ manufacturing with single source parts.

Soon, the new buzzword will be ‘total localized production’.  Build a plant or two or three with their own, localized and complete supply network  --  in each major population area: North America, Europe, South America and East Asia.  If Gaia disrupts one area’s production, you are not without alternative ‘backups’ to ensure continued production, sales and profits.Last updated 8 days ago