Editor's Viewpoint
The Myth of International Trade
It has been said that the diminishment of distance in the world is likely to be the single greatest economic factor to shape our future. It's certainly vital to logistics as shown by our key features in this issue. There are exciting and dynamic ways logistics professionals are benefiting from international trade. However, it's a myth that today’s level of globalization is new, some economists suggest.
"The world is a city," as tycoon Baron Carl Meyer von Rothschild reportedly said in 1875, while witnessing stock markets around the world fall. In other words, globalization isn't new even though today's capital flows around the globe faster, with a technologically-produced herd moving it in many directions, but without cowboys to give direction.
The value of an international perspective continues to grow in this industry as evidenced by the Council of Logistics Managment's (CLM) decision to hold the last conference of this millennium in Toronto, the first time CLM's annual conference has been held outside of the United States. I recently spoke with Nancy Haslip, past president of the Council of Logistics Management, and Director of Logistics, Bank of Boston, about the rationale for selecting Toronto as a place for CLM's annual meeting this fall. She highlighted the international flavor of Toronto as well as its attractiveness as a city as factors that certainly played a role when the organization's executive committee made its decision. During her tenure as a president she also focused on international membership, partly to reflect the global integration of the supply chain.
Our cover article focuses on Customized Transportation, Inc. (CTI) and DaimlerChrysler's Bramalea operation, which is part of our report about outsourced logistics in this issue. It also affords a look at one of the many logistics facility tours, which we have noted in this issue of LQ, scheduled for CLM's 1999 Conference to be held this fall in Toronto.
In addition, our feature article about Donaldson Company, Inc. highlights the value of international trade, but with a controversial approach, as companies in the United States consolidate their operations and rely more on third party providers to manage their logistics requirements in Canada.
It is common wisdom to recognize that international trade and, therefore, logistics, is vital to our economy. However, there are cogent arguments that common wisdom isn't correct in this case. A new paradigm is unfolding, one that puts an emphasis on genuine relationships and, increasingly, the capacity to work with competitors in your business, sometimes to access local export markets or for other purposes, such as benchmarking, to improve your company's performance.
What one could liken to intellectual picadors are intent on lowering the notion of international trade as a myth - spurning the view that it is the greatest key to economic prosperity. Instead, it seems, dynamic business groups, recognized as "clusters," to specify groups of companies and people, are more vital to business. There is a paucity of "clusters" in Canada, excepting the oil patch, the wheat industry in western Canada and, perhaps, the automotive and logistics industry in southern Ontario, based on the concept of clusters as defined by Michel Porter. In other countries, examples of clusters abound; as for high-tech, there is Silicon Valley, or the Twin Cities, known for printing and publishing, and Italian Wool produced in Prato, Italy.
The significant of "clusters" was recently explored by three keynote speakers at a recent Council of Logistics Management's Toronto Roundtable, chaired by Nicholas Seiersen, a principal at KPMG.
It was explained that the close geographic proximity of companies with good business relationships that may even involve competing companies, their co-operation in benchmarking, and the sharing of "best practices," are all vital to the businesses involved in "clusters."
One of the keynote speakers who advocated "clusters" noted that the billion dollar agricultural and food industry in Ontario, second only to the automotive industry in stature, represents an important cluster as it exists in such proximity to high-tech knowledge afforded by universities in the region, as well as to other elements indigenous to clusters - enabling this six-month old firm to create a multi-million dollar fund with investors or some 500 "stakeholders" intent on creating new companies. All this made for a fascinating evening of discussion about what may be one of the greatest myths of our time.