Moving production offshore cuts production costs in many ways. The obvious advantage is the low cost of labor but there's also the advantage of building a new factory to take maximum advantage of current technology to increase workforce productivity.
The use of "throwaway factories" are another option that can be used where labour costs are low. These factories are decidedly "lower tech" and they not built to last. They are built to take advantage of swift changes in market opportunities and to avoid the high capital costs associated with the mass production of products having short product life cycles. In the "developed world" we tend to build our factories for highly automated production at very high production volumes using the minimum number of production workers. But the lead times and increasingly higher capital costs associated with building those factories are becoming less competitive with low tech manual production methods that are much more flexible. And of course the same high tech solutions we generally prefer here in the "west" are also available in the "east".
A highly manual production process requires less investment of capital and in ongoing maintenance. Utilities and other infrastructure assets will always be required (at least until we can find a way to live without them) and so we will always live with their maintenance costs regardless of how high those are. Resource industries will always locate where the resources are found and service providers will always locate near their markets. Manufacturing is the industry that can move to where costs are lowest.
Manufacturers with "throwaway factories" will enjoy significant business advantage so long as their low cost labor supply lasts. That will shift jobs in developed countries away from manufacturing and into services. And some of those services are also relatively low wage so our wages are seeing downward pressure. As developing nations develop they are seeing upward pressure on wages - but the process will take a long time. In the meantime, we still have expensive and high cost production facilities to run and maintain and we do build some new ones. Doing it at low cost, safely and with respect for our environment is more important than ever - it's no longer just a competitive imperitive, it is a matter of survival of our manufacturing businesses.
Safety performance is directly related to reliability. The more reliable the plant the fewer downtime incidents and the less risk to workers who must deal with those abnormal states.
Reliable assets don't leak their contents into the environment. Reliable assets don't emit beyond their controlled limits.
Reliable assets don't break down as often so production rates are more consistent. Consistency allows more predictable output and business results.
Reliable assets are less expensive to maintain - they don't incur high breakdown costs. The proactive maintenance required to keep them reliable is far less expensive than the reactive breakdown repair work required to fix them.
So why isn't reliability a bigger priority? Why aren't regulators insisting on reliability programs to ensure safety and environmental performance? Why aren't companies choosing the lower cost approach? The small investment up front has a huge payback - sadly our finance people don't really understand these relationships. You (the reader of this blog) are very likely a maintenance and reliability professional. You have an education job to do with them. If you don't and you work in manufacturing, you may be working somewhere else before long.
