ITC manufacturing stays in the Far East despite new nationalism

Trump, Brexit, Catalonia,… I’ve been reporting for a few years now on the rise of new nationalism and extreme politics and how it affects the ITC industry. Politicians use phrases such as ‘fake news’ and ‘project fear’ to silence debate, often ignoring the realities of the workings of the global economy. One important issue for the nationalists is the source of the products we buy. Our industry is arguably the most global of all and we’ve seen a constant move of manufacturing to the Far East.

My Figure shows the consumption (top) of all ITC hardware by region, the nationality of the supplier (middle) and the manufacturing location (bottom), combining component and finished goods suppliers together and using the total amounts paid by the customer. It demonstrates a considerable disparity between the 3 dimensions. EMEA in particular has virtually given up on making computers and computer equipment, the Americas still dominate in terms of the the suppliers’ nationality; however they too have been exploiting lower wages and growing technical specialisation to use Far Eastern sub-contractors, or their own divisions to make the products they sell abroad.

Nationalists need to decide where their products should be made (at home or abroad) and by whom (by a national supplier or not). In the US almost all ITC suppliers are making their equipment abroad, so Trump is trying to provide incentives for indigenous manufacturing. In the UK, although it is already too late for the ITC industry, politicians ought to encourage the creation of major UK manufacturers, especially in the car market where there are none.

The growth of our market will be curtailed significantly if the trade wars and new tariffs are expanded to cover services as well as manufactured goods.

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