Full Version: Are American companies selling out Americans?
My company, companies in my vicinity, all talk about how necessary it is to get into the Asian markets, notably India and China, because those are the future markets that you want to get a foot hold in.
But a lot of these companies are moving American jobs (jobs to service Americans that are typically done by Americans) to India and China because they claim it's necessary to get into that market.
My question is are American companies selling out American workers to get in good with the new big markets?
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
But a lot of these companies are moving American jobs (jobs to service Americans that are typically done by Americans) to India and China because they claim it's necessary to get into that market.
My question is are American companies selling out American workers to get in good with the new big markets?
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
My question is are American companies selling out American workers to get in good with the new big markets?
Certainly they are, because as has been spelled out to me on many threads here over the years, American companies' only real responsibility, and certainly the only one they all take very seriously, is to their stockholders.
Stockholders want ever-increasing profits. Labour costs are a big part of any business - often the biggest. So the pressure is on businesses to move labour abroad. The new thing is that where this used to apply only to manufacturing, it now applies just as easily to service industries.
On the other hand, many states of the USA hold the right of an employers to hire and fire on a whim, ostensibly to respond to market conditions, far higher than the right of employees to be treated fairly (like ONLY being fired for good business reasons - most states with such rules don't require the employer to give ANY reasoning).
Such labour market flexibility is held to be one of the strengths of the US economy (and indeed it is), but it is also the Achilles Heel. You can't afford to backpedal from it, because your economy is not geared to be tightly controlled and regulated (which, short of massive public subsidy that would have to come from taxation, is the only "solution"). Yet if you do nothing the jobs will all go and the US economy could still be badly damaged.
In a way, I think that the European economies are a little better placed, since they have already gone through much pain anyway, they have (in the newer EU members) some very low wage economies on their doorstep - broadly comparable to the Far East once transport costs are included; and they are far more used to living with tight regulation on who and how can be fired.
Indeed, Europe's economic problems are to do with not being flexible enough, and I don't believe that Europe has the same level of cultural barriers to the necessary adaptations to Far East economic power that America has to the required changes she might need to make. I see a big opportunity in Asian growth that pehaps Europe is better placed to take advantage of than AMerica might be.
If true, that wouldn't make Europe better[/]i than America. It would make Europe [i]luckier. Something current analysts might like to remember when crowing over America's recent, and current, dominance. Ultimately, everyone's "destiny" is oblivion.
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
Welcome to international capitalism, which America has largely benefited from for the past 150 years - and initially mostly at the expense of the previous great industrial powers of Europe. These industrial powers have changed how they work - pretty much abandoning their old heavy manufacturing businesses (certainly the European coal and steel industries are miniscule compared to 50 years ago). America has not yet done so on quite the same scale.
Now that it looks like it won't be quite so easy for America in the next 150, you don't get to change the rules (again) to keep your dominance without having to change the way you do things. The rules that allow such free movement of capital and goods around the world but prevent the free movement of labour (cheap workers can't come to America, but companies can and must seek the cheapest labour, meaning they have to move abroad).
Certainly they are, because as has been spelled out to me on many threads here over the years, American companies' only real responsibility, and certainly the only one they all take very seriously, is to their stockholders.
Stockholders want ever-increasing profits. Labour costs are a big part of any business - often the biggest. So the pressure is on businesses to move labour abroad. The new thing is that where this used to apply only to manufacturing, it now applies just as easily to service industries.
On the other hand, many states of the USA hold the right of an employers to hire and fire on a whim, ostensibly to respond to market conditions, far higher than the right of employees to be treated fairly (like ONLY being fired for good business reasons - most states with such rules don't require the employer to give ANY reasoning).
Such labour market flexibility is held to be one of the strengths of the US economy (and indeed it is), but it is also the Achilles Heel. You can't afford to backpedal from it, because your economy is not geared to be tightly controlled and regulated (which, short of massive public subsidy that would have to come from taxation, is the only "solution"). Yet if you do nothing the jobs will all go and the US economy could still be badly damaged.
In a way, I think that the European economies are a little better placed, since they have already gone through much pain anyway, they have (in the newer EU members) some very low wage economies on their doorstep - broadly comparable to the Far East once transport costs are included; and they are far more used to living with tight regulation on who and how can be fired.
Indeed, Europe's economic problems are to do with not being flexible enough, and I don't believe that Europe has the same level of cultural barriers to the necessary adaptations to Far East economic power that America has to the required changes she might need to make. I see a big opportunity in Asian growth that pehaps Europe is better placed to take advantage of than AMerica might be.
