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Lecture 2

Week 3 Lecture 2 GEOG 2200 2013 Notes.docx

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Carleton University
GEOG 2200
John Milton

Page1GEOG 2200 Global ConnectionsJohn Milton Instructor SeptemberDecember 2013Week 3Lecture 2 Consumption and Beyond Consumption and Manufacturing TodayPyke 2007 makes an interesting point Many employees fear losing their jobs overseas and yet flock to WalMart to buy cheap imported products Politicians worry about constituentsjobs trade imbalance and global competitiveness while recognizing the stabilizing effect of strong trade relations And managers try to balance the needs of their employees and communities with the demands of an often brutally competitive marketplace Today we are going to look at two issues resulting from the changing consumer and the changing forms of manufacturing discussed last class the changing geography of manufacturing and the implications hidden behind product labels of this new geography and it isnt all pleasant One central issue is how consumers perceive the commodities or products that they consume Commodity fetishism refers to the tendency for geographies of production and distribution that actually generate the goods on sale in Western shops to be obscured by the emphasis consumers attach to the physical appearance and price of goods As such consumers see value as being inherent in commodities rather than resulting from being added through labour That is this product has inherent properties Some political economists have sought to overcome this by reasserting the relations of production such as through fair trade networks or making it central again in discussionsThe new geography of manufacturingThe changing geography of manufacturing was based upon changing in three areas new enabling technologies in transport and communications changing patterns of demand consumption and the changing global regulatory environment The first and the third combined to trigger corporatefirm restructuring A tripolar world economy has emerged centred around the United States Western Europe and Japan This is reflected in the uneven spatial impact of the enabling technologies I have spoken of New technologies have different implications for different regions within the world economy In core countries high technology is creating new jobs particularly in the financial and business services sectors creating new products facilitates new production and distribution processes and new forms of corporate organization BUT is leading to reductions in employment in manufacturing In semiperipheral countries we continue to see increases in manufacturing employment increases in productivity and in overall improvement in competitiveness in the international economy In peripheral countries new technologies are too expensive to acquire or deploy leading to a relative decline in both productivity and international competitivenessAlongside this geographic organization changes were taking place within industrial sectors Perhaps most important has been the globalisation of business activity through the restructuring of the corporate world Two of the most important outcomes of this have beenConcentrationinvolves the elimination of small weak firms in particular spheres of economic activity sometimes through competition and sometimes through mergers and acquisitionsCentralizationinvolves the merging of the resultant large enterprises from different spheres of economic activity to form giant conglomerate companies providing a diverse Page2range of activities and products These are often transnational in their operations We have discussed the various strategies employed by MNCs in organizing their operationsEfficiencies have also been achieved by firms through yet another strategythe externalization of certain functions One example of this is the reorganizing of administrative managerial and technical units from hierarchical into more flatter and flexible units drawing upon outside consultants specialists and subcontractors And another way to externalize has already been highlighted when discussing the MNC last classvarious forms of arrangements with other firms These include joint ventures in the licensing or contracting of technology and in strategic alliances involving design partnerships collaborative RD projects and other such initiatives Strategic alliances have become an important facet of globalization These current outnumber mergers and acquisitions Examples of such alliances include those in the automotive industry Toyota and Nissan are collaborating on hybrid vehicle technology GM and the Dalmer Group are doing the same GM and Chevron Texaco are working on fuel cells Examples of outcomes the Pontiac Vibe now gone the Suzuki SwiftFlexible Production Systems How the geography changes The clothing industry provides a dramatic example of how production networks have changed over time In the late nineteenth century the textileclothing industry concentrated in the metropolitan areas of core countries or near energy sourceswater with many small firms using cheap migrant or immigrant labour This was in part the legacy of the Industrial Revolution In the first half of the twentieth century the industry began to modernize larger firms emerged drawing upon economies of scale and mass production techniques for mass markets Plants located to areas with lower labour costs in the core country As the world economy began to globalize semiperipheral and peripheral countries became the least cost locations due to lower labour costs for mass produced clothing for the global market Why All you have to do is look at the numbers The hourly compensation including benefits for clothing workers in the US is about 10hour for a 37hour work week In Western Europe it is about 17hour But in Asia taken as a region the average clothing worker earns US3hour for a 60hour week while costs in China India and Bangladesh while rising were less than 1hourThis means that a 100 garment is divided up as follows50 to the retailer35 to the manufacturer who spends 2250 on textiles15 to the contractor who pays the workerslabours6 to the garment workerIn 1960 less than 7 of all apparel purchased in the US was imported In 2007 it was 90 imported The globalization of production has resulted in a complex set of commodity chains Major clothing companies have most of their products manufactured through arrangements with independent suppliers In the case of Liz Claiborne this totals nearly 350 factories globally with no supplier providing more than 5 of the companys total output These are scattered throughout the globe Claiborne has operations in more than 40 countries but primarily in Asia ChinaHong Kong Cambodia Malaysia as well as the Caribbean and Central America These commodity chains are highly volatile
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