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A couple of good editorials/commentaries on outsourcing.

The roar offshore: Bain and creative destruction
http://www.chicagotribune.com/news/opin ... 7277.story

Bain Capital invested in some companies that developed or moved operations overseas in the quest for economic efficiency. That quest often creates job gains and job losses. Older workers and less educated workers tend to be vulnerable. Yet such dynamic change — creative destruction, as it's known — is essential for the prosperity of the U.S. and every other nation.
...
And, yes, that public investment does help businesses, although note that it does so by removing money, aka taxes, from the private sector. But at its core — you didn't build that, somebody else made that happen — the president's remarks rang as an astonishing dismissal of the hard, often lonely work of American business people.

What pols don't know about outsourcing: It's a key to economic progress
http://www.chicagotribune.com/news/colu ... 256.column

A company that successfully outsources saves jobs — since a company that goes bust employs no one. If Bain had barred corporations from shifting factories when it made sense to do so, it would have been guilty of economic malfeasance.

Outsourcing, contrary to myth, has not led to the collapse of American manufacturing. In fact, U.S. industrial production has risen by nearly 50 percent in the past 15 years. The reason manufacturing employment has declined is that workers have gotten more productive — meaning it takes less labor to make more goods.

Why can't we be honest about the reality of outsourcing?

Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

danefan wrote:Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

Look at the tags on your clothes, your kid's toys, even your car and you'll see that most likely your'e 80%+ invested in globally sourced products. Obama can try to paint Bain as a bad company for shopping around for the lowest cost to source products but it's an unfortunate reality. Remember the US steel industry? Gone. How about the US textile industry? Kaput. The US is great at ideas and manufacturing/exporting intellectual capital worldwide, but the manufacturing base is negligible to where it used to be.

danefan wrote:Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

I agree. Despise the sport, not the participant.

A bigger question - would we be willing to pay 100%, 200%, or 300% more for products?

I wouldn't be....

danefan wrote:Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

That's true but the GOP not allowing that jobs bill to be voted on yesterday will haunt them till November. The fact that we allow companies a tax break for outsourcing jobs makes zero sense.

Expect to see a continuation of the full frontal assault on Romney with Bain Capital & outsourcing.

danefan wrote:Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

I disagree. Outsourcing is not a necessary evil, in the long-run it's a positive. We don't live in a bubble, where the U.S. can do everything internally and ignore the rest of the world. If a company has a choice between outsourcing and going out of business because it won't be competitive, outsourcing can keep the headquarters and related jobs in the U.S. That's a positive. It puts the manufacturing employees out of work but that is better than the whole company. And rather than focusing on protecting those manufacturing jobs we need to focus on retraining them, either in higher-end manufacturing or in other fields.

ASUG8 wrote:

danefan wrote:Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

Look at the tags on your clothes, your kid's toys, even your car and you'll see that most likely your'e 80%+ invested in globally sourced products. Obama can try to paint Bain as a bad company for shopping around for the lowest cost to source products but it's an unfortunate reality. Remember the US steel industry? Gone. How about the US textile industry? Kaput. The US is great at ideas and manufacturing/exporting intellectual capital worldwide, but the manufacturing base is negligible to where it used to be.

I think you're gong to see an upswing in manufacturing jobs in the U.S. As the cost of labor around the world increases along with the costs and logistics of shipping, US manufacturing is going to become more cost effective. I don't think these will be the low-end manufacturing/textile type jobs but the higher-end, higher-skill jobs using more complicated robotics and manufacturing processes. Manufacturing will never return to the share of the US GDP and labor market that it once was but IMO it will see an increase.

UNI88 wrote:

ASUG8 wrote:


Look at the tags on your clothes, your kid's toys, even your car and you'll see that most likely your'e 80%+ invested in globally sourced products. Obama can try to paint Bain as a bad company for shopping around for the lowest cost to source products but it's an unfortunate reality. Remember the US steel industry? Gone. How about the US textile industry? Kaput. The US is great at ideas and manufacturing/exporting intellectual capital worldwide, but the manufacturing base is negligible to where it used to be.

