Gilbert Clee and the New World Enterprise

When it comes to the balance of industrial trade, many who support China's rapidly increasing share of the global manufacturing pie attempt to invalidate those of who do not by arguing that globalization is inevitable and that we should just 'get over it' and move on.

But, are those Middle Kingdom sycophants, bunting hangers and flag wavers really talking about globalization in it's pure sense? Maybe not.

In 1959, Gilbert Clee, of McKinsey & Company, described a 'new world enterprise' where corporations could procure raw materials from anywhere across the globe; manufacture it's products wherever labor was the cheapest and market it's products, without limitation, to any country on the globe. Clee treated labor and raw materials as commodities which could be competitively interchanged with any combination of countries in order to arrive at a profitable 'bottom line'.

In Clee's view, the corporation was elevated to super-political status and given the ability to step across the world with it's seven league boots any way it saw fit. This vision was only slightly better than pure colonialism where one country simply rode into another country taking whatever it needed and leaving whenever it was good and ready.

Todays' 'world enterprise' is much different than Clee's original hypothesis forewarned. When we talk of globalization we are actually describing 'multi-localization' where a corporation becomes an active partner in foreign enterprises in many countries rather than operating as a passive consumer of foreign commodities per Clee. Few nations today are willing to allow foreign companies a free reign within their borders. Those who have done so have, as of late, reversed their decisions via ugly street battles calling for the nationalization of foreign businesses.

Contemporary China serves as a good model of multi-localization. China contract manufactures products in factories jointly owned by Chinese and foreign interests. The products are designed by the foreign partner and marketed through sales channels managed by the foreign partner, as well.

In exchange for it's investment, the foreign partner's cost for it's product is far below that of a similar item produced domestically. In addition, the foreign partner is relieved of any responsibility for social, energy and environmental issues within the product cycle which, in the corporation's eyes, adds cost to a product but no value. You may be sensing an imbalance of social responsibility whilst reading this section.

If a modern day Connecticut toolmaker decides to design it's tool offerings domestically but produce those tools in China, then it is bypassing the very heart and power of it's company- it's manufacturing prowess.

The word 'industry', as used during the early part of the industrial revolution had more to do with personal diligence and a passionate drive to excel at a craft and less to do with sweat shops, draconian working conditions and child labor, all of which would come much later. The essence of the industrial revolution was the transition from craft and cottage work toward mechanized and standardized work.

In the early days of our country, farmers, shopkeepers and ship chandlers crowded alongside the forges of village smiths and into the cramped cottage workplaces of wood and metal craftsmen to ask for wares produced specific to their individual trade and purpose. As the country grew, these custom products were desired by a growing complement of users and it became necessary to expand the scope of industry into what we now know as manufacturing.

To meet the burgeoning demand, parallelism was introduced to the workplace and even more craftsmen needed to be trained in the trade. Those who would learn in earnest and be industrious in the shop or factory were rewarded with a skill worth a lifetime of gainful employment. A factory full of skilled tradesmen provided a hotbed and incubator for innovations to grow from ideas to fully tested and market ready products. In short, the skilled worker was the heartbeat of the organization and hardly a commodity to be 'traded' across the globe.

That Connecticut toolmaker we spoke of earlier can now stand on the dais at a hotel ballroom and report increasing corporate earnings to a roomful of shareholders, giddy from head spinning at all the newly found wealth in their possession. Of course, this newly found wealth was mostly created by replacing high cost, 'unproductive' labor in Connecticut with outsourced contract production units which have few days off and absolutely no legacy pension liabilities. I would be willing to bet that none of those overseas contract production unit members will be found sketching out ideas for improving the product he or she is making.

Gilbert Clee at once overestimated a nation's willingness to move to a purely borderless economy and underestimated an American worker's desire to be industrious in the historical sense of the word and for this I am thankful.