Modern Industry Characteristics and Global Offshoring

Characteristics of Modern Industry

From the decade of 1970, after the oil crisis, a new model of industrial production was born: the post-Fordist model. This model is based on:

• The development of new technologies and new industries: information technology, biotechnology, telecommunications, microelectronics, etc.
• The satisfaction of the individual tastes of each consumer: Many different models of each product are produced to cover different tastes and needs.
• A system of flexible production: automated and highly specialized.
• The incorporation of emerging countries into industrial development.

Globalization and Multinationals

The globalization of the economy is the context in which current industrial activity is developed. Globalization has boosted business and territorial competitiveness. As a consequence, multinationals are larger than in the past. A multinational is a large company that takes advantage of the benefits that each territory offers to settle in it. They use very advanced technologies, make strong investments in research, and are able to produce large quantities of a product at very low prices.

Factors of Industrial Location

The following factors influence the location of an industry:

• Access to innovation and information technology
• Transport and communication
• Capital
• Proximity to markets
• Availability of a qualified workforce
• Availability of raw materials
• Environmental factors

Industrial Relocation (Offshoring)

Industrial relocation (also called offshoring) involves the transfer of part or all of the productive activities of a company from one country to another (generally from a developed country to a less developed country). Relocation has been common since the decade of 1990. Three factors made it possible:

1. The opening up of emerging countries and the internationalization of markets.
2. The development of new information technologies, which allow communication from one end of the planet to another in real time.
3. The development of the means of transport.

Impact of Relocation

The impact of relocation is different according to the country. In developed economies, industrial relocation has had two types of consequences:

• The loss of direct and indirect jobs, the precariousness of working conditions, and the closure of some plants.
• Companies have lowered the prices of their manufactured products enough to make them more competitive.