CATCH 22 and Our Industry

I don’t know if the readers are familiar with the term Catch-22 which was derived from the title of a novel by Joseph Heller set in world war II between 1942 and 1944 .

The term catch-22 denotes a paradoxical situation in which to avoid combat duty you have to be declared insane but wanting to get out of combat duty is a proof of sanity which means that you keep fighting.

One other example of such situation is that to get a job you need experience but how can you acquire experience if you don’t have a job in the first place.

Today to have a performing industry you need a good network of subcontractors and there is no need for subcontractors if there is no industry to serve. If China has reached this level of industrialisation it is because of the concept of outsourcing which was and is still used by multinational manufacturing companies as a cost effective mean to acquire a network of subcontractors.

If we take the car industry for example we are far from the concept of one giant corporation integrating in one large physical structure the whole range of by-products necessary to build a car. Henry Ford and his assembly line production concept of the twenties and thirties of the last century started showing a loss in profits as early as the seventies when the Japanese started claiming their share of the market .

Car manufacturers started using small and medium firms outside the corporation to provide some of the by products. Subcontractors were first considered as part of the firm’s staff as they were given the equipment, the material and the design to make their product .They have now become partners since they developed their own engineering ability designing the parts and acquiring the necessary materials themselves . One subcontractor like Bosh for instance can supply more than one firm with a by product to build their cars.

Algeria as a developing country should in my view concentrate on creating a good network of small and medium subcontracting companies for all industries including the car industry. This network will in the first place provide the necessary spare parts and accessories which are actually imported and constitute a considerable weight on the country’s foreign currency reserves and in the second place to prepare the country for future attempts at specific industries.

If we go back to the example of the car industry noting however that this line of thoughts can be extended to other industries, convincing any car manufacturer to invest in an assembly line in Algeria is not profitable to the country if it is not firmly supported by a transfer of technology represented by the will to assist in the creation of local small and medium subcontracting companies which will provide gradually a certain quantity of by parts to the manufacturer. Partnership between Algerian industrials and foreign car manufacturers should be limited to the creation of this kind of subcontracting network; anything else is just a useless drain of our reserves in foreign currency.

This article is the modest point of view of a simple electronics engineer and I certainly don’t claim to have any expertise in economy.