Fordism to neo-liberalism, off-shoring and re-shoring

D R . C H RI S CH A N
Outline of this lecture
• 1. Fordism and its critiques
• 2. Neo-liberalism, globalization and off-shoring
• 3. De-globalization and re-shoring

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 1. Fordism and its critiques:
The origin of Fordism

The system of mass production that was

pioneered in the early 20th century by the Ford
Motor Company
• Henry Ford and its car factories
• Anti-trade union attitude and ‘philanthropic’
reform: increase wages of employees
•The logics of Henry’s idea (production and
consumption)
•The global recession (1929) and the failure of
single factory reform

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Fordism in the US

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 The concept of Fordism
•A post-war mode of economic success and its associated political and social
order in advanced capitalism.
1. The new deal reform in the USA
2. The post 2nd World War period – (1950s – 1970s)
3. Cold war and the US hegemony –> extension to Europe and Japan
• The features of Fordism:
◦ High productivity, High wages, high consumption = virtuous circle
◦ Simple work, but high rewards for deskilled intensive production
◦ Mass production – pioneered in US and diffused across sectors/countries
◦ Strong trade unions in post-war period
◦ High demand for products – new consumer products (cars, washing
machines, etc)
◦ National level collective bargaining stronger embedded in firm
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 The challenges to Fordism since 1980s
•Crisis of profitability - pressure to get more back from workers
• New competition to US corporations - European and Japanese and Asian Tigers
•Challenges to trade unions and full employment
•New production paradigms – Japanese (Toyota Production System/lean production)
•Decline of manufacturing employment and growth of mass services
•New sectors – ICTs
•International division of labour – exporting production overseas: off-shoring

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Toward greater flexibility: Neo-Fordism
or Post-Fordism?
•The success and global influence of Japanese production model in
1980s and 1990s: just-in-time, lean production, kaizen, team
work, job rotation…
•Gradually shift globally towards division of workers into
permanent (core) and temporary (periphery)
•Increased use of third parties to source workers – growth of
international employment agencies
• Neo-Fordism, Post-Fordism or changing pattern of work?

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Lean Production in Japan

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 Manufacturing employment, 1970–2010
Table 1. Manufacturing employment, 1970–2010: millions and share of global manufacturing employment): selected nations

1970 Mn (% world) 1990 (% world) 2010 (% world)

Italy 3.3 (2.35) 2.8 (1.53) 3.3 (1.66)
France 5.2 (3.72) 3.1 (1.72) 2.9 (1.45)
Germany 8.2 (5.87) 7.1 (3.95) 6.2 (3.10)
UK 8.0 (5.69) 4.8 (2.6) 2.3 (1.13)
USA 18.2 (13.03) 17.5 (9.71) 12.7 (6.36)
Japan 10.9 (7.79) 1.2 (6.20) 7.3 (3.63)
Poland 3.5 (2.48) 3.0 (1.67) 2.0 (1.01)
Brazil 2.1 (1.48) 4.2 (2.32) 7.7 (3.84)
China 14.2 (10.13) 42.4 (23.53) 68.8 (34.34)
Korea 0.8 (0.59) 3.0 (1.64) 1.3 (0.64)
World 139.7 (100.00) 180.3 (100.0) 200.3 (100.0)
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◦
 3. Neo-liberalism, globalization and off-
shoring
What is Neo-liberalism?
• Neoliberalism - the doctrine that market exchange
is an ethic in itself, capable of acting as a guide for “Neoliberalism is in the first
all human action - has become dominant in both instance a theory of political
thought and practice throughout much of the economic practices that
world since 1970 or so. proposes that human well-
being can best be advanced by
liberating individual
entrepreneurial freedoms and
• Its spread has depended upon a reconstitution of skills within an institutional
state powers such that privatization, finance, and framework characterized by
market processes are emphasized. State strong private property rights,
interventions in the economy are minimized, while free markets, and free trade.”
the obligations of the state to provide for the —Harvey (2005: 2)
welfare of its citizens are diminished.
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What are the Problems of Neo-liberalism?
 Sweatshop in the developing world
The Case of China
• Mass employment of migrant workers: young and female
(295.6 million migrant/peasant workers in 2022)
• Low pay and poor enforcement of labour law
• No freedom of association and independent trade union
• Military management and dormitory labour regime
• industrial disasters and occupational disease

