The implications of going global

To a logistician, or even a classically trained economist, globalization is a good thing. Dave Joyce has a more nuanced view. At the 31st Annual National Logistics Forum put on by the National Defense Industrial Association last week, Joyce, who is president of GE Aviation, offered an interesting take on globalization and its consequences.

In Joyce's world, there are global competitors and global collaborators. That fits with the traditional economic view, which also holds that benefits flow from the dynamic globalization creates. Competition drives improvement, and collaboration eases friction. This dynamic should be a good thing, creating ever-increasing global economic prosperity. But Joyce doesn't work for the world; he works for GE. And given what GE does—its slogan is "Imagination at work"—it's natural that he looks below the surface and thinks about innovation, a core competency for GE, and about how, exactly, globalization is affecting GE Aviation. We see that innovation takes place where the work is done, we know that innovation creates, and we rely on the profit that creation generates. As supply chains increasingly go global, work flows to international locations. Along with that work goes a piece of the engine of innovation. In the long run, that loss compounds and our domestic competitiveness erodes.

Economists call that a vicious cycle.

Now, Joyce wasn't arguing against globalization. Instead, he was issuing a call for action. U.S. industry cannot become complacent and just ride the wave of globalization. American companies need to be "capable, competitive, and ready for the future." And that means we need a renewed focus on innovation. To Joyce, "global competitiveness and national security are the same mission."

Think about that the next time you watch containers being unloaded at Long Beach.