Friendshoring
Let's Know Things
Colin Wright
4.8 • 593 Ratings
🗓️ 14 June 2022
⏱️ 25 minutes
🧾️ Download transcript
Summary
This week we talk about offshoring, nearshoring, and the TPP.
We also discuss onshoring, China, and supply chains.
Show notes / transcript: https://letsknowthings.com/episode316
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Transcript
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| 0:00.0 | Off-shoring, which usually refers to the practice of moving jobs from one country to another country originated in its modern |
| 0:22.4 | incarnation in the 1960s, at least at scale, when companies in wealthier countries began to move |
| 0:28.5 | their labor-intensive jobs from local cities to foreign shores. The impetus to make this |
| 0:34.7 | kind of move, which tends to be fairly expensive up front, |
| 0:38.3 | because you have factories, materials, and trained workers already operating in, let's say, Pittsburgh, |
| 0:45.0 | is that costs have gone up in Pittsburgh to such a degree that you could actually save money over the long term, |
| 0:51.2 | and in some cases the relatively short term within just a few years, |
| 0:54.7 | even after all that additional investment, by rebuilding everything and retraining a brand |
| 1:00.1 | new workforce overseas, maybe in India or Malaysia, or China. |
| 1:05.2 | Thus, as the world became more interconnected following World War II, and the rich world |
| 1:09.6 | became more diplomatically connected with, and in some ways entangled with, the poorer world, due to newly empowered diplomatic entities like the United Nations, and commerce incentivizing entities, like the General Agreement on Tariffs and Trade, which was the 1947 precursor to the World Trade Organization, which made trade between |
| 1:29.5 | nations more possible and in many ways more beneficial than ever before, using what amounted |
| 1:34.7 | to basic default treaty boilerplate and rules. As those new systems blended with new technologies |
| 1:41.7 | and shipping capabilities developed during the war, |
| 1:45.0 | governments started looking across borders for customers, but also for business partners. |
| 1:50.0 | And in some cases, because of the wealth disparity between these newly interacting, newly trading nations, |
| 1:56.0 | there were also significant arbitrage opportunities. |
| 1:59.0 | It might cost one one hundredth as much to pay a factory worker in Vietnam |
| 2:04.5 | compared to paying someone doing the same labor in Pittsburgh. And although you might want to keep those jobs |
| 2:10.3 | local for political, ideological, or traditional reasons, that kind of savings on recurring expenses is a compelling opportunity |
| 2:21.2 | for companies willing to make that upfront investment and risk pushback from their local |
| 2:26.9 | regulators and customer base. This is why in the 1960s, after those post-war effects were both |
... |
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