The Mixed Bag: Globalization’s Impact on the State of Maine Maine, like many US states, suffers from stiff competition and lower labor costs of emerging markets. Many of its industries, however, are insulated from these effects because of the low labor cost per ton of material produced, which makes savings in labor inefficient compared to costs in shipping…
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Put simply, globalization is the idea that with trade barriers falling down and connections between countries (such as the internet, cheap and efficient transportation etc.) the location of a product’s consumer and producer no longer need to have a connection to each other. Maine, like virtually every other part of the world, has been significantly affected by globalization. Globalization has had both positive and negative effects on the economy and lifestyles of people living in Maine. On the one hand Maine has been spared many of the out and out relocations of jobs to outside of the state due to the impracticality of relocating those industries that other places, such as Michigan, have had to deal with, while on the other a global market has still driven prices down, hurting manufacturers. These same falling prices, however, have been beneficial to the working class people who are most harmed by jobs moving away. Furthermore most economic theories state that, in the long term, Industry Globalization leads to the most efficient distribution of jobs and manufacturing across the planet in terms of money cost. Basically it states that if a job can be done or a product produced for less cost somewhere else than it is currently being done, the job or production moves to that new place. In the case of America, the largest consumer society ever seen in all of history, the calculation usually involves three fundamental principles: cost of labor, location of raw materials, and cost of shipping and production (Bilgin, 2004). America has relatively high labor costs, especially when compared with emerging markets such as China or India, which is what prompts many industries to move away(Bilgin, 2004). Luckily for Maine, however, many of the industries are impractical to move because high shipping and transport costs would more than offset any savings made by reducing labor costs. Maine has a small but important steel industry, for instance (Madar, 2009). This industry is naturally protected from being moved elsewhere because it has such incredibly low labor costs per ton of steel produced, so even though Chinese steel foundries can often get labor for about ten percent of the cost of labor in Maine, the cost of shipping that steel from China to the consumer market on the east coast of the United States still ends up costing more than steel produced in Maine, with its higher labor costs (Madar, 2009). This same principle holds true for two of Maine’s oldest and most well known industries, the lumber and paper industries. Both of these industries involve moving around an processing incredibly heavy raw materials (wood in both cases) and have very high tonnage of product per unit of labor ratios. This means that they are inherently somewhat protected from the effects of globalization, because taking the raw materials (lumber) from Maine, transporting it to another country for processing then returning it to a consumer market in and around Maine would lead to such amazingly higher cost than just leaving the manufacturing jobs, even with high labor costs, in Maine. Maine’s other ancient and venerable industry, the fishing industry, is likewise protected to a certain degree from globalization by its very nature. The raw materials for Maine’s fishing industry can obviously be found nowhere except off the coast of Maine. While it is possible to by many of
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