If true, that wouldn't make Europe better[/]i than America. It would make Europe [i]luckier. Something current analysts might like to remember when crowing over America's recent, and current, dominance. Ultimately, everyone's "destiny" is oblivion.
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
Welcome to international capitalism, which America has largely benefited from for the past 150 years - and initially mostly at the expense of the previous great industrial powers of Europe. These industrial powers have changed how they work - pretty much abandoning their old heavy manufacturing businesses (certainly the European coal and steel industries are miniscule compared to 50 years ago). America has not yet done so on quite the same scale.
Now that it looks like it won't be quite so easy for America in the next 150, you don't get to change the rules (again) to keep your dominance without having to change the way you do things. The rules that allow such free movement of capital and goods around the world but prevent the free movement of labour (cheap workers can't come to America, but companies can and must seek the cheapest labour, meaning they have to move abroad).
I'm not sure if I got my point across, but I appreciate the input.
I guess the angle I was going for was that "American" companies are trying to use American consumers (and European consumers) to get an angle into the Asian markets. They are moving service jobs (servicing Americans/Europeans) to Asia, for the intent of increasing their presence in those countries.
In essense, these corporations are courting Asian markets using American jobs.
The feeling is that companies are overlooking Americans (and I guess Europeans) as consumers (i.e. workers) in order to land the big prise: China and India.
It's not just cheap labor, but an interest in getting an early foot in the door in Asian markets.
Are companies willing to sacrifice good will with the West to gain a foot hold in the far east? Is the far east becoming more important than the west?
I guess the angle I was going for was that "American" companies are trying to use American consumers (and European consumers) to get an angle into the Asian markets. They are moving service jobs (servicing Americans/Europeans) to Asia, for the intent of increasing their presence in those countries.
In essense, these corporations are courting Asian markets using American jobs.
The feeling is that companies are overlooking Americans (and I guess Europeans) as consumers (i.e. workers) in order to land the big prise: China and India.
It's not just cheap labor, but an interest in getting an early foot in the door in Asian markets.
Are companies willing to sacrifice good will with the West to gain a foot hold in the far east? Is the far east becoming more important than the west?
QUOTE(Tim-Mello @ Mar 15 2005, 05:45 AM)
I'm not sure if I got my point across, but I appreciate the input.
I guess the angle I was going for was that "American" companies are trying to use American consumers (and European consumers) to get an angle into the Asian markets. They are moving service jobs (servicing Americans/Europeans) to Asia, for the intent of increasing their presence in those countries.
In essense, these corporations are courting Asian markets using American jobs.
The feeling is that companies are overlooking Americans (and I guess Europeans) as consumers (i.e. workers) in order to land the big prise: China and India.
It's not just cheap labor, but an interest in getting an early foot in the door in Asian markets.
Are companies willing to sacrifice good will with the West to gain a foot hold in the far east? Is the far east becoming more important than the west?
I guess the angle I was going for was that "American" companies are trying to use American consumers (and European consumers) to get an angle into the Asian markets. They are moving service jobs (servicing Americans/Europeans) to Asia, for the intent of increasing their presence in those countries.
In essense, these corporations are courting Asian markets using American jobs.
The feeling is that companies are overlooking Americans (and I guess Europeans) as consumers (i.e. workers) in order to land the big prise: China and India.
It's not just cheap labor, but an interest in getting an early foot in the door in Asian markets.
Are companies willing to sacrifice good will with the West to gain a foot hold in the far east? Is the far east becoming more important than the west?
In which case I refer you to the first half of my last riff - yes they are overlooking American consumers because they know they are too inertia-driven to change any time soon - as long as they still get the services they want, they don't much care who is providing it.
And yes they are trading away Western jobs wherever they can (mostly the US and UK - the rest of Europe has strciter employment protections that make it harder to do, but not impossible) to curry favour with Asian economies because of their low cost bases in the short term and because of their far greater market potential in the medium and long terms.
And the reason they are doing this is not because of any great conscious contempt for American jobs or consumers, but because they only people in (y)our economic system that they have to care about is their stockholders.
These companies are emphatically not doing anything to alienate the big investment institutions in the West, where most of the money still is. Indeed, by lowering their cost base and attempting to get an early toehold in markets with greater growth potential than their home markets, they are doing precisely the right thing with regard to their capitalist responsibility to their stockholders.
Which then brings me to the second half of my first repsonse - what did you expect? Did you think that America would stay the largest consumer market and the lowest-cost economy forever? Did you think that the kind of free-market capitalism and corporate-run "democracy" that America has put so much faith in (when it was working for you) wasn't going to turn around and bite you the second someone else looked an attractive investment?
