Local: the new global?

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Donald Trump and Brexit are a reflection of the fact that a large constituency in each country feels left behind by globalisation; through the loss of high paying manufacturing jobs, for example. But ‘peak globalisation’ has already been reached; the tide is turning, so last month’s leader, ‘Reshoring by tweet’, is a reflection of something bigger. Trump is pushing at an open door.

In a January issue, The Economist published a detailed analysis of why this is so (https://is.gd/tucufo). In short, globalising companies have reached the limits of being able to achieve lower costs in distant lands; they are now generating profits that are lower than for those firms that operate more nationally.

And before that, at the annual Davos, Switzerland, World Economic Forum meeting in February last year (so before Trump and Brexit), Paul A Laudicina of consultant AT Kearney posed this question: ‘Globalisation is dead: what now?’.

His underpinning reasoning carries weight, for he is partner, chairman emeritus of AT Kearney, chairman of the firm’s Global Business Policy Council and has been observing global affairs for some 40 years.

He posits four futures: Globalisation 3.0 – a welcome return to global integration and growth that has proven so elusive since 2008; Polarisation – a world of heightened big power tensions, fuelled by increasing Sino-US competitive friction and animosity; Islandisation – growing global, regional and sub-state fragmentation and atomisation, driven by identity politics and social media; and Commonisation – a post-capitalist world of localised, low-cost production and more modest patterns of consumption enabled by advanced technologies and dramatically different youth attitudes and behaviour.

Just at the moment you could be forgiven for thinking that the second, polarisation, is likely, but Laudicina favoured the latter two, saying: “World transformation is powered first and foremost by the mega-driver of technology, which in turn is central to both of these worlds. The most significant change in the past seven years of world history is that we have entered into a period of sustained technological progress. I fully expect in coming years further breakthroughs in areas including alternative energy, biotechnology and artificial intelligence (AI) that dramatically change our economies and our societies.”

Will more high-paying manufacturing jobs be the result for the USA and UK, amongst others? Certainly, automation (often referencing AI these days) across society as a whole is not getting wholly positive headlines, but the International Federation of Robotics makes confident claims for industrial robot use increasing manufacturing employment, particularly in the USA (see link, below).

This article was published in the March 2017 issue of Machinery magazine.