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TODAY Wednesday 17 September 1997 Each weekday. Conn Nugent on what's new in the world, on the site.

 

TODAY IN THE WORLD: Outsourcing Pollution

Two articles in this morning's Wall Street Journal merit a pause.

The first is David Wessel's report on the five-year "World Economic Outlook" just issued by the International Monetary Fund. The outlook is bullish. The IMF anticipates growth in the global aggregate GDP of 4.5% a year for the next five years (the average since 1970 has been 3.75% a year). Predicted growth leaders for 1997 are East Asia (7.6%) and the United States (3.7%). But even Europe is slated for expansion, says the IMF, with Germany and France leading the way.

Inflation is expected to be held in check by two forces: vigilant monetary policies on the part of central banks, especially the US Federal Reserve, and price competition among manufacturers stemming from surplus capacity in Asia and Europe, particularly countries recently converted from Communism.

The second article, by Robert Rose and Carl Quintanilla, analyzes Monday's announcement by the Sara Lee Corporation to divest itself of most of its manufacturing facilities. Sara Lee makes and markets Sara Lee pastries, Haines underwear, Bali brassieres, Coach leather, and other high-profile consumer products. Soon, though, Sara Lee will market but not make. Except for a few plants involving "highly proprietary" processes (sausage making, for example), Sara Lee is selling off its factories. The world will still be supplied with Haines briefs provided by the Sara Lee Corporation, but Sara Lee will put the manufacture of the briefs out to bid. There's much more profit in processing and selling than in manufacturing these days, and profits are what shareholders demand. "The financial community has an impatience with asset-intensive companies," said Sara Lee CEO John Bryan, sounding very '90s. Wall Street agreed; on Tuesday Sara Lee stock rose six dollars, to $48.56.

According to Rose and Quintanilla, the Sara Lee move is "...part of a relentless drive by US manufacturers" to reduce their physical capital. The model is the computer industry, which increasingly contracts out much of its manufacturing. The trend is picking up steam with auto manufacturers and apparel companies. Nike doesn't make a single shoe anymore.

There are some generally-acknowledged consequences of this divorce of manufacture from managing. One is that the tendency for American companies to market goods made in other countries will accelerate; although outsourcing can be done among American bidders, cheaper labor costs and excess capacity overseas will probably make for more attractive bids. Another is that unionized factory labor will be increasingly disadvantaged.

As for the environment, it's the usual mixed bag. From a pollution-regulation point of view, it's generally easier for inspectors to police a big corporation like Sara Lee than it is to police a small manufacturing contractor operating on a thin profit margin. Bigger manufacturing firms have better environmental-compliance records than smaller firms. On the other hand, a toxic manufacturing process that migrates from the US to another country is one less process for the EPA to have to worry about. On the other hand, a globalist would say that depletion of resources and creation of wastes are embedded in every consumer object; the localization of the damage may vary, but the planetary loss remains.

If the IMF is right (is anybody arguing?), the overall size of the global economy will increase at record levels, as will its multinational, interdependent character. It may well be that fortunate, wealthy countries like ours will be able to outsource many of the primary, pollution-intensive stages of manufacturing consumer goods. Nostalgia for belching smokestacks may be premature, but you can wonder if the apparently ineluctable tendency for Americans to separate ourselves from our material underpinnings might not confine our relationships with nature to those of recreation and lifestyle photo ops.

 

TODAY ON THE SITE:

We've made a change in the Newsroom that regular readers will have noticed. What was born as "Media Watch" has now evolved into "In Other News..." Each week Tom Turner will review some aspect of environmental journalism that captures his eye or stimulates his juices. As you'll see from this week's installment, he's not afraid to be critical.

 

Recent "Today" columns:

9/16: In the Preservation of the Funky
9/15: The Problem With Health
9/12: The Automobile Crisis of 2020
9/11: Gratifyingly Inept Adversary
9/10: The Porkbarrel Works for You
9/09: Climate Change Changes
9/08: More or Less Voluntary Simplicity
9/05: Man Bites Cougar
9/04: Logging
9/03: Fishing

To access more "Today" columns, click "Archives" below.