Free market capitalists have always talked about "the market" as if it is something wholly outside conscious human control, like the weather. In fact, they have always resisted any controls, arguing that it can only work properly when regulated as little as possible (minimal "interference" is aword oft-used).
If that was correct and accurate when the wind was blowing in America's favour, it will remain correct and accurate when the direction changes in China and India's favour. If you don't like how the wind blows, learn to sail.
Or, better still, stop pretending that markets and economies are anything other than human constructions, and that nobody can or should try to control or direct them.
QUOTE(Julian @ Mar 15 2005, 06:56 AM)
QUOTE(Tim-Mello @ Mar 15 2005, 05:45 AM)
I'm not sure if I got my point across, but I appreciate the input.
I guess the angle I was going for was that "American" companies are trying to use American consumers (and European consumers) to get an angle into the Asian markets. They are moving service jobs (servicing Americans/Europeans) to Asia, for the intent of increasing their presence in those countries.
In essense, these corporations are courting Asian markets using American jobs.
The feeling is that companies are overlooking Americans (and I guess Europeans) as consumers (i.e. workers) in order to land the big prise: China and India.
It's not just cheap labor, but an interest in getting an early foot in the door in Asian markets.
Are companies willing to sacrifice good will with the West to gain a foot hold in the far east? Is the far east becoming more important than the west?
I guess the angle I was going for was that "American" companies are trying to use American consumers (and European consumers) to get an angle into the Asian markets. They are moving service jobs (servicing Americans/Europeans) to Asia, for the intent of increasing their presence in those countries.
In essense, these corporations are courting Asian markets using American jobs.
The feeling is that companies are overlooking Americans (and I guess Europeans) as consumers (i.e. workers) in order to land the big prise: China and India.
It's not just cheap labor, but an interest in getting an early foot in the door in Asian markets.
Are companies willing to sacrifice good will with the West to gain a foot hold in the far east? Is the far east becoming more important than the west?
In which case I refer you to the first half of my last riff - yes they are overlooking American consumers because they know they are too inertia-driven to change any time soon - as long as they still get the services they want, they don't much care who is providing it.
And yes they are trading away Western jobs wherever they can (mostly the US and UK - the rest of Europe has strciter employment protections that make it harder to do, but not impossible) to curry favour with Asian economies because of their low cost bases in the short term and because of their far greater market potential in the medium and long terms.
And the reason they are doing this is not because of any great conscious contempt for American jobs or consumers, but because they only people in (y)our economic system that they have to care about is their stockholders.
These companies are emphatically not doing anything to alienate the big investment institutions in the West, where most of the money still is. Indeed, by lowering their cost base and attempting to get an early toehold in markets with greater growth potential than their home markets, they are doing precisely the right thing with regard to their capitalist responsibility to their stockholders.
Which then brings me to the second half of my first repsonse - what did you expect? Did you think that America would stay the largest consumer market and the lowest-cost economy forever? Did you think that the kind of free-market capitalism and corporate-run "democracy" that America has put so much faith in (when it was working for you) wasn't going to turn around and bite you the second someone else looked an attractive investment?
Free market capitalists have always talked about "the market" as if it is something wholly outside conscious human control, like the weather. In fact, they have always resisted any controls, arguing that it can only work properly when regulated as little as possible (minimal "interference" is aword oft-used).
If that was correct and accurate when the wind was blowing in America's favour, it will remain correct and accurate when the direction changes in China and India's favour. If you don't like how the wind blows, learn to sail.
Or, better still, stop pretending that markets and economies are anything other than human constructions, and that nobody can or should try to control or direct them.
Well I do think Americans (and definately Europeans, and the UK) care where their services are done. The more the companies flaunt that they are using cheap Asian workers, the more disgruntled under and unemployed workers will get, along with everyone else.
And what did I expect? Well there are two pieces of this puzzle that you meld into one. American corporations are not America. American corporations, like many European corporations are really multi-nationals with stockholders around the world and like you said, their interest is the stockholder, not ANY country in particular.
So when you say "we've had it good for so long", I don't think you mean me or your average American citizen. You more than likely mean the average American billionare or the average American corporation.
So what did I expect? Well I expected more from Americans, but I didn't expect much different from corporations. And what I'm seeing within my own company which was just merged and acquired into a big multi-national bank that has many operations in Asia, is that they are blantantly telling its employees how great moving jobs to India is.