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 After 40 years of neo-liberal
globalization
• Labour unrest in the Newly Industrialized Countries (such as China):
the new Global Factory produces new militant working class.
• The end of cheap China? Rising labour cost

• Source: https://www.economist.com/business/2012/03/10/the-end-of-cheap-china

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How about workers in the developed
world?
•The Burberry Case: From manufacturing to post-industrial (service-
based) economy
Precarity: “In the current labour market in Wales, the majority of
opportunities for low skilled workers lie in the service sector,
particularly within retail, call centres and the delivery of community
care for vulnerable groups such as disabled people and older people.”
Deskilling: “the current flexible labour market for low skilled workers
means little more than precarious economic survival and longer term
skills depletion.”
Source: Blyton, P. and Jenkins, J., (2011) Working All Hours: The part-time poverty trap.

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 What are the
consequences?
• The loss of decent jobs: Is
China stealing jobs?
• The living cost crisis: rising
inflation rate?
• The discontent of working
class: Trumpism and Brexit….
• Is re-shoring a solution?

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3. Deglobalisation and re-shoring
Recall week 1 lecture
• Economic and geopolitical tensions (such as
US-China trade war and the Ukraine war) as
well as uncontrollable events (such as Covid
and natural disasters) cause disruptions to
supply chains and trade.

• Countries re-evaluate whether to be

independent on other countries for economic
development and national security purposes.

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Not China, Motorola’s new smartphone plant in Fort Worth,
Texas

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 Returning work – Inland Empire of
Temporary migrant labour
•Growth of precarious employment: cheapening of labour in developed countries
•Jobs that were off-shored due to higher labour costs return to developed countries as
labour costs fall
•Rising economic nationalism and attacks on neo-liberalism and globalisation
• Ideological and political push to return jobs to the US – which has been reinforce with
election of Donald Trump in 2016
•Quality of jobs and nature of employment relations in new US and UK – remains of critical
importance.

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 Narrowing wage gap
• In 2010 a company could employ 8.3
Chinese workers for 1 American worker. In
2018 the same company could employ just
2.9 Chinese workers
• Advanced countries in G20 wages rose 9%
1999-2017; while emerging countries in
G20 they rose 300%
• FDI to emerging economies has declined
• FDI from emerging economies to advanced
has increased

Https://on.ft.com/35wvzY6
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 Made in America, Again
Made in America, Again – Boston Consulting Group
Reasons
•Rising wages in China, falling wages in US
•Rising transport costs
•Return production closer to consumption
•US unions are weaker and rising productivity in US labour force
•Temporary workers can undermine worker solidarity and increase management control
◦ http://www.macleans.ca/economy/business/why-factory-jobs-may-be-returning-to-america/

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 Why making iPhones in America is so hard?
Watch the video and discuss:
1. Does imposing tariffs on trade with one low-cost
country simply force companies to move to another low-cost
country? Look at the Apple supply chain featured in the
video.
2. Why is it unlikely that Apple will design and assemble in
the US?
3. Returning production of products to the US often
means returning fewer jobs. Why?
4. What does the MacPro case illustrate?
5. In what way are company’s location decisions political
and not economic?

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Case: Fast Fashion in the UK
•Competition in fast fashion has been driven by new types of lead firms such as
discount and online retailers
•Marketing value of ‘Made in Britain’ : In 2013, John Lewis planned to increase
sales of ‘Made in Britain’ products by a minimum of 15%.
•The value chain was transformed with a focus on quick response to market
opportunities: Lean supply chain management, and speed-to-market in design,
production and distribution
•By doing so, employment opportunities have been shifted into the local
informal economy

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The new challenge for ‘Made in Britain’
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The return of textile manufacturing to the UK
The report (Hammer, 2015) highlights:
•Apparel manufacturing in the UK has seen a striking revival since 2007. Between 2008-2012,
11% growth mainly concentrated in major sourcing hubs such as the East Midlands,
Manchester, and London.
• Majority of workers in Leicester’s garment sector earn around £3 per hour (compared to a
National Minimum Wage (NMW) rate of £6.50);
•Wages cash in hand, and workers do not hold an employment contract.
•Some workers also complain about health problems, inadequate health and safety standards,
verbal abuse, bullying, threats and humiliation.
•Employers often consider welfare benefits as a ‘wage component’ and force workers to
supplement wages below the NMW with welfare benefits.

