More than systemic under-investment, computerization and robotisation were also creating a whole new generation of manufacturing capabilities which were very capital intensive and which required changed work practices and extensive re-training which are often easier to implement in a green field environment rather than with expensive 50+ aged workers. Labour costs actually became a smaller fraction of the total cost of production, but it was the willingness of (say) Chinese workers to work all hours, learn new skills quickly, and the lack of unionisation which made the move overseas attractive.

Of course once they had acquired the skills, the Chinese set up their own factories with the same technology and the "borrowed" intellectual capital to effectively compete with the original out-sourcers. Too late, the out-sourcers realized their own technologies where being used to compete against them, and in many cases, sought to insource again or transfer to a less entrepreurial culture with less availale capital to replicate the technology.

Index of Frank's Diaries