The Impact of Globalisation on the Manufacturing Industry

Reagan Rolls (S5311968)

Griffith University

1007GBS: The Future of Work

Anne Eastgate, Tuesday 6pm online workshop

Table of Contents
Introduction ..................................................................................................................................... 3

Response to Essay Topic .................................................................................................................. 3

Recommendations ........................................................................................................................... 5

Summary .......................................................................................................................................... 6

References ....................................................................................................................................... 7
 Introduction

Globalisation has been the rise and fall of various practices and ‘norms’ within certain industries,

and manufacturing has been the subject of many of these changes (Butler, 2021). It is important to

recognise these positive and negative developments in an industry that we work and live in every day,

from the shoes we wear to the cars we drive. This paper will cover the effects of globalisation on the

manufacturing industry and provide recommendations on some problems faced by the industry.

Gaining an understanding of globalisation is important to recognise the impact it has on various

global industries. In doing so, we can comprehend the hand that it plays in shaping trade, affecting

businesses, and changing industry operations.

Response to Essay Topic

Globalisation has resulted in many countries becoming interconnected, with a reasonably

shared level of interdependence amongst each other. It essentially covers the transfer of services,

goods, and people between economic regions, and this is done through the advancement and aid of

transportation, trade agreements, and technology (Butler, 2021). This also means that key global

industries are subject to significant changes, and the manufacturing industry has been a primary target

for these developments.

Many businesses founded in first world countries have since relocated manufacturing into

poorer countries, where overheads for labour can be substantially reduced to remain competitive in a

global market. Whilst outsourcing does improve the employment market and number of jobs available

for an area, it also sees many workers fall victim to exploitation, as well as the risk of a poorer quality

product. In addition to this, many factories will be relocated into these poorer countries, which can also
negatively affect business image and by the loss of jobs in the parent country, as well as have

detrimental effects on the local environment and increase carbon emissions (Crevoisier & Rime, 2021).

The supply chains have also opened numerous opportunities for manufacturers, as raw

materials and labour are able to be sourced from cheaper countries, where specialist skills may also be

more easily attained. This results in the reduction of production costs, product improvement, and

accessibility to a wider range of resources (Callaghan, 2021). In diversifying supply chain locations,

manufacturers also mitigate risks that may be faced by certain countries, such as civil unrest or natural

disaster, and provides a competitive advantage and flexibility (Ramanujam & Savoy, 2022).

Trade has been an essential part of human business since the Stone Age, and the growth of

world trade has steadily increased since 1979, when it accounted for 35.6% of the world’s output, up

until 2019, with trade being 58.2% of global output (Butler, 2021). With anything, there are people who

will benefit more and less from change, and trade is no stranger to this. Trade threatens poorer

countries, who are more likely to face coercion from higher powers and exploitation of workers, and are

also subject to mass-produced imports, ultimately pushing tradition craft out (Lund et al, 2019).

The problems and advantages listed above affect everyone involved in the manufacturing

process, making these widescale and systemic issues. These problems, facing disadvantaged countries in

particular, need to be addressed to ensure the continued development of the manufacturing industry.

As manufacturers make efforts to expand their factories into poorer regions, this puts additional strain

on the local environment and increases carbon emissions (PlanetTogether, 2023). Whilst these countries

are supplied with imports for manufacture, this also slowly suffocates traditional craft output and

culture.
 Recommendations

In considering the problems outlined above, it is important to recognise the efforts required to

mitigate the effects of globalisation. Through the adoption of certain preventative measures,

manufacturers can improve their competitiveness in the global market and navigate the various issues

that are often presented (Styles, 2017).