I think you're gong to see an upswing in manufacturing jobs in the U.S. As the cost of labor around the world increases along with the costs and logistics of shipping, US manufacturing is going to become more cost effective. I don't think these will be the low-end manufacturing/textile type jobs but the higher-end, higher-skill jobs using more complicated robotics and manufacturing processes. Manufacturing will never return to the share of the US GDP and labor market that it once was but IMO it will see an increase.

To some extent I agree. The Koreans, Japanese, and Germans have figured out how to effectively assemble vehicles in the US so I know it can be done. NAFTA was the catalyst to a lot of the offshore manufacturing - once the Mexicans said they could do it cheaper, the Chinese undercut them in a big way to move all sourcing there. If you're willing to manipulate currency and are an advocate of public/private industry the Chinese have it figured out.

Fair and balanced.

The issue isn't really how manufacturing in the US is doing, because frankly, it's doing comparatively well. The issue is that we've leaned on manufacturing for a large number of jobs, especially labor intensive jobs, and the reality is, with the increases in efficiencies and productivity and technology, those types of jobs have gone away in large part and they're never coming back. Certainly not if people want to keep paying the same amount, or less, than they do today for virtually any consumer products.

US manufacturing is producing more now, with far fewer people, than it ever has in it's history. But that doesn't necessarily translate into a lot of jobs so people get upset about it. That's why we get silly stories from folks like ABC that bemoan that the little novelty item of a US flag sticker on a toothpick is made in China or Mexico or somewhere else and how come we can't do that here. Of course we could do that here, but then that stupid little novelty would cost $1 to buy rather than $0.10 and we wouldn't buy as much of them and they wouldn't be as available. We should let someone else make those trinkets. Look at the world, in many places, even Germany, manufacturing is becoming less and less a share of GDP as time goes on, and that's fine. The world is changing, and it's better and more profitable to be good and skilled in thinks like information technology since we're moving more and more in that direction globally anyway. I've said it before and I'll say it again - if we make anything in the US it should really mostly be things that 1)require a lot of technical skill and knowledge to make and 2) can't be made easily elsewhere. That's the kind of manufacturing that makes sense to do in the US - high margin stuff that can't be done more effectively in a foreign, less skilled country. That is going to mean that manufacturing as a percentage of GDP will probably decline and manufacturing as a percentage source of labor will decline, but that's not necessarily a bad thing. It just means we're being smarter and more efficient about what we do.

If you establish a culture holding to the belief that there is some minimum compensation a person is "owed" for their labor and/or service regardless of what that labor or service is actually worth, you get more outsourcing. We have an entitlement culture in this country and part of that is believing that when one person purchases labor and another person sells it government should force the purchaser, if "necessary", to pay more for the labor than it's worth. So it makes sense for the purchaser to go outside of this population to do the purchasing.

JohnStOnge wrote:If you establish a culture holding to the belief that there is some minimum compensation a person is "owed" for their labor and/or service regardless of what that labor or service is actually worth, you get more outsourcing. We have an entitlement culture in this country and part of that is believing that when one person purchases labor and another person sells it government should force the purchaser, if "necessary", to pay more for the labor than it's worth. So it makes sense for the purchaser to go outside of this population to do the purchasing.

and part is believing that those who benefit the most from living in these United States are entitled to a free ride on the backs of the less fortunate..

Agree, if outsourcing is done right, it can benefit the economy. People in the US just have to get use to the new wage scale for the jobs that are being outsourced. It's not just manufacturing, information technology does a great deal of outsourcing. The company I work for in international, and the demographic of the area I sit, is about half American's and half from India, Asia and the Middle East. My previous company did not outsource and paid about a third less for similar positions. I realize it's not fun being told you are getting replaced by an overseas group, the only snafu is they never ask the current employees if they would take less money to stay.

