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Globalization and the worldwide division of labor.

Globalization and the worldwide division of labor

In the 1950's and 1960's, certain tradeoffs governed where U.S. firms located production: many labor-intensive jobs were shipped offshore where labor costs were lower and where unions were nonexistent or very weak. But, automation was located in the United States where the necessary skills and industrial infrastructure were found. And, in fact, for workers and unions, automating was the alternative to shipping jobs out of the United States. Technological constraints existed in most developing economies that prohibited the easy transfer of complex, sophisticated, and highly automated production processes. Those tradeoffs are now quite different. With the advent of worldwide telecommunications and with the improvement in infrastructure in newly industrializing countries, the most sophisticated and automated production processes can be located throughout the world. In some cases, computers mean that work that was formerly transferred abroad is shipped back to the United States. In most other cases, just the opposite is taking place. And with all the attention on the trade deficit and mounting criticism of Japan, an increasing amount of the trade deficit is attributable to U.S. firms, either wholly owned or joint ventures, transferring important elements of the production process to places such as South Korea, Mexico, and Taiwan.

Transferring production

The issue is not the very pressing need of these countries to develop and to have those laws and trade policies that allow that development, but rather the ability of multinational firms to transfer production with a great deal more mobility and far fewer constraints than existed in the past. It is not simply a question of factory work. Sophisticated design processes and key aspects of services in financial, programming, and other areas are also subject to export.

Take the design of a new car, the Mercury Tracer, that will be introduced in 1987. It is a small, sporty car that typifies the technological changes that are taking place. The car was designed by the Japanese and its engine and transmission will also be built in Japan. The car itself will be assembled in Mexico and sold in the United States. What is important is not just the transfer of the labor-intensive parts of the vehicle's production, but a worldwide division of labor from the point of design to the point of assembly, wherever both happen to be most convenient for the firm.

One automaker operates a major electronic components subsidiary in Ohio, providing parts for automobiles, such as wire harnesses and other electronic equipment. The company sought to introduce new technologies and also to make dramatic cuts in wages and benefits. The union local there initially resisted, concerned about losing jobs and gains that were built up over many years. Ultimately, the company took a number of local leaders down to a new plant in Juarez, Mexico, just across from El Paso, and showed the union leaders the technologies used in the plant, pointed out the capacity, and said, "It is your choice. Either you concede what we are asking in terms of bargaining or the work that you do in Ohio will be transferred to Juarez. If you think this is an idle threat, this is the plant. This is the production process.' Rather than wages and working conditions of workers in Mexico slowly rising to the levels of the United States or South Korea or Brazil, just the opposite is taking place: that is, the ability to globally locate production is serving to rachet down wages and working conditions. In many cases, workers are pitted against each other for the available jobs rather than being able to improve their living standards based on the best conditions that exist.

Solidarity: key to the future

But with this said, the U.S. labor movement brings important traditions to addressing the issue of technological change: while technological change, computers, or microelectronics in many ways are new, dealing with labor's most important values of solidarity and cooperation provide the key for moving changes in a positive direction.
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
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Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Author:Shaiken, Harley
Publication:Monthly Labor Review
Date:Aug 1, 1987
Words:667
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