Chicago-based Boeing, challenged by Europe’s Airbus to produce a new plane to carry more passen- gers at lower prices, is planning a sleek new 787 Dreamliner, which will carry 250 to 330 at passengers nearly the speed of sound. To produce this plane, materials and parts will have to be assembled from all over the world. The center, aft, and forward fuselages, engine pylons, nacelles, and vertical tail will be produced in the U.S., the engines will come from the U.S. (GE) and England (Rolls Royce), the horizontal stabilizer will come from Italy, and the passenger doors and landing gear from France. The cargo and access doors will be made in Sweden; the fuselage wheel well, wingbox, and fixed trailing edge in Japan; the wingtips in South Korea; and the movable trailing edge in Australia. Boeing will be able to coordinate these parts plus all others needed, hopefully in such a way as to compete with Airbus, serve consumers, and earn a profit for its shareholders.
It takes producers in several different countries to create “Topper the Trick Terrier,” a robotic dog that can talk and stand on its head. The motor for its legs, the speaker for its voice, and its transistors and wiring are made in China. Its plastic body comes from Malaysia. Koreans make the micro- fiber fabric for its coat. Its plastic legs and integrated circuit chips come from Taiwan. Its voice-recognition requirements are produced in San Francisco, and it is packaged in Hong Kong. Yet a toy store in the United States can offer it for only $29.99.
Forty miles north of Frankfurt, skillful German artisans assemble the 1,500 parts of the M7 35mm viewfinder Leica the old-fashioned way. The Leica factory boasts that its new digital camera, with 8.4 million pixels of precision, is “hand- crafted.” That may be true, the cameras may be assembled by hand, but their 1,500 parts are certainly not produced by hand in the quaint town of Solms: the Leica factory outsources the production of parts.
The miracle of the market – outsourcing, insourcing, and in-between sourcing. It’s the only way entrepreneurs can expect to anticipate the wants of consumers and offer them cheaper, better goods and services.