A new book by Cambridge academic, Dr Finbarr Livesey, suggests there is early evidence of a coming U-turn in the globalisation of manufacturing.
While digital globalisation continues apace, Livesey has reportedly detected a “sea change in the production and distribution of goods,” according to the University of Cambridge.
“With global supply chains shrinking as companies experiment with moving production closer to home, [Livesey] argues that many of the big assumptions we have about globalisation and outsourcing are now wrong, and that the global economy is subtly changing in ways yet to be picked up by blunt macroeconomic measurements.”
Livesey reportedly investigated factors ranging from automation and 3D printing through to environmental regulations and customer expectations to assess whether or not the classic concept of globalization was still applicable to manufacturing.
“Robots are becoming cheaper than overseas labour, climate concern and volatile fossil fuel markets are restricting carbon footprints, and consumers increasingly expect tailored products with express delivery,” he explained in the lead-up to this year's Hay Festival, an annual literature festival held in Hay-on-Wye, Wales.
“Bouncing production around the planet is already making less and less economic sense.”
He added, “Holding on to familiar stories about the global economy is [thus] not an option, as technological and political changes make a mockery of any past consensus.”
However, Livesey warned against falsely claiming such shifts as a victory for protectionism: the technologies allowing the return of production to high-cost economies are unlikely to mean the promised return of jobs.
If ‘deglobalisation’ is indeed coming down the line, he added, then Brexit may be a “particularly bad move” for UK manufacturing.
“Trying to reach over our neighbours in the name of ‘global Britain’ at a time when many companies are on the cusp of reverting to regionalism means that marginal calls for European manufacturing bases may go to France or the Czech Republic, for example, rather than the UK.”
According to Livesey, “weak signals of early change” are emerging around the globe. “Global supply chains cost companies time in an age of next-day delivery, and add risks of disruption – from cultural differences to natural disasters – and even intellectual property theft. They also take a heavy environmental toll: shipping alone produces a billion tonnes of carbon, roughly equal to that of Germany.”
Livesey said the journey from production to customer may ultimately be measured in metres rather than continents, pointing to a range of patents for mobile 3D printing filed by Amazon in 2015 as indicative of a hyper-local rather than hyper-global direction for production.
“While not currently feasible, there may come a time when your purchased product is printed en route to your house.”
While he admitted that the data from the last few decades could make his position seem “Canute-like” at the moment, Livesey argued that the tide was turning, with “signals of new localism amid the noise”.
“A recent survey of over 500 companies found well over half were moving production away from China,” he explained. “One in six companies surveyed by the Engineering Employees Federation had moved production from a low-cost economy to the UK. The Korean government passed a ‘U-Turn’ law encouraging companies to return from China.
“Companies are deciding to have their production either in their home country or nearby. Automation is attacking the costs of labour and shifting the calculus for managers. Political forces are constraining the space for manufacturing, for example restricting emissions from transport. The early signs are there.”