Four years ago, Dyson, proud symbol of British innovation, moved production of its vacuum cleaners from Malmesbury to Malaysia and provoked a chorus of lamentation that British jobs were being lost to sweated labour in the Far East. Today Dyson says the move helped it double its business and employ almost as many staff back in Britain as it had before - and on higher wages, because they're in design and engineering.
We're used to gloomy headlines about car manufacturers heading east, and of course, as consumers, we find that those call-centres in Bangalore remind us all too frequently of a global movement of jobs. But does this really justify the apocalyptic forecasts we hear, of our industries sinking beneath a wave of cheap Far Eastern goods and services, and of our workers heading for mass redundancy?
According to a recent study of more than 500 global businesses by the Massachusetts Institute of Technology, the answer is no: western manufacturing still has a lot of life left in it.
The study's author, Professor Suzanne Berger, says that some of the findings surprised even her. When she visited a clothing factory in Romania she was shown two identical sweaters, one made in Italy and the other in Romania. The Romanian sweater cost 50 per cent more to make than the Italian version, even though the Romanian workers got only one-tenth of Italian wages. "Because they're much less experienced," she explains, "the Romanian workers really don't know how to fix the machines themselves and the Italian workers do; and the Italian workers are able to hear when the machine is not about to work well, so they're able to stop the machine before defective products are produced. These white wool sweaters are [made of] a very precious material, and when you produce defective sleeves you're wasting very valuable material."
Berger also cites a Los Angeles T-shirt maker which employs 3,200 people making shirts that sell for $18 apiece, compared with $5 for a Bangladeshi equivalent at the local Wal-Mart. What makes the US-made version a runner, says Berger, is that "they have a brand, they have a kind of sexy cut to the T-shirt, and they're able to deliver any quantity anywhere in the United States in 24 hours".
Proximity to customers can be even more of an asset in services such as banking and insurance. So why are they being outsourced to distant call-centres? Again, the answer may be that we can't see the good news for the bad. Professor Mari Sako, of Oxford University's Saïd Business School, points out that Britain is gaining more service jobs than it is exporting. A case in point is the Indian call-centre firm now setting up in Northern Ireland.
The moral is that global competition isn't necessarily a losing game, provided we stay flexible and technologically savvy. It's only two centuries since western industry put the traditional crafts of China and India out of business, and today's trend may be a correction to that. If that is true, western workers don't need to retire, but they do need to reinvent themselves.
Zareer Masani presents "Analysis: workers of the west, retire?" on BBC Radio 4 on 10 August at 8.30pm (repeated 13 August, 9.30pm)
