« « Companies and Countries: Diverging Interests?

Companies and Countries: Diverging Interests? (2)

Seagate also supports a substantial supplier base in the United States of companies producing high value components for disk drives. The issue of employment is very sensitive to national governments. Employment in the U.S. computer hardware industry has declined steadily since the mid-1980s, while employment in U.S. overseas affiliates has grown rapidly.

As table 1-4 illustrates, employment in hardware production has been growing fastest in Asia, while the United States continues to see large gains in software and services. Even the software industry is now moving some production offshore to places like India and China, but the software and services industries need to be located close to users, and the United States is still the largest and most sophisticated computer market in the world.

The trend in hardware might begin reversing, however, as more Asian PC makers move production to the United States. As PCs become more consumer oriented and customized, there is a need to be close to the user to respond quickly to market changes. Also, there are cost advantages from maintaining a minimal inventory and assembling expensive components at the last possible moment.

These forces are pushing final assembly back to the U.S. market, and production of some components might follow. The division of labor in the PC industry is likely to revolve less around labor versus capital intensity and more around the need to be close to the market. Simple assembly jobs will continue to follow low-cost labor, but other production will move closer to final markets in order to get the right product to market at the right time.

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