To me that is amazing. There is absolutely no loyalty whatsoever. I guess I expect it, but it is still outrageous behavior.
What I didn't expect is for Americans to sit on their hands and accept this as status quo.
My perception is that multi-nationals are telling Americans that the Asian Market Prize is more important to them than they are. That's my perception. Not just cheap labor, but getting their early hooks in those growing economies while using the American markets to keep them going.
I guess I would like to see a little loyalty to Americans by American corporations. That's probably a pipe dream.
I'd also like to see Americans do something about the situation.
Would you demand the same loyalty of Japanese firms? For example, should a Japanese auto manufacturer not create factories in the US in place of factories in Japan?
I think your idea of corporate loyalty is misguided, and the danger is that we'll seek to enforce it in the future through tarriffs, quotas, or other laws. The United States has benefited in large part to the free flow of trade. Do you agree? This is not just an idea. Functionally, it means corporations are able to increase profits by seeking more efficient places for production. More profit means more investment, which means growth, and more jobs. It is not a zero-sum game.
Our goal, as a nation, should not be to seek protection for our labor force through artificial means, but to ensure that our labor force is competitive on the world market. Protections to trade would only raise the cost of living, making our work force less attractive. Instead we need broad-based investment in education, from high school through professional degrees, with emphasis on marketable, productive skills. And we need to allow for more immigration, to provide a larger workforce to balance our reitred population, reducing the load on pension and welfare programs.
As well, as a nation we need to somehow reduce our over-consumption habits, both individually and federally, learn how to save and invest at home, and live WITHIN our means.
I think your idea of corporate loyalty is misguided, and the danger is that we'll seek to enforce it in the future through tarriffs, quotas, or other laws. The United States has benefited in large part to the free flow of trade. Do you agree? This is not just an idea. Functionally, it means corporations are able to increase profits by seeking more efficient places for production. More profit means more investment, which means growth, and more jobs. It is not a zero-sum game.
Our goal, as a nation, should not be to seek protection for our labor force through artificial means, but to ensure that our labor force is competitive on the world market. Protections to trade would only raise the cost of living, making our work force less attractive. Instead we need broad-based investment in education, from high school through professional degrees, with emphasis on marketable, productive skills. And we need to allow for more immigration, to provide a larger workforce to balance our reitred population, reducing the load on pension and welfare programs.
As well, as a nation we need to somehow reduce our over-consumption habits, both individually and federally, learn how to save and invest at home, and live WITHIN our means.
QUOTE(PudriK @ Mar 16 2005, 11:02 PM)
Would you demand the same loyalty of Japanese firms? For example, should a Japanese auto manufacturer not create factories in the US in place of factories in Japan?
That's up to Japan and the Japanese. When they are selling cars to Americans, and they build the cars in America, should Japanese have much to complain about?
QUOTE(PudriK @ Mar 16 2005, 11:02 PM)
I think your idea of corporate loyalty is misguided, and the danger is that we'll seek to enforce it in the future through tarriffs, quotas, or other laws.
I agree on the 2nd part. If Americans start to become largely impoverished, then you will definately see the things you mentioned (and there are definite signs that this is happening).
I'm not sure why it's wrong to expect some loyalty. Our gov'ts are very loyal to companies, people change their lives for companies, is there any reason the same should not be reciprocated?
QUOTE
More profit means more investment, which means growth, and more jobs. It is not a zero-sum game.
That's not necessarily true. More profit is sometimes, just more profit, i.e. more money to stockholders and billionare CEOs. See the WalMart plan of success and who leads the Forbes 500.
QUOTE
Protections to trade would only raise the cost of living, making our work force less attractive.
So is the goal to make our work force the absolute cheapest on the globe? That's whats happening in Asia and Centro/South America. They are all claiming to have the cheapest workers and are bitterly fighting to keep wages down to keep companies around.
Is that what you consider "attractive"?
QUOTE
Instead we need broad-based investment in education, from high school through professional degrees, with emphasis on marketable, productive skills. And we need to allow for more immigration, to provide a larger workforce to balance our reitred population, reducing the load on pension and welfare programs.
That reminds me of a particular event in the past 5 years. I had become unemployed due to a consolidation within a major international company. I went seeking employment at another major "American" company and to my amazement their entire work force were H1B visa workers (mostly Chinese and Indians). This is an "American" company, mind you.
The hiring manager who interviewed was from India. And despite having no doubt the best qualifications for the job, I didn't get it. So I sent a letter to my representative, Debbie Stabenow (D-MI) letting her know that