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 The drivers of reshoring
Rising costs of transportation
Rising labour costs and standards in developing countries
Falling wage levels in developed countries: equalisation of wages and working
conditions between regions
Mass customerisation: fast fashion and adapting products access to local
markets easier with proximate production or delivery of service
Closer to customers for service provision: tacit skills in call centres harder to
standardise internationally
Reducing disruption along complex and long supply chains
Source Tavassoli, S., Kianian, B. and Larsson, T.C., 2013. Manufacturing Renaissance: Return of manufacturing to western countries (No. 2013/04).
Center for Innovation and Technology Research, Blekinge Institute of Technology. 25
 The problems of ‘reshoring’
•Poor working conditions: Subcontracting, workforce segmentation, work
intensification, and the under-payment of wages are prominent
• Informal contracts and wages: increasingly similar between developing and developed
countries
•Exploitation of migrant workers: Tapping into pools of local and migrant workers in
developed economies
•Made in …’ logo: As a driver for reshoring, ‘Made in …’ logo is important (luxury
brands, authenticity), but need to look closely at the ‘Made in’ logo. It may be just a
final assembly stage of a complex production chain for marketing purpose
•Different labour process for different customers: small units, and subcontracting
chains, especially in fashion industry.
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References
Peck, J., 2017. Offshore: Exploring the worlds of global outsourcing. Oxford University Press.
Tavassoli, S., Kianian, B. and Larsson, T.C., 2013. Manufacturing Renaissance: Return of
manufacturing to western countries (No. 2013/04). Center for Innovation and Technology Research,
Blekinge Institute of Technology.
Bailey, D. and De Propris, L., 2014. Manufacturing reshoring and its limits: the UK automotive case.
Cambridge Journal of Regions, Economy and Society, p.rsu019.
Christopherson, S., Martin, R., Sunley, P. and Tyler, P., 2014. Reindustrialising regions: rebuilding the
manufacturing economy?. Cambridge Journal of Regions, Economy and Society, 7(3), pp.351-358.
Nik Hammer 2015 New Industry on a Skewed Playing Field: Supply Chain Relations and Working
Conditions in UK Garment Manufacturing.
Kalleberg, A. L. (2011). Good jobs, bad jobs: The rise of polarized and precarious employment
systems in the United States, 1970s-2000s. New York, NY: Russell Sage.
Robinson, P.K. and Hsieh, L., 2016. Reshoring: a strategic renewal of luxury clothing supply chains.
Operations Management Research, 9(3-4), pp.89-101.
Gray JV, Skowronski K, Esenduran G, Johnny Rungtusanatham M (2013) The reshoring
phenomenon: what supply chain academics ought to know and should do. J Supply Chain Manag
49(2)
Hammer, N. and Plugor, R., 2016. Near‐sourcing UK apparel: value chain restructuring, productivity
and the informal economy. Industrial Relations Journal, 47(5-6), pp.402-416.:27–33 27
Further study materials:
Bringing Business Back
Our World, Bringing Business Back, 21:30 15/02/2015, BBC News 24, 30 mins.
https://learningonscreen.ac.uk/ondemand/index.php/prog/08B9BE91

◦ 3.28 – post-war American industry boom (Fordism) and collapse – Cooper Electric case in
Eufaula, Alabama outsourcing to Mexico; Condom factory moved to China;
◦ 9.00 – Reshoring – boots, washing machines (Whirlpool); Candles; Software
◦ 17.40 –20.22 - Impact on India of jobs being re-shored back to the US
◦ 20.30 – 25.30 - Software in South Dakota – Eagle Creek

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 Further study materials:
reshoring with automation of production
•Adidas in Germany

https://www.economist.com/news/business/21714394-making-trainers-robots-and-3d-printers-adid
ass-high-tech-factory-brings-production-back

•Clarks in the UK

https://fashionunited.uk/news/business/clarks-to-bring-back-local-manufacturing-in-robo-assisted-fa
ctories/2017070525077

•Reebok in the US
https://fashionunited.uk/news/business/reebok-to-begin-producing-shoes-in-the-us-once-more/201
6102422200
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 Next Lecture
The guest lecture which was planned at 19 March
will be moved to 12 March:

Dr. Adam Badger (Oxford Internet

Institute and New Castle University)

OII | Dr Adam Badger (ox.ac.uk)

https://www.youtube.com/watch?v=xgWX8oTOH
tg

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