As discussed, outsourcing has become increasingly popular for manufacturers as it provides a

company with diversification of outsources, which aids in reducing the risk of loss, and the other

country’s employment sector would increase (Lund et al, 2019). Although this does benefit both parties

in their own respective ways, it also means that workers could be easily exploited, in terms of being

overworked and/or underpaid. This will have a negative impact on employee wellbeing, workplace

health and safety, and the supplying country’s economic and production turnaround. As a method of

mitigation, governments could provide relevant workforce training, enforce higher minimum wage laws,

and implement fair trade practices in support the manufacturing sector (Kusiak, 2022). The

manufacturer could also consider opening factories domestically in order to further expand the portfolio

and mitigate risk. This would also contribute to SDG 8.7: End Modern Slavery, as it was revealed that 50

million people were trapped in modern slavery in 2022, with women and children being

disproportionately vulnerable (United Nations, 2022).

Additional to the risk of worker exploitation, the region could also face the added negative

effects of carbon emissions and environmental changes, with the increase of pollution in the area from

the opening of these factories (Kusiak, 2022). To reduce the likelihood and detriment of this problem,

companies should move to strengthen their relationships with suppliers and explore more sustainable
options as their providers in an effort to influence a more conservatory business approach and ensure

ethical sourcing.

Another recommendation stems from the use of automated technology, which is becoming

increasingly popular in the business context, with many using various programs to enable online

bookings, remote orders, and group discussions. Investing in technology for the manufacturer would

increase workplace efficiency, which also leads to reducing production costs and instills a competitive

edge for the manufacturer.

These measures will not likely change the ‘way’ of the manufacturing industry overnight, but

they would provide a blueprint for other manufacturers to work off and aim to achieve for their

company.

Summary

Throughout this report, there was discussion around globalisation and the effects it has on the

manufacturing industry. We covered what areas are disadvantageous to the sector and how they

negatively impact a variety of stakeholders, and how trade has developed over millennia. Furthermore,

appropriate recommendations to rectify and/or mitigate these issues were made, with the primary

focus being on worker exploitation and the relevance of modern slavery to manufacturers.
 References

Butler, E. (2021). An introduction to trade and globalisation. Institute of Economic Affairs in association

with London Publishing Partnership Ltd.

http://public.eblib.com/choice/PublicFullRecord.aspx?p=6741301

Callaghan, C. W. (2021). Consequences of deindustrialisation for globalisation: Insights for international

business. International Business Review, 30(3). https://doi.org/10.1016/j.ibusrev.2021.101804

Crevoisier, O., & Rime, D. (2021). Anchoring Urban Development: Globalisation, Attractiveness and

Complexity. Urban Studies, 58(1), 36–52. https://doi.org/10.1177/0042098019889310

Kusiak, A. (2022). Universal manufacturing: enablers, properties, and models. International Journal of

Production Research, 60(8), 2497–2513. https://doi.org/10.1080/00207543.2021.1894370

Lund, S. et al. (2019, January 16). Globalization in transition: The future of trade and trade chains.

Globalization in transition: The future of trade and global value chains | McKinsey

PlanetTogether. (2023, April 28). Globalization and its impact on manufacturing facilities. Globalization

and Its Impact on Manufacturing Facilities (planettogether.com)

Ramanujam, S. & Savoy, C. (2022, June 10). Diversifying Supply Chains: The Role of Development

Assistance and Other Official Finance. Diversifying Supply Chains: The Role of Development Assistance

and Other Official Finance (csis.org)

Styles, G. (2017, March 15). Three ways globalization is influencing manufacturing. Three Ways

Globalization Is Influencing Manufacturing | Manufacturing Business Technology (mbtmag.com)

United Nations. (2022, September 27). 50 million people in modern slavery: UN report. 50 million

people in modern slavery: UN report | United Nations

Varsava, J. (2022). Manufacturing crisis under globalisation: middle-class precarity in Dave Eggers’s A

Hologram for the King. Textual Practice, 36(5), 776–805.

https://doi.org/10.1080/0950236X.2020.1841279

Wood, A. (2017, March 18). How globalisation affected manufacturing around the world. How

globalisation affected manufacturing around the world | CEPR