Gil Dobie wrote:Agree, if outsourcing is done right, it can benefit the economy. People in the US just have to get use to the new wage scale for the jobs that are being outsourced. It's not just manufacturing, information technology does a great deal of outsourcing. The company I work for in international, and the demographic of the area I sit, is about half American's and half from India, Asia and the Middle East. My previous company did not outsource and paid about a third less for similar positions. I realize it's not fun being told you are getting replaced by an overseas group, the only snafu is they never ask the current employees if they would take less money to stay.

Yo! McFly! ....that's kind of the problem, the "new wage scale" is poverty level.

ASUG8 wrote:

danefan wrote:Outsourcing is a necessary evil.

People all around the world are willing to work for cheaper. Companies have a fiduciary duty to their shareholders to make the most money possible.

Hate the game, not the player.

Look at the tags on your clothes, your kid's toys, even your car and you'll see that most likely your'e 80%+ invested in globally sourced products. Obama can try to paint Bain as a bad company for shopping around for the lowest cost to source products but it's an unfortunate reality. Remember the US steel industry? Gone. How about the US textile industry? Kaput. The US is great at ideas and manufacturing/exporting intellectual capital worldwide, but the manufacturing base is negligible to where it used to be.

Down from its heyday, but not out:

"U.S. steel production up nearly 8 percent in 2011

Early estimates from the American Iron and Steel Institute show that U.S. steel production rose 7.9 percent in 2011 compared to last year.

In 2011, domestic steel mills produced an estimated 95.6 million tons of raw steel, compared to about 88.6 million tons in 2010, the Washington-based trade association for the North American steel industry said Tuesday. The group is expected to release final data later this month..................."
http://www.nwitimes.com/business/local/ ... 20d7b.html" onclick="window.open(this.href);return false;

Textiles might be a fraction of what they once were, but they are still significant in the US:
"The U.S. textile industry is one of the more important employers in the manufacturing sector, with over 235,000 workers, representing 2 percent of the U.S. manufacturing workforce.

Textile industry workers are highly skilled, and the industry is technologically advanced, with investments upward of $1.4 billion a year in total capital expenditures. In recent years, U.S. textile companies have focused on retooling their businesses, finding more effective work processes, investing in niche products and markets, and controlling costs.

The industry is globally competitive, ranking third in global export value behind the European Union and China. U.S. exports of textiles increased by 20 percent between 2009 and 2010. More than 60 percent of U.S. textile exports go to our free trade agreement partner countries."
http://selectusa.commerce.gov/industry- ... ted-states" onclick="window.open(this.href);return false;

Remember reading this in the WSJ a couple of days ago (posted whole article since not too long and not sure if link will work:

Some Firms Opt to Bring Manufacturing Back to U.S.

About 14% of U.S. companies surveyed by a Massachusetts Institute of Technology professor definitely plan to move some of their manufacturing back home—the latest sign of growing interest among executives in a strategy known as "reshoring."

David Simchi-Levi, an engineering professor at MIT who runs a program for supply-chain executives, said he surveyed 108 U.S.-based manufacturing companies with multinational operations over the past two months. The companies range in size from annual sales of about $20 million to more than $25 billion, and most of them are over $1 billion, Dr. Simchi-Levi said.

Among the main reasons cited for reshoring: a desire to get products to market faster and respond rapidly to customer orders; savings from reduced transportation and warehousing; improved quality and protection of intellectual property.

About 21% listed "pressure to increase U.S. jobs," a hot political issue this year, as a factor in reshoring. Dr. Simchi-Levi said the survey didn't specify where that pressure was coming from. But some companies appear to feel both political and market heat to show they make things in the U.S.

In February, Boston Consulting Group surveyed 106 companies with annual sales of $1 billion or more and found that 37% planned to reshore or were "actively considering" it. The MIT survey is more precise in singling out those with definite plans. When asked the broader question of whether they were considering a move to reshore, the MIT study found that 33% of those surveyed said yes.

