Answer: Only maybe.
The question is being asked by a U. S. firm which has a contract to supply a component for the telecommunications industry. The product is very expensive -- half its value is locked up in labor content.
This means that, up to now, places like Mexico, the Caribbean and a few places in the Far East have been major candidates for assembly sites. But labor costs are rising everywhere.
Except in Russia. The firm in question -- it insists on anonymity -- figures Russian labor costs are now the lowest in the world, at least among educated work forces.
In fact, it's almost too good to be true. If well-trained and properly-motivated, the company believes about 12 good people could do what it wants done. Total monthly wage bill: The equivalent of $600.
Well, okay -- the firm understands it may have to add a few positions: A 24-hour security detail to guard the equipment, a shipping specialist to "negotiate" with customs officers, a full-time bookkeeper to keep the Minfin and other inspectors at bay, maybe a cook for lunches, a driver or two. and so forth.
Nonetheless, against output valued in the world market in six figures each month, the payroll is almost invisible.
There is even a little-known customs program which allows for full duty remission on this kind of thing. In other words, at some point, some bureaucrat actually realized that fabrication and assembly was something not to be discouraged.
Trouble is, that bureaucrat was of a rare breed. Russian bureaucracy remains a haven for giganticism, where vast, Stalinesque projects continue to be cooked up, examined in mindless detail and then placed on dusty shelves to await future financing.
Sure enough, when representatives of the U. S. backer for this particular small project made the rounds of various agencies, it was as if they were discussing the opening of a commercial kiosk. Twelve jobs? Who cares?
And the problem with that is that such projects continue to rely on bureaucrats to get going -- for factory space, various registrations, etc. and then there are the "alternative sector" bureaucrats to deal with. Even an ordinary commercial bank account is a torture test for small-fry. What's worse, the industrialized West, despite its own experience showing small-fry to be the key source of jobs, tends to buttress this bias in favor of giganticism. The European Bank for Reconstruction and Development, for instance, looks at no project with capitalization under $20 million. and that's at a time when blessed few projects of that scale, in this country, could be counted on to spend such funds effectively.
It's a tough dilemma. With such huge problems, huge solutions seldom work. But thinking small simply doesn't come naturally.
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