Brokenland Note:
Corporate Sleepwalking
3 July 2014
¶ We’ve come across this story before, but it has been a while since the last one, so our capacity for seething is fully refreshed. “Losing Sparta: The Bitter Truth Behind the Gospel of Productivity,” Esther Kaplan’s account of the closing of a productive, profitable plant in Tennessee has us boiling with rage. (We’ll think twice about buying anything bearing the Philips label.) To give the tale a wicked twist, Kaplan surmises that the shuttering and offshoring made no business sense. (Virginia Quarterly Review; via The Rumpus)
A 2012 study by Michael E. Porter and Jan W. Rivkin of Harvard Business School, based on interviews with 1,767 executives involved in location decisions over the previous year, confirms Bronfenbrenner’s view. Porter and Rivkin found that “rigorous processes for location choices” are “far from universal” and that such decision-making processes “have lagged behind those for virtually all other major investment decisions.” They found that companies often underestimate the hidden costs of offshoring, overlook the advantages of a US location and “fall prey to biases that work against the U.S.”
Combined, this research hints at a radical idea: that offshoring has simply become a reflex. And if that’s true, all the lean manufacturing and just-in-time production and automation and retraining and two-tier pay scales in the world won’t be enough to save American production jobs.