1.4 Offshore fragments of industry: the negative standpoint
Nike Inc., the US sportswear firm, did in fact take the lead in organising its overseas manufacturing business on a subcontracting basis (Donaghu and Barff, 1990). Early on in the 1970s, it established a web of contractual relationships (or partnerships, as it preferred to call them), with factories in Taiwan and South Korea, to produce its branded footwear. Of these factories, the big-volume producers among them were also contracted to other Western firms to produce a range of footwear. Nike maintained an arm's length relationship with most such producers, but with others it established closer ties to produce its ‘top-of-the-range’ footwear. These factories, in turn, often subcontracted the majority of their routine and standardised work, as well as their material-sourcing requirements. A decade or so later, Nike also developed subcontracting links with factories in China, Thailand and Indonesia in an effort to further diversify its assembly operations. These factories, as before, formed part of a more extensive network of subcontracting operations through which component and subassembly work was outsourced.
So, by the end of the 1990s, Nike had an estimated 800 contracted suppliers worldwide, with approximately half that figure located in Asia, and many thousands of manufacturers tied indirectly into its business operation. Between them, this network of partners, volume producers, component and subassembly firms manufactured for Nike around 175 million pairs of shoes each year (Hartman and Wokutch, 2003). Far from unusual, this complex, fragmented supply network, conducted largely at arm's length on a contract basis, became something of the norm for the global factory business. Gap Inc., the high street clothing chain, for instance, which subcontracts its garment production worldwide, has ties with around 2000 factories in Asia where workers sew and assemble its products (Gap Inc., 2004). Like Nike, it has a complex set of sourcing arrangements whereby it selects and places orders with manufacturers around the globe who, in turn, subcontract their basic, routine and material operations. Realistically, then, the merchandise that it sells in its retail stores in the West and beyond may have passed through dozens of hands, factories and firms and across any number of international borders before reaching the shopping mall.
A shirt on sale in one of Gap's many European stores may have been cut, trimmed and sewn by factory hands, or even by home-based workers, in, say, Cambodia or the Philippines, with little more than scissors and a sewing machine; yet we would be hard pressed to know precisely how this set of events came to pass or, indeed, whether the lines of responsibility are known. In between, a chain of buyers and suppliers, trading companies and sourcing agents, place their orders, purchase materials, coordinate production schedules and conduct their contractual business in a way that fragments responsibility into such small measures that it could be argued that no one can reasonably be held to account. The market alone seems responsible for how things come together, how something like a shirt's design, sourcing, production, assembly and export are pieced together through a series of commercial contracts.
This might help to explain why the harsh realities of life in what appear to be remote factories initially failed to register at the headquarters of the big Western firms (Hartman et al., 2003). Along with the fragmented geography of manufacturing production, it is possible to find a parallel fragmentation of responsibility, as the global marketplace makes it just that much more difficult to know who, if anyone, should be held to account for, say, the corners cut in producing goods on time or the safety measures compromised to get an order out that week. In that sense, the workings of the global market not only tangle and complicate the economic relationships involved, they also enable the actions of those overseas to be perceived as distant and beyond the control of Western companies, no matter how well intentioned their management may be. By distant here, I mean that the contractual arrangements of the marketplace made everyday life in global factories seem not just far away to many boardroom executives, but too remote to do anything about anyway. Besides which, why should they feel responsible for factories that they did not own in the first place?
Even the use of the term ‘offshore production’, to describe the relocation of industry, is not entirely innocent in this respect, with its connotations of faraway locations, rather than those which might be merely on the other side of an international border, as is the case with US firms outsourcing production to nearby factories in Mexico.