Deindustrialisation is a process faced by developed nations characterized by a decline in labor-intensive industrial manufacturing. Manufacturing facilities relocate out of more expensive developed nations to third-world countries where labor costs are lower to improve production efficiencies, lower costs, and increase profits. Additionally, technological innovations, such as the increased use of robotics, eliminate many jobs performed by low-skilled workers.
Here are some examples of countries that went through deindustrialization with summary descriptions of what happened.
In the mid-1980s, Australia had a vibrant textile industry supported by trade tariffs. As the Australian government reduced the tariffs in an effort of trade liberalization, the textile manufacturing business left for other parts of Asia. Most Australian textile manufacturing plants closed by 2010.
Before 2008, four large auto manufacturers were operating in Australia. Despite the government’s efforts to try to save the car manufacturers with financial support, they all went out of business. In 2008, Mitsubishi stopped producing cars in Australia. Ford shut down in 2016. Toyota and Holden ceased Australian operations in 2017.
Manufacturing production peaked in Canada from 2004 to 2007. After that, the Canadian economy shifted from manufacturing jobs to services. Currently, only 13% of the Canadian population has industrial production jobs, and 69% of the Canadian gross national product comes from the services sector.
In Poland, like other former communist countries, deindustrialization occurred after the collapse of the Soviet Union in 1989. Unprofitable businesses, which were previously state-owned, were allowed to go bankrupt as the country changed to a capitalistic market economy. More than one-third of the large factories and their manufacturing capacity were eliminated.
The UK benefited from the Industrial Revolution and contributed 22.9% of the global manufacturing output by the 1870s. Subsequently, the UK experienced a substantial decline over the following century. By 1970, the manufacturing output of the UK was less than 5% of the global total. The causes were the loss of the British Empire, foreign competition, trade unions, the welfare state, and a lack of technological innovation.
The US had a vibrant manufacturing sector that peaked in 1979, with nearly 20 million Americans employed in manufacturing jobs. The reduction of trade barriers and allowing China into the World Trade Organization in 2001 with favored-nation status caused almost all of the manufacturing jobs to move overseas. The “rust belt” of manufacturing in the US was devastated, with one plant closure after another.