Our thanks to Rosaliene Bacchus for another informative Blog entry.
Photo Credit: Indigo Furniture Company – UK
We live in a globalized world in which outsourcing production or services to another country has become a way of doing business. For those who have lost their jobs to lower-paid, overseas workers, outsourcing is a painful reality. For workers in an emerging economy like Brazil, outsourcing offers an opportunity to rise out of poverty.
At Italbras Leather Producer & Exporter Ltd.,* I worked with a number of furniture companies worldwide that outsourced the production of their upholstery leather covers. My first and largest client was the Canadian Furniture Company* with factories in Canada and the United States. Italbras had secured this contract owing to its well-equipped factory, with emphasis on worker safety, and fair labor practices: remuneration in accordance with Brazil’s minimum wage plus additional benefits of on-site meals, private bus transport, uniforms, and a medical doctor on duty.
I had…
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Comments
One presumes that the finished product in this case was exported. The main issue is the transfer of technology and whether the developing country can protect its local industry. Japan would never have produced Honda, Toyota etc. had they not protected their local automobile industry. Cheaper US corn and rice destroyed those industries in Mexico and Haiti respectively leading to more dependency.
Thinker, the finished upholstery covers were shipped directly to the client’s Canadian factory where they were mounted on their wooden furniture frames. Under the terms of the contract, Italbras (fictitious name) could not sell these covers to third parties within or outside Brazil. To my knowledge at the time, the Canadian furniture company marketed its products only in Canada and the United States.
As you so rightly point out, developing countries have had to protect their local industries if they were to survive. However, as occurred with NAFTA and other free trade agreements between nations, the rules of the agreement make local industries very vulnerable to cheaper imported products. We’ve already seen what such an agreement has done to the Mexican farm workers, whom we vilify when they flee across our borders for survival.
The multinational and transnational corporations – bestowed with the rights of person-hood in the USA – now have the political clout to pass laws in their favor. The secretly negotiated Trans-Pacific Trade Partnership Agreement (TPP), awaiting approval by the US government, will give them more power over nation states where they operate. (You can learn more about the TPP on the Public Citizen website: https://www.citizen.org/TPP)
Thank you very much for your reply and the original article.