« What spooked the stock market? | Main | Where’s the money for roads? »

August 30, 2007

The disassembly line

It was Henry Food who invented the assembly line in manufacturing, putting together entire cars in one factory. But now the exact opposite is happening in some cases. Mike Walden explains.

"In many cases we've gone from the old assembly line to what many are calling the disassembly line. And what's happening is that you have pieces of the product manufacturers put together in different locations," says Dr. Walden, a North Carolina Cooperative Extension economist.

"In fact they may be in entirely different countries, and what businesses are finding is that although they will have higher transportation costs -- and in some sense higher coordination costs. That is, they need to have each piece get to its proper place in the right time period -- but they are finding that those additional costs can be more than made up by the lower cost if the site is the most cost-effective, in particular in having the best-skilled labor or perhaps having the cheapest labor.

"Of course what's happening today is that we have air travel much more predominant, and so it is fairly easy to, for example, put together a piece of a product in one location, maybe one country; later that morning ship it by air to another location. Another piece is put together, and so on," he adds.

"I think this is one more feature of the global economy, where now it's many countries working together to produce one product."

Posted by deeshore at August 30, 2007 09:51 AM