Latin America: The lesson to be learned from …

IPS, 22 July 1996

FLORIANOPOLIS, Brazil, (Jul. 22) IPS—The British Ronson company, which produces the lighters of the same name, has taken a decision which should be of interest to Latin American companies wanting to attract investors with their cheap workforces.

After several years of operating in South Korea, Ronson decided to close its plant in Asia and move back to Britain, or southern Scotland to be precise.

This surprising decision goes against the tide of corporate moves to developing countries, motivated by the same reasons which took the company to South Korea in the first place: the availability of cheap labor.

Howard Hodgeson, executive with the British company, discovered that the Scottish workers earn less than the Koreans at present, which means the company had no hesitation in returning to its homeland.

Hodgeson said the days of strikes and endless tea-breaks are now over for the British worker, and that they are now practically Asian workers themselves.

The attitude of the Ronson company could appear to be an isolated act or a curious decision, but it is actually a direct consequence of the new rules of the international work market.

The mass migration of First World companies to the Third World broke the political power of the unions and put an end to the social security which increased the cost of the workforce.

So it now appears that the journey back has begun, which means a very serious blow for weak economies which accept groups of investors unconditionally, attracted by the low salaries.

In Latin America there is still a considerable army of unemployed capable of carrying out any work for pitiful wages.

But transnationals which use barely qualified labor can now pack their bags and return to their point of departure as the difference in salary between their home country and the Third World is so small.

Ronson said that putting made in Britain back on their lighters would attract the more discerning first world consumers back to their products, as the tag made in Korea is only acceptable on cheap goods.

The comparative advantages have now disappeared and the move back home appears to have taken root in Europe.

The case of the British company shows that the cheap workforce can no longer be an option for the economic strategy of the developing nations.

This is particularly important for the Central American and Caribbean countries who currently count on the assembly plants as a solution for unemployment and chronic poverty.

The homecoming of Ronson should light the warning lights for the Latin Americans if they do not want to be left out in the cold once again.