Does where stuff gets made matter to consumers, and thus to brand identity?
I keep thinking that it does, and that it will play an ever-increasingly important role in purchase decisions. Reality hasn’t quite caught up with my forecast.
Here’s my rationale:
:
- Outsourcing has its limits, as recent product crises have illustrated: Boeing had to buy the factories to which it had outsourced key components of its 787 airplane, while Mattel and other toy companies encountered serious quality and safety issues with products made in outsourced factories. The easy conclusion is to believe that these were just technical hiccups, and that the premise of outsourced manufacturing — that work should be done where it can be done best, irrespective of company or geography — is an inevitable business practice. I wonder if the philosophy is flawed, least of which by the emergence of "noise" in any complex, distributed system.
- Outsourcing harms the environment. Not consistently, of course, but the premise of "remote production" implicitly involves transportation, which often pollutes. Further, many of the factories that play into any outsourcing scheme operate under far looser environmental standards than those in the U.S. or Europe, so more gunkcan get throw into the land or water (off balance sheet, of course). Wait until the next energy crisis, and watch how long the companies that are overly-dependent on outsourcing can withstand the impetus to raise prices.
- Outsourcing hurts local economies, too. A lot has been written about the impact factory closings have on a multitude of local businesses, from restaurants and other service providers, to the development of new industries (one of the things a community loses when a factory leaves are the on-the-job training opportunities for local talent).
- Outsourcing causes its own demise. Companies and their learned academic supporters can use whatever flowery words and terms they like, but the fundamental reason outsourcing "works" is because of inequalities and inefficiencies of governance, rights, and information. It’s production arbitrage, only its success means that the imbalances will get righted. It’s happening now on mainland China, where workers are getting higher salaries, better working conditions, and otherwise eating up the margin that made the outsourcing deal make sense on a balance sheet in the first place.
Where my rationale breaks down is on the consumer, or demand side.
You’d think people would care more than they do, especially with the availability of so much information online. Garment factory conditions are no longer secret, and there’s probably a web site that measures how many tons of pollution every freighter spews into the sky while carting dangerous toys across the oceans. The demand-side implications are far more complex and substantive than a simple "buy NAME YOUR COUNTRY HERE"slogan.
As a brand attribute, the where of manufacturing could be as important as the what of the product performance, if not more so. Could companies use it as a differentiator and purchase motivator? Might its importance to buyers change future business strategy?
Only time will tell. So far, the jury is still out.
Original Post: http://dimbulb.typepad.com/my_weblog/2009/09/the-jury-is-still-out.html
