Return of industry in France? Maybe the major event of 2010?

Sunday, 4 January 2015

Saturday, 28th August 2010

A major potential of competitiveness and profitability, of protection against soaring energy and raw material prices

movements », “the Chinese company Foxconn raises salaries after suicides”, these are the most evocative titles of 2010. In a country where going on strike is prohibited, the four Honda factories produced nothing for more than four weeks, the 800.000 employees of Foxconn, electronic product manufacturers for the biggest brands, obtained a 20% then 70% salary raise! In august, Foxconn decided to recruit 400.000 additional employees (+50%) to improve working conditions.

What is happening in China? The fabulous growth that has lasted for the last 30 years has transformed the country, enriching more or less everyone, but also creating grave social tensions. The gain in productivity has not sufficed to maintain a sufficient workforce reserve. The numbers but also training is need. When growth goes too fast, one or the other, can no longer keep up, if not both. We should have taken into account these tensions and acted to reduce them. And then, to stay in the major league, China signed what will be next November the norm ISO 26000 on companies social responsibility, … and then, since Europe and the United States may well no longer buy enough to support this exceptional growth that China needs to modernise and accomplish many things thanks to this general enrichment, China must stop gambling on solely on exporting, it is the moment to gamble on domestic growth. These events, very publicised by official Chinese television, the events shall be like an oil spill: the production costs will explode. Already, in certain domains, contractors are searching for alternatives. With the hidden costs of delocalization, well known today, with the soaring energy and raw material prices, everything is in place for a significant imported inflation.

Is this specific to China, due to an exceptional development over several decades? It seems not as, in June, in Bangladesh, 700 factories where hit by violent strikes, causing their closing down, the workers are demanding a raise of the minimum wage from 25 to 70 dollars.

Is the era of delocalization over? European salaries have not raised (!) in the name of fighting against inflation. The quality of the workforce is there, the infrastructures are there. The readjustment of the euro, which is back at its starting rate against the dollar, so therefore also against the Chinese Yuan, gives the European industry its competitiveness from 10 years ago, insofar that the progress in productivity is still happening. The very high rate of unemployment excludes tension on salary costs.

Functional service economics, very economical in natural resources, very rewarding for the quality workforce, is a factor for increasing company profitability and a factor to fight against inflation far more surelythanmonetary tightening (see “A modern factor for cost reduction: functional service economics”). With functional service economics it is perfecrly possible.

Homo sustainabilisis and profitabilitisis

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