Why Is Sustaining Productive Capacity Important?

When Korea started as a humble OEM provider, it took on labor-intensive manufacturing jobs, using cheap wages, although the profit margin was thin. Yet, it has accumulated not only competitive high-tech production competence but R&D capacity over the years, becoming a newly industrialized nation. China is following the similar path.

Manufacturing has been the backbone of the Korean economy. It has generated not only a technological base but a climate for other businesses to flourish.

However, as I pointed out before, many Korean firms have moved its manufacturing operation overseas including China and Southeast Asian countries for several reasons.

The U.S. case has demonstrated what would happen if a country lost its productive capacity. It is highly likely that when manufacturing jobs are offshored, R&D may be eventually gone with them. Keeping higher-paying product design jobs, while outsourcing lower-paying manufacturing jobs, doesn’t seem to be working.

Again, production and innovation is the gist of a healthy economy.

Offshoring manufacturing jobs should be also understood in the overall context of economic prosperity and even national sovereignty. For one, the stagnation of wages has been caused largely by shrinkage in the manufacturing sector. Further, the global capitalists would continue to move manufacturing operation to a low cost producer nation.

National interests, corporate interests and individual interests may have to converge for the economic sustainability and social well-being. Sensible policy decision making, smart strategic corporate move, and enlightened individuals would sustain and prosper a nation. Of course, greed and rottenness should be purged out of the system, which may be the hardest part.