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?

Why would a rich man want a poor man's product?

Bigthink.com talks about the concept of reverse innovation - that is... creating value for many rather than value for money.

Vijay Govindarajan, Professor of International Business at the Tuck School of Business, defines it as innovation that starts in poor countries and brought to people in wealthy countries. He argues that poor countries have unique problems that inspire solutions usable throughout the world, regardless of economic status.

Reverse innovation, however, is not about making cheap products, says Govindarajan. "It's about giving value because poor people, their hard earned money, they want value they don't want cheap products." he said.

This means the onus is on innovators to find creative ways to drive down the cost of material and labor and add features that cater to the needs of the community. It's about doing more with less.

Click here to read the full article.