Word: rollei
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Dates: during 1970-1979
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WEST GERMANY'S Rollei-Werke for years has been losing sales to Japanese rivals, whose low wage costs enable them to sell cameras for less than half the price of a Rolleiflex. Fighting to overcome that handicap, Rollei executives recently decided to try to beat the Japanese at their own game. The German firm is investing $12.6 million in a new plant in Singapore. There workers will turn out cameras for sale in the U.S. and East Asia at wage rates only one-sixth as high as in Germany, and two-thirds below those prevailing even in Japanese camera...
...long Rollei's advantage will last is problematic. Low as they are by European standards, Japanese wages more than doubled between 1963 and 1969. Logically enough, Japanese industrialists are also discovering the advantages of shifting some production to lands where no wage explosion has yet begun. Within the past four years, at least 40 Japanese firms have set up plants in Taiwan alone. The factories turn out lingerie, computer parts, kitchenware and TV sets-though not yet cameras-at wages averaging only 30% of what their owners would have to pay in Japan...
Willing Workshops. Both Rollei and the Japanese firms seem likely to have increasing company in their new locations. All over the industrialized world, accelerating wage inflation is pushing manufacturers into new efforts to tap the vast pool of willing and cheap labor in poorer countries. They are farming out production of component parts, subassemblies and even finished products, sometimes for export to other areas but often for use back home. In the process they are not only cutting their own costs but speeding the industrialization of underdeveloped countries, some of which are coming to relish the role of workshops...
Dividends of Discipline. To the poor countries, such investments offer not only jobs but desperately needed foreign currency earnings and a chance for local workers to acquire skills that home-owned industries cannot teach. Rollei, for example, is already bringing groups of workers from Singapore to its main plant in Braunschweig for training in camera making. Westerners have been impressed by how swiftly unskilled Asians respond to such training. George A. Needham, head of Motorola Korea Ltd., says that it takes only six weeks to teach girls in Seoul to assemble transistors-or two weeks less than the training period...
...these reasons, the leaders of several underdeveloped countries, particularly in Asia, have switched from their traditional insistence on developing locally owned industry to welcoming, or even actively seeking foreign manufacturing operations. Besides the Rollei and Semiconduttori plants, Singapore soon will boast $48 million worth of new factories to be built by Philips, the Dutch electrical giant, and Plessy, a leading British electronics firm. Taiwan's Finance Minister, K.T. Li, cites "the availability of inexpensive labor" to foreign manufacturers as a prime reason for locating in a free trade zone that the government has set up. Companies can export products...