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In September 1999, an earthquake devastated much of Taiwan, toppling buildings, knocking out electricity, and killing 2,500 people. Within days, factories as far away as California and Texas began to close. Cut off from their supplies of semiconductor chips, companies like Dell and Hewlett-Packard began to shutter assembly lines and send workers home. A disaster that only a decade earlier would have been mainly local in nature almost cascaded into a grave global crisis. The quake, in an instant, illustrated just how closely connected the world had become and just how radically different are the risks we all now face.End of the Line is the first real anatomy of globalization. It is the story of how American corporations created a global production system by exploding the traditional factory and casting the pieces to dozens of points around the world. It is the story of how free trade has made American citizens come to depend on the good will of people in very different nations, in very different regions of the world. It is a story of how executives and entrepreneurs at such companies as General Electric, Cisco, Dell, Microsoft, and Flextronics adapted their companies to a world in which America’s international policies were driven ever more by ideology rather than a focus on the long-term security and well-being of society.Politicians have long claimed that free trade creates wealth and fosters global stability. Yet Lynn argues that the exact opposite may increasingly be true, as the resulting global system becomes ever more vulnerable to terrorism, war, and the vagaries of nature. From a lucid explanation of outsourcing’s true impact on American workers to an eye-opening analysis of the ideologies that shape free-market competition, Lynn charts a path between the extremes of left and right. He shows that globalization can be a great force for spreading prosperity and promoting peace—but only if we master its complexities and approach it in a way that protects and advances our national interest.
Globalization is here to stay. The movement of goods, services and knowledge across national boundaries is accelerating at an unprecedented pace thanks to factors like the internet, modern logistics and supply chain technologies, collapse of communism and reduction in tariffs. But behind this rosy picture lie many risks that have been ignored by companies for temporary gain sacrificing long term stability and national security argues this book. In the initial chapters I got the impression that the argument is primarily to protect American interests, but a full reading of the book reveals that the need and urgency to review existing sourcing strategies by major multinationals is applicable to all nations. The discussion starts will an American nationalistic fervor citing Alexander Hamilton who championed the cause for national self sufficiency in all critical supplies to win the war against the British. Unfortunately the mighty nation is now dependent on companies in other continents for critical supplies to feed its assembly or distribution processes at home. Any disruption to this critical balance can bring major corporations to a halt. As an example, an earthquake in Taiwan, the world's major manufacturer of silicon chips brought assembly lines at Dell to a crawl.But then what made the major multinationals to place all their eggs in one basket or that matter in a few baskets far away from home ?. The author traces this fundamentally to the Japanese onslaught of the American car and electronics markets in the 80's. America had to respond. One way was to outsource manufacturing to the cheapest possible source. Asian countries like China, Taiwan and Singapore were ideal candidates with low labor costs. The cost pressure was further extended down the supply chain and soon a cost effective supply capability emerged to counter and finally overcome the Japanese threat. But in the process, argues the author, American companies have sacrificed manufacturing as a strategic tool that needs to be retained with investment and constant innovation. Companies like Cisco for example rapidly grew through global acquisitions for technology and partnering with contract manufacturers like Flextronics. Shareholders were happy, but the interests of other stakeholders like employees, consumers and national self competencies in manufacturing were sacrificed.American dependence on China ( and vice versa) is brought out as a major risk for America. How long and how much could two nations with diametrically opposite political ideologies grow this equation is a big question.Diversification of risk - market, financial, political and geographic are the elements of any introductory book on business strategy. This book is a call to major multinationals to brush up their elementary lessons once again.There are clear recommendations at the end of the book to correct the course and secure the future of nations from the risks of asymmetries in the global supply chain. America for example could invoke the provisions of the Antitrust laws and limit the percentage of supplies originating from a single nation and make second sourcing mandatory. De-linking CEO compensations from short term performance is another factor that is highlighted.The pendulum of power as of now is closer to Wall Street and far away from Washington. But the pendulum does swing as per the basic laws of physics. Back to basics is the key message from this book.This book should not be misunderstood as a criticism of globalization. In just suggests a better and safer approach.