Google Inc. made a big splash last month by announcing that its new Nexus Q music and video player will be manufactured in the U.S., something that rarely occurs in consumer electronics. Scores of other companies—including Caterpillar Inc., General Electric Co. and Ford Motor Co. —in the past two years have announced plans to make in the U.S. some products they previously brought in from overseas.

GE's website includes an "American Jobs Map" providing details of 14,500 new jobs announced by the company since 2009.

Some foreign companies also have been stepping up their U.S. manufacturing. The U.S. unit of Japan's Yaskawa Electric Corp. recently decided to make a new line of electrical motor controls for heating and ventilation equipment at its plant in Buffalo Grove, Ill., rather than in China. Craig Espevik, a vice president at Yaskawa, said the cost of the parts will be about 10% higher, even after shipping costs are included, mainly because of higher wages in the U.S. But producing the parts here will allow for quicker deliveries to customers, lower inventories and more customization.

In April, U.S. Sen. Debbie Stabenow, a Democrat from Michigan, announced legislation dubbed the Bring Jobs Home Act. The bill would provide tax breaks to help companies cover the cost of moving production back to the U.S. and ban tax deductions for the expenses of moving operations abroad.

MIT's Dr. Simchi-Levi said lower U.S. corporate taxes would help bring more manufacturing back. He said it wasn't yet clear whether the reshoring trend will result in a large amount of U.S. job growth. Some of the jobs will be low-paid assembly work, he noted.

Even so, he called reshoring an encouraging development: "Once you start this process, there is no telling where it ends."

The complete results of the MIT survey are due to be presented at a Forum for Supply Chain Innovation conference July 25 at the university in Cambridge, Mass.
http://online.wsj.com/article/SB1000142 ... lenews_wsj" onclick="window.open(this.href);return false;

I don't see how outsourcing is a bad thing to people who like to argue that there are all kinds of jobs that Americans don't want to do (and therefore we need all those illegals to do them).

Right Donks? Harry Reid? Bueller?

houndawg wrote:

Gil Dobie wrote:Agree, if outsourcing is done right, it can benefit the economy. People in the US just have to get use to the new wage scale for the jobs that are being outsourced. It's not just manufacturing, information technology does a great deal of outsourcing. The company I work for in international, and the demographic of the area I sit, is about half American's and half from India, Asia and the Middle East. My previous company did not outsource and paid about a third less for similar positions. I realize it's not fun being told you are getting replaced by an overseas group, the only snafu is they never ask the current employees if they would take less money to stay.

Yo! McFly! ....that's kind of the problem, the "new wage scale" is poverty level.

The new wage scale is much closer to the old wage scale. 6 years ago the wage scale for the Indian developers was $25 per hour, which was much below the American scale, today it's much higher and close to the American scale of 6 years ago. The outsourced labor is getting more expensive and many companies are hiring more American employees, but still keeping the outsourced employees. Maybe you have some different info from a different company, but that's how I see it.

danefan wrote:A bigger question - would we be willing to pay 100%, 200%, or 300% more for products?

I wouldn't be....

Read a story awhile back that said if iPhones were made in the U.S. Instead of China, they'd cost $67 more. I'd be willing to pay that.

Meanwhile, Apple is absolutely rolling in money.

I have a minority opinion on this one, but I'm not going to share it fully

Just remember, there's a little bit more to unions, etc than the idea of being entitled to something. The U.S has border, but capitalism does not. Though it's the paranoia speaking, I think we trust that third world countries will remain paying people on the low end a tad too much. Workers getting paid shit wages was basically the reason socialist thought had its genesis. Countries like China have a good enough stranglehold on their people to where it may not be an issue, but its just a thought to keep in mind. And yes, I know China says it's a socialist country (with a communist philosophy, there is a discrepancy between a socialist country and a communist country as the former precedes the latter in a Hegelian "end of history" kind of deal), but China also says it's a democracy and we all know that's bullshit....

