Globalization, Price Deflation and Flat Panel TVs

Earlier in the week, McPaper (AKA: USA Today) ran an insightful story -- yes, it can actually happen on occasion -- matter-of-factly titled "Flat-panel TVs display the effects of globalization". Even though a protectionist bias is evident in the quotations and citations at the end -- USA Today is, after all, the purest form of populism in newsprint -- I still found the article useful nonetheless. The story traces the evolution and drastically falling prices of plasma and LCD televisions as they begin their journey in "state-of-the-art fabrication centers in South Korea, Taiwan and Japan, where the glass panels that form the televisions' heart are produced ... to Mexican plants clustered along the U.S. border” where the screens are “assembled into cabinets and loaded onto trucks bound for retailers such as Circuit City and Wal-Mart."

The piece notes that "Each link in this global supply chain specializes in what it does best and at lowest cost. By collaborating across time zones and oceans, these industrial networks have driven costs down and performance up in ways no single company ever could … The high levels of capital, skilled labor and technology required were more than any single company possessed, so "meta-national" networks emerged ... By cherry-picking talent and capital from around the globe, these cross-border alliances breached technological barriers at a blistering pace."

This revolution is a modern one that depends on automation and engineering know-how rather than low cost labor. Consider that "unlike the textile or furniture plants that increasingly have moved abroad to capitalize on endless supplies of low-wage labor, the Asian factories that produce flat-panel TVs are highly automated and staffed by skilled engineers." All in all, a good quick history lesson about the rise of a new industry and integrated and interdependent global supply chain, but in the end, it's one skewed by a bitching and moaning about lost domestic jobs. I guess McPaper is just serving up what its readership expects.

Jason Busch

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