Industrial Evolution and Restructuring in the Late 20th Century
Industrial Problems
1. Business Challenges and New Orientation
The onset of monetary and energy problems had specific dates (see below). However, industrial difficulties became apparent only gradually. With hindsight, these disruptions were already evident in Western economies since the late 1970s. Problems within companies played a crucial role in triggering the late 20th-century economic crisis, representing the difficulties of the post-World War II economic model. Manufacturing output experienced fluctuations, amplified by slowing growth, and spreading to Eastern countries.
Post-war growth represented the triumph of modern industrial enterprise management, particularly in capital-intensive industries. Management companies increased in labor-intensive industries as production technologies shifted the capital-labor balance. The growth of big business presented unprecedented challenges for directors, marking a turning point in the institution’s evolution.
During the 1970s, intensifying competition caused declining profits and reshaped growth strategies, internal organization, and intercompany relationships. This was most evident in the U.S., where management companies faced new competition from revived European and Japanese firms. This challenged the dominance of large U.S. companies, particularly those that had emerged after World War II. Rebuilt Europe and Asia increased international competition, aided by state support and multinational strategies.
The changes in growth, direction, and funding of modern industrial enterprises were unprecedented, resulting in:
- New business strategies focused on competitive advantages and the sale of company divisions.
- Increased securities trading and transaction volumes, playing a key role in business control and profit.
- Emergence of influential institutional investors with different perspectives on business strategy.
- Worldwide company restructuring, including investments, divestments, and mergers.
The diversification of the 1970s, divestitures, and the emergence of the market for corporate control led to a restructuring of the modern enterprise.
2. Evolution of Industrial Relations
Changes in farm incomes led to a reassessment of employment strategies and work organization. The Keynesian and Fordist paradigm faced crises like inflation, declining productivity, and profit. Entrepreneurs and experts sought new work models, potentially resembling the Japanese production system of the 1960s.
Following the Japanese model, flexible, chip-driven machines would form the basis of a new, equally flexible human resource management system. From the mid-1980s, this new paradigm was defined as post-Fordism and flexible specialization. A crucial element was the exclusion of low-skilled workers who had experienced the alienation of Taylorism and Fordism. Modern methods sought to recover the versatility and collective responsibility of 19th-century work teams. Companies now required a highly skilled workforce adaptable to changing demands, eliminating rigid job categories.
Flexible specialization was also adopted by SMEs, particularly in new industrial districts like Silicon Valley. However, by the mid-1990s, studies offered contradictory findings. It was unclear if this was becoming the dominant work organization method. These new methods coexisted with Taylorist, Fordist, and labor-intensive manual forms reminiscent of 19th-century home industry. The idea of renewed job satisfaction was also questionable.
The rapid economic integration of the late 20th century led to growing geographical interconnectedness and uniformity in labor markets. This resulted in the globalization of labor contracts, the advance of neoliberal deregulation, and the segmentation of workers, leading to increased inequality and polarization between rich and poor, corporate profits and wages, and income inequality itself.