Jan 25

Another closure, another customer gone..

2 Comments »

With the recent news that Lexmark is closing it's inkjet cart manufaturing facility in Rosyth, I'll be losing a good customer.

It would seem that the plant has closed for economic reasons - presumably the cost of production per unit is too high. This is likely to be due to a number of things - falling prices of laser printers, increased competition between the inkjet refill suppliers, but the gaze of suspicion has to look at the manpower costs that is incurred by running a workforce in a so-called first world country.

The company also has major production facilities in the Philipines and Mexico, presumably which will be taking up the Scottish workload.

It would appear that the large corporates are taking an increasingly abstract view on their global locations, concentrating on the bottom line, and to be honest, can we really blame them? I recently shopped around to purchase a consumer electrical product at the cheapest price. In many ways, they are doing just the same, just on a rather grander scale.

Where will this lead us though? - I'm no financial or economic expert, but surely this trend is unsustainable in the long term...

Posted by Mike Scott

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  1. Dizwell says:
    02/17/2006 07:19:59 AM

    I'm no economics expert either, but what you are fearing is the law of compartive advantage... which states that whilst Scotland might be hopeless at churning out cheap laser printer cartridges, it must be cheaper or more efficient than the Philipines or Malaysia at doing something. Even if the Philipines or Malaysia are absolutely cheaper at doing *everything*, it's in their interests to concentrate on specialising in those things in which they are especially cheap (that is, their compartive advantage is maximised), which still leaves room for Scotland to be good at producing something in which its comparative advantage is maximised.

    Moaning about the transfer of work to "third world" countries is not only whistling in the wind... it's also short-sighted, as your own blog makes plain. Comparative advantage in this case means that the world as a whole gets cheaper laser printer cartridges. That's good for the people thrown out of work in Rosyth (at least in the medium term) as well as everyone else.

    Not directing this at you, particularly, but there is a definite whiff of colonialism or worse whenever the many, many people who start making disparaging noises about outsourcing, India, Malaysia or the Philipines do so in their public utterances (and it's the Americans who seem worse in this regard than most). There is every sense in this happening, from everyone's perspective. Is it disruptive to the individual? Of course it is. Is it cause for starting to muse on the end of civilisation as we know it? Nope.

    To answer your specific closing thought: is this sustainable in the long run? Absolutely it is, and in fact anything other than this is unsustainable in even the medium term, as that great Scott Adam Smith would have told you 200 years ago.

  2. Mike says:
    03/02/2006 02:13:14 AM

    Interesting perspective - thanks..

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