Monday, April 16, 2012

Offshoring in the west. Viable in the long-term or just lucky?

I found this a very interesting article to come out of WalesOnline. Major multi-national Tata, which makes everything from trucks to tea, has invested £800M in Welsh steelworks facilities. The Tata Steel spokesperson said the reasons for this investment were because of the quality of the workforce, strong industrial relations and a supportive Welsh government.

It's welcome news for the 8000 people employed by Tata in Wales, but more broadly offers an interesting twist on the offshoring issue and its implication for Western manufacturers.

Could manufacturers in the US, Europe and other western nations be genuinely considered as viable offshoring alternatives for the big manufacturers? eg those from India and China. The majority of economic arguments up to now would say otherwise.

Two of the reasons why you might think western manufacturing nations were unattractive offshoring alternatives; a quality (highly paid?) workforce and industrial relations practices, were some of the reasons why Tata were drawn to investing in Wales. Are these features that much of an enticement for overseas investment?

Another byproduct of the success was the Welsh government was able to 'on-sell' education via its FE colleges to the Indian education department - this may have helped seal the deal.

What do you think? Is it a viable alternative for western manufacturers to attract BRIC-type (Brazil, Russia, India, China) investment?

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