Geography Reference
In-Depth Information
well as large ones, circumventing the critical role of economies of scale that
favored large
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firms and oligopolies. In contrast to the large, vertically inte-
grated
rms
tend to be relatively small, vertically disintegrated, relying on highly com-
puterized production techniques to generate small batches of goods sold in
relatively specialized markets. Microelectronics, in essence, obviated the need
for economies of scale. Emphasis in the production system is placed on high
quality, premium prices, and low error rates rather than large quantities of
output and low prices. The classic technologies of post-Fordism include
robots and just-in-time inventory systems (Linge 1991). The latter, developed
by the Japanese shortly after World War II and pioneered by the Toyota
Corporation (and hence sometimes called “Toyotaism”), obviated the need
for large, expensive warehouses of parts (the “just-in-case” inventory system).
Just-in-time refers to a method of organizing immediate manufacturing and
supply relationships among companies to reduce ine
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firms typical of the Fordist economy, under
fl
exible production
fi
ciency. Stages of the
manufacturing process are completed exactly when needed, according to the
market, not before and not later, and parts required in the manufacturing
process are supplied with little storage or warehousing time. This system
reduces idle capital and allows minimal investment so that capital can be used
elsewhere. The manufacturing run proceeds only as far as the market demands,
and inventories are very small and are only replenished to replace parts used
downstream. Post-Fordist approaches to production came to dominate much
of the electronics industry, automobiles, and the minimills of the steel industry.
Flexible production is also closely associated with vertical disintegration
and increased externalized subcontracting rather than “in-house” produc-
tion. Under the relatively stable system a
ff
orded by Fordism, many vertically
integrated
firms produced their own parts, justifying the cost with economies
of scale, which lowered their long-run average cost curves. Under post-
Fordism, however, this strategy is no longer optimal: given the uncertainty
generated by the rapid technological and political changes of the late twen-
tieth century, many
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firms opted to “buy” rather than “make,” i.e., to purchase
inputs from specialized companies. A large number of companies abandoned
hierarchical, bureaucratic assembly-line (Fordist) processes and switched to
customized,
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flexible, consumer-focused processes that can deliver personal
service through niche markets at lower costs and faster speeds. In the process
of widespread vertical disintegration, the use of subcontracts accelerated
rapidly. This strategy reduces risk for the buyer by pushing it onto the sub-
contractor, who must invest in the capital and hire the necessary labor. As
inter-
fl
rm linkages grew rapidly, many corporations found it useful to enter
into cooperative agreements with one another (e.g., joint ventures). All
of these changes re
fi
ect postmodern capitalism's accelerated time-cycles of
production, in which the duration from product development to sale on
the market has been steadily reduced: in software, automobile parts, and
mortgage approvals, for example. The rush is exempli
fl
ed by the enormous
popularity of overnight mail services such as Federal Express and UPS.
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