‘Dying’ American industries
April 10th 2012 - Tuesday
The list of dying industries in the US is quite interesting. A few thoughts from me:
1. Some industries are not considered industries by themselves in the context of a non-American perspective. Rather they are at best product sub-sectors within a larger sub-sector. Apparel, fabric, costume, footwear etc are considered products within the larger context of Apparel manufacturing. They have distinct product-owners and brands in the US that have over time created a distinct market.
Stepping out of the US most such brands either don’t lend themselves to such levels of classifications, or consumers don’t consider the need for such distinct classifications. From a production standpoint, commodities where technologies and competencies have become globalized have resulted in a constant pursuit of cost-chasing initiatives. No wonder the Indonesian or Vietnamese apparel manufacturing worker is 33 times cheaper than his / her counterpart in the USA.
While these sectors will die in the US, they will remain relevant for all – of course one needs clothes and footwear, Americans included. Yes some of the footwear folks have been reinventing themselves – as they say going up the value chain, while I would like to think they are going up the price chain by offering some “hooks” like customized footwear, personal branding etc. Such products will perhaps keep the manufacturers alive and well in the US and other niche markets, while volume-driven sub-sectors will die a natural death as they continue to chase costs.
No surprises here, but it will be interesting to watch if low-end brands like Starter, QuickSilver etc will reinvent themselves to serve higher-value needs, or will high-end brands like DKNY, Gucci, Coach, Dr. Scholls etc expand their consumer footprint?
2. Some industries have been relegated to the backburner or obsolescence thanks to modern technologies (read photofinishing, DVD, game and video rentals) given digitization and transmission of games/ movies on the cloud via globalized networks and real-time availability of consumers (thanks to smart-phones and continued connectedness).
These industries are dying globally. So I don’t see any reason to lament about their impact on the US particularly. After all, successful business ideas like NetFlix and Amazon did come from the US itself.
3. The publishing sector is an interesting dilemma for now. While Amazon and crowd-sourcing initiatives have taken a significant chunk of large book publishers by offering the flexibility with not just publishing chapters instead of large books, but also sourcing content from multiple people and putting them together as publications, I am not sure this spells the death-knell on newspapers.
Yes, granted that newspapers as we know them in their physical form will perhaps vanish in a decade or so. But I believe the concept of a newspaper – bringing in relevant categorized information to a consumer – will only be enhanced. One need only look at the online versions of various newspapers / magazines.
They bring (a) instant and real-time distribution of happenings to a wider consumer base, at much cheaper subscription rates, and (b) opportunity for consumers to be a part of production/ enhancement of such content (for e.g. iReports and iReporters for CNN). So the volume-based physical printers may be replaced and the newsprint industry may suffer significant losses (much to the happiness of environmentalists who for long have lamented about the impacts of deforestation). But I wouldn’t be worried anymore than that.
4. What I am quite surprised and curious about is the prediction that money markets and banking will also see demise. Is this a response to the current woes Americans encounter thanks to the economic crisis perpetrated by greedy and unscrupulous bankers? Or is there a fundamental shift in the manner by which economies are steering themselves?
I am reminded of the folks at www.nowandnext.com who have a very intriguing, and fascinating Trends Map that talks about technology and trends across multiple sectors (all structured around the map of the London Underground). One of the predictions envisaged around 2025 is about the rise of virtual currencies (does someone remember Linden Dollars and SecondLife?), followed closely by the rise of private currencies. The latter deserves extra attention in the context of this predictive demise of banking systems in the USA.
I wouldn’t be surprised if some – though not all – countries chose to create their own private currencies (virtual or real doesn’t really matter) going forward, to be governed by entities that maybe or may not be banks, that may or may not be using policies or disciplines we know of today. Will it then mean the demise of globalization, free world trade and similar concepts as we know it? This is stretching our imagination a tad too far I guess. For now, I shall sit on the fence with this “prediction” and watch the proceedings.
Interestingly however, given that recent history dictates any structural changes to industries/ sectors in the US have had a (more often than not) positive impact on global markets, I eagerly await predictions on the “next generation” sectors in the US. While the Trends map I mention above has many suggestions, I will remain a keen observer of progress with some of them!
Bobby Varanasi is CEO of Matryzel Consulting, and is one of the top 25 Global Powerhouse leaders in the sourcing space. He is also Global Ambassador and Strategic Advisory Board member of IAOP.