Dynamics of Industrial Location

Fordist and Flexible Templates

In the context of how production systems are organized, a fordist template may be summarized in terms of the following attributes:

1. Factories feature the mass production of standardized goods on assembly lines or in continuous flow processes that emphasize cost minimization and the full exploitation of economies of scale and size;
2. Vertically and horizontally integrated MNCs dominate production so that substantial flows of goods and services, including exports and imports, are among affiliated plants within the firm;
3. Purchases from outside suppliers are typically 'arms length' and made mainly to minimize costs and uncertainty, for example, by the use of subcontractors to (temporarily) provide excess capacity;
4. Decision making structures of MNCs are strongly hierarchical and organized according to M-form principles;
5. Labour is organized according to the strictures of Taylorism, that is restricted as far as possible to highly specialized, operating tasks;
6. Unions provide labour with considerable power to gain high wages and good benefits and in return provide discipline and agree to Taylorism;
7. Technological change is internalized in specialized R&D departments separate from manufacturing units and planned. Innovation itself is structured as a 'linear' process 'naturally' progressing through R&D stages and into manufacturing systems.

Flexible production systems may be summarized in terms of the following attributes:

1. Flexible production is highly efficient in the use of materials , space and workers but gives priority to value maximization and product differentiation. Flexible production may occur as batches in small factories or as large volumes in large factories;
2 MNCs remain important in flexible production but small and medium size firms play significant roles in performing highly specialized activities.
3. Networking among firms, for example, in terms of subcontracting, design collaboration and strategic alliances is an important way of realizing economies of scope; inter-firm relationships may be stable and mutually reinforcing as well as competitive and arms length;
4 Decision making structures of MNCs are relatively flat implying greater personal responsibility and self supervision;
5. Labour is based on principles of flexibility implying that work supply is closely adjusted to demand, for example, through greater use of part-time workers, workers who are readily hired and fired, or more multi-skilled workers;
6. Unions are less powerful in general and worker benefits are closely related to skill as well as productivity;
7. All employees are expected to contribute to innovation and R&D activities are closely intergrated with manufacturing activities. Innovation is structured as a 'loopy' process that 'naturally' progresses by constant interaction among R&D, manufacturing and marketing departments