Barry Lynn Stresses Fragility of Global Industrial System

Addressing a capacity Global Economic Forum luncheon audience on September 18, Barry Lynn, author of “End of the Line—The Rise and Coming Fall of the Global Corporation," pointed out the vulnerabilities of the current global production system, and emphasized the need for greater redundancy and risk management to forestall a potential systemic collapse.

Lynn argued that corporate consolidation through mergers and acquisitions has led to relatively few sources for many of our products, and that out-sourcing has led to ignorance among corporate leaders about their own manufacturing processes.  Further, he said, globalization of out-sourcing has created a fragile supply line, vulnerable to disruption from natural disasters, pandemics and regional conflicts. Moreover, according to Lynn, market fundamentalism—letting the market be the sole regulator of the manufacturing sector—has forced corporations to focus excessively on near-term profits rather than long-term sustainability.

Lynn recalled the earthquake in Taiwan in 1999, which disrupted production in some U.S. corporations, and threatened others, even when those corporations were not purchasing components directly from Taiwan. A subsequent investigation showed that Malaysian, Singaporean and other Asian manufacturers of components that supplied U.S. businesses were in turn procuring semiconductors from a single source in Taiwan, a source that had been damaged in the earthquake. Lacking in-depth knowledge of their component suppliers’ sources, American corporations were unprepared for the shortage and at risk of having to shut down their own assembly operations.   One major U.S. firm, learning of the role of the Taiwan semiconductor supplier, used the knowledge to force more concessionary terms from the Taiwan firm (to better compete with its main rival) rather that using that knowledge to better diversify its supply chain.

Greater public awareness and consequent political action, said Lynn, are required to encourage the evolution of smaller firms and to formulate a trade policy that promotes flexibility and redundancy.

-Tom Brennan

Board of Directors

The World Affairs Council of Jacksonville

Media Sponsor: