Sep 23, 2019 in Informative

Capital moves, also referred to as capital mobility, are described as the ability of capital to move across international or regional borders with an aim of getting higher returns on investments. Capital mobility has gained a lot of focus in the recent past. With increased globalization, business organizations and investors are moving across the globe in search of markets that provide them with higher returns on their capital. In what is as of today commonly referred to as taking operations offshore, manufacturing companies are involved in a shift towards the East (Asia) that provides an opportunity for low cost manufacture. Additionally, business organizations are involved in business process outsourcing, where specific functions / tasks, such as customer care, programming and design are outsourced to companies located in foreign countries, since they have the capacity to provide the needed services at a low cost. However, capital mobility depends on national policies that govern capital flow. On this point, it is worth noting that foreign direct investments that are important in developing national economies are capital moves motivated by the development of good capital mobility policies at the government level. Although capital moves are perceived to be a recent trend in the business world, it can be noted that it started a long time ago; at least in a slightly lower degree, as compared to the current. According to Cowie, capital move was rife in early 20th century, as illustrated in his book that analyses Radio Corporation of America’s RCA moves in search of cheap labour. The following essay discusses the reasons as to Why RCA moved and also the emotions and feelings associated with the societies that RCA moved to. 

 

RCA was a conglomerate of several companies that formed the company’s electronic manufacturing and radio and production business functions. RCA made four major moves in its history from Camden New Jersey to Bloomington, to Memphis Tennessee and, lastly, to Ciudad Juarez Mexico. The reason as to why RCA moved was in search of cheap labor. On this point, it is worth pointing out that labor is one of the major factors determining the unit cost of manufacture. In order to maintain the unit cost of manufacture at the minimum level possible, manufacturing organizations try to look out for opportunities that enable them to reduce the cost of labor amongst other operation expenses. In the modern world, automation and mechanization of processes is a major revolution that has enabled manufacturing firms to reduce their manufacturing costs. This explains the human–machinery conflict in industrial sector, as people perceive machinery as agents that ‘take up their jobs’. However, getting human capital/ labor at the lowest rates in the market is and has been a sure way of keeping operation costs at a minimum low. This was the major reason that was pushing RCA to move its manufacturing operations from one location to another.

 

RCA’s decision to set base at Camden was driven by the availability to cheap and competent labor at the region. On this point, it is worth noting that Camden and New Jersey, in general, was inhabited by south and Eastern Europe immigrants. The immigrants had far much better industrial skills, as compared to the rest of the Americans owing to their decent from the Industrial Europe. With Europe having been the heart of global industrialization, Europeans were much more equipped with skills that were needed in a manufacturing plant. Additionally, their immigrant state has put them at a desperate situation, where they needed to secure a job to sustain their livelihoods. This gave RCA a good reason to set up base in Camden. The location provided RCA with a good geographical location to allow it supply its products to the United States of America, which was its largest market. After some time, RCA employees in Camden started to feel the heat of the work; after realizing that they were receiving way much below the industry’s average pay, they started strikes and combined efforts to form a labor union that would spearhead their negotiations with RCA. After too much heat, RCA gave in to the employees but it was just for a short duration before they shifted their manufacturing operations to Bloomington in 1940. This location provided the company with another platform to get access to cheap labor from employees from Scot – Irish decent. Just like the former employee base, potential employees at Bloomington were desperate for work. The location also provided the company with a good geographical location to manage its operation in the United States. Just like in its former location at Camden, RCA’s operations were stressed by a workforce that was striving hard to unionize so as to fight for better employment terms.

 

This triggered its next relocation to Memphis. Its target employees were African Americans who were also desperately searching for work. Barely a century old after the abolishment of slave trade, African Americans were struggling economically. The availability of jobs in manufacturing companies was a huge relief that was due to be readily accepted. The story of a formerly oppressed workforce gaining the social power to demand for better pay repeated itself in Memphis and RCA was forced to move to Cuidad Juarez Mexico, 5 years after it had relocated to Memphis. Strategically located, Cuidad Juarez provided RCA with an opportunity to benefit from the cheap labor provided by the impoverished Mexicans who were more than ready to work for the company. The geographical location of Cuidad Juarez was also strategic and gave the company a chance to supply the American market. However, the RCA was also forced to fight constant worker union challenges, as Mexicans tried to use their social power to bargain for better pay. From the above discussion, it can be acknowledged that RCA used the provisions of capital moves to relocate to locations that provided it with an advantage of cheap labor, thus being able to maximize on its capital investments.

 

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