Geography of Production Linkages in the Irish and Scottish Microcomputer Industry: The Role of Logistics

Abstract

Abstract:The economic crisis of the mid-1970s marked the transition from the traditional Fordist mode of industrial organization to one of time-based competition (TBC). It has been postulated that the rise of TBC will lead to an increase in local and regional production linkages. Part of the argument is that the associated search for logistical efficiency and the adoption of the just-in-time (JIT) principles will lead to closer buyer-supplier proximity. In this article, we test the relevance of this idea in a case study of the microcomputer hardware industry in Ireland and Scotland. Most of the data were collected during multiple interviews with subsidiaries of all global microcomputer assemblers with operations in one of the two countries. The study shows that rather than sourcing locally or regionally, the assemblers import the vast majority of their material inputs from regions outside Ireland and Britain, notably from the Far East, and that the inbound logistics pipelines of most components involve inventories, often hubbed in local warehouses. Such supply systems have been interpreted as pseudo-JIT, suboptimal inbound logistics systems that are organized on traditional Fordist principles. We argue that the logistics systems and the geography of the supply linkages should not be interpreted this way. Inbound inventories were tightly managed, leading to modest target buffer levels and high shipment frequencies. Even under JIT supply, the geographic configuration of production linkages and the details of logistics systems remain highly dependent on a range of contextual conditions and component characteristics. The findings of this study suggest that a strategy of building integrated vertical production clusters around subsidiaries of multinational enterprises is no longer suitable for Ireland and Scotland, at least not in the context of the microcomputer industry.

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