Arrogance of Imports

The recent, worldwide, inflationary trends in food prices, throws up a number of questions on the business wisdom of "core competency", "import if you cant make it efficiently", "outsource", & "insource" that has been much touted in the last 25+ years. Perhaps, these concepts have outlived their utility or at the very least need to be modified to suit the new "flat (but still real) world"
The developed world, mostly led by America, "discarded" a number of so called "lowly jobs" or in looking for doing only those parts of businesses that have scale, ended up importing everything else. Soon, an arrogance set in, where businesses thought that they could import or buy almost anything in the world (Build vs Buy decision heavily tilted towards Buying) and that they did not need to grow, build or manufacture anything anymore. Many of these earlier businesses, shut down due to their domestic inefficiencies and instead of "fixing" the inefficiences, the problem was solved through imports, without regard for its "strategic need" to fix it.

Is this, the right way forward in this multi-polar world, where many regions of the world are becoming wealthy and have huge domestic needs of their own? Whilst, its not a pointer towards going back to socialist ideals of "import substitution", we need to be aware of the following:

• Are imports, a solution to domestic inefficiencies? Growing 5 things well but importing 100 other (food) items all the way from New Zealand (or Mexico or Bangladesh), is not very efficient
• Food Exports will always be politically sensitive. Most countries will ban exports, whenever there is a perceived or real shortage of any commodities.
• Talking to an erstwhile mango exporter from the Dapoli region of the Konkan, it seems that mango or many other food EXPORTS are not lucrative anymore with the additional (cumbersome) work required, the weak dollar exchange rate and the 90 day payment cycles. Its getting more lucrative selling at comparable domestic prices and with Cash On Delivery!!
• Perishables (namely food), as is well known and as pointed out by Peter Drucker, dont transport efficiently. The cost per kg for transporting food is prohibitively expensive, especially in these times of high gasoline prices. Food just doesn't transport cost effectively! unless we cut out fresh produce and healthy food from our diets.
• The fact that food security is surely more important than Energy or External security. We could still walk if there was no gasoline or power, but what if we didn't have anything to eat?
• Importing Labour- Whilst labour always migrates to the place with the best paying jobs, and labour even works best away from home!! this would also be under pressure with stricter immigration enforced due to domestic pressure in the developed countries. Also labour would rather stay home if their home country has a booming economy.

Its an Efficiency, Social & HR issue
These problems of "throwing money at and importing solutions", need to be looked at as an "efficiency issue". There is a need to look at "real" sustained efforts at continuous improvement and solving inefficiencies of a strategic nature right at home. Give people the "right and hard" messages, that improvements are required through hard work and that no work is "demeaning". Is it possible to get people in America (or even the very many who are quitting farming in India) to get back to farming, when they were told all along that they could do better jobs?

Inspite of the "virtual, flat world", everyday life is still in the real world that needs to produce & transport food efficiently! Geography may be history now, but our stomachs haven't gone anywhere!

Look out for my next post on "Arrogance of Technology"