Why Country Of Origin Still Matters

With the launch this week of the global COOLXmas educational project, it seems a good time to highlight some of the issues students could discuss. Here are some of the ones that matter to us here at madeinnations:

 

It hasn't been easy to convince people that the Country Of Origin of manufactured goods still matters, especially before the global economic crisis hit. Until then, rising house prices and cheaper consumer goods convinced many people that the global economy was working, and that the new world created by the 1995 GATT agreement was the best one possible.

 

It's important to remember though that even at that time there were dissenting voices warning of the consequences for manufacturing capacity in the West- and with the decline of it, the threat of long-term unemployment and social instability. The multi-billionaire James Goldsmith made exactly these warnings in this 1994 interview (54 min).

 

Yet a decade and a half of the ban on country of origin labelling, on product displays and in advertising (which some argue is effectively a form of censorship) has clearly had an effect on consumers. Price, brand and specification matter more than origins in the short-term desire to possess the latest gadgets and keep up with our friends, as we 'join the conversation' on their terms, and the terms of the companies that assembled the products and sold them to us.

 

But if a democracy means anything, it surely means that people have the right to ask questions about where their economies are headed, and why. So here are 10 questions students might like to consider discussing now:

 

1. If a country loses its manufacturing capacity because it prioritises finance instead, and the financial services industry then bankrupts itself through bad investments, what is left to turn the economy round?

 

2. What happens to the economy when borrowings exceed GDP by an amount that can never be paid back, and when the debts to pay those borrowings can no longer be serviced either? Try the usdebtclock.org or iousa.org for more on the US as an example. Who is lending all that money, and why? What if they stop lending it?

 

3. How are all the ex-manufacturing employees going to find new work, and where, if the service economy can't employ them all? How is the wealth to support them and their communities going to be created, and who by?

 

4. What happens when the IT jobs are outsourced too, and even the workers capable of being re-trained in the 'smarter' industries become vulnerable to a second round of unemployent?

 

5. At what point is the ability to turn the economy round by re-investing in manufacturing industry lost forever, because the skills base has gone, the suppliers and component makers have gone, and the most skilled employees have retired?

 

6. How do the new generations of engineers build up their experience and expertise so they can become future innovators? How do they learn to improve existing production methods and raise quality, if design is in one country but product assembly in another?

 

7. How can the 'race to the bottom' be avoided, as corporations seek to reward shareholders and directors with maximum short-term profits? What will happen to human rights in those countries? Is 'Free Trade' between democracies and dictatorships really possible?

 

8. How can currency manipulation be avoided, so a fair rate between nations or trading zones can prevail and one country can't use an undervalued currency to subsidise its exports and undermine competitors?

 

9. Should just a few countries have the advantage of insisting that others who want to sell in their markets have to manufacture the products there, or should this strategy to increase employment (at the expense of 'Free Trade') be available to everyone?

10. How can a country guarantee to be able to defend itself in the future, if it loses the capacity and know-how to make things?

 

There are many more issues to discuss on Country Of Origin. But the ten questions above should help get students thinking and discussing. It's a conversation worth joining, and it's happening in lots of places. Even the Harvard Business Review has lots of articles now from Professors and leading industrialists asking whether these decades of outsourcing have been a huge mistake.