Tod wrote:

danefan wrote:A bigger question - would we be willing to pay 100%, 200%, or 300% more for products?

I wouldn't be....

Read a story awhile back that said if iPhones were made in the U.S. Instead of China, they'd cost $67 more. I'd be willing to pay that.

Meanwhile, Apple is absolutely rolling in money.

Funny you should mention that. Not too long before his death Steve Jobs was complaining to Obama that the US just doesn't have enough engineers for an Apple plant to operate (see link). And therein lies a big part of the problem. We want to be able to find good jobs in factories making blue jeans and pots and pans....jobs that folks in developing countries with the equivalent of a third grade education could do. Meanwhile our education system produces more people with four-year degrees in multicultural rainforest white guilt studies than you can shake a stick at when more people should be pushed towards technical/vocational education. If you really want to revive manufacturing you have to invest in R&D human capital and not just go all batsh** protectionist.

http://www.politifact.com/truth-o-meter ... ma-he-mov/" onclick="window.open(this.href);return false;

Pwns wrote:

Tod wrote: Read a story awhile back that said if iPhones were made in the U.S. Instead of China, they'd cost $67 more. I'd be willing to pay that.

Meanwhile, Apple is absolutely rolling in money.

Funny you should mention that. Not too long before his death Steve Jobs was complaining to Obama that the US just doesn't have enough engineers for an Apple plant to operate (see link). And therein lies a big part of the problem. We want to be able to find good jobs in factories making blue jeans and pots and pans....jobs that folks in developing countries with the equivalent of a third grade education could do. Meanwhile our education system produces more people with four-year degrees in multicultural rainforest white guilt studies than you can shake a stick at when more people should be pushed towards technical/vocational education. If you really want to revive manufacturing you have to invest in R&D human capital and not just go all batsh** protectionist.

http://www.politifact.com/truth-o-meter ... ma-he-mov/" onclick="window.open(this.href);return false;

Thank you! Excellent information.

We need more education in this country, and in the right fields.

Pwns wrote:

Tod wrote: Read a story awhile back that said if iPhones were made in the U.S. Instead of China, they'd cost $67 more. I'd be willing to pay that.

Meanwhile, Apple is absolutely rolling in money.

Funny you should mention that. Not too long before his death Steve Jobs was complaining to Obama that the US just doesn't have enough engineers for an Apple plant to operate (see link). And therein lies a big part of the problem. We want to be able to find good jobs in factories making blue jeans and pots and pans....jobs that folks in developing countries with the equivalent of a third grade education could do. Meanwhile our education system produces more people with four-year degrees in multicultural rainforest white guilt studies than you can shake a stick at when more people should be pushed towards technical/vocational education. If you really want to revive manufacturing you have to invest in R&D human capital and not just go all batsh** protectionist.

http://www.politifact.com/truth-o-meter ... ma-he-mov/" onclick="window.open(this.href);return false;

There were a lot of Engineers looking for work the last few years. I remember when Jobs was spouting that, as many companies were laying off Engineers at the same time.

Tod wrote:

danefan wrote:A bigger question - would we be willing to pay 100%, 200%, or 300% more for products?

I wouldn't be....

Read a story awhile back that said if iPhones were made in the U.S. Instead of China, they'd cost $67 more. I'd be willing to pay that.

Meanwhile, Apple is absolutely rolling in money.

Many good points in this thread. And I like hearing about the repatriation of manufacturing. It makes a hole heap of sense from a logistical standpoint considering how many of the products are sold here anyway. We have abundant natural resources and the ability to produce just about everything. Most countries do not. That's a tremendous economic advantage that we've allowed to slide.

And to Tod's point above, I would gladly pay more for American made and do whenever I can. The other part of that equation is that manufacturing jobs are supposed to lead to higher wages which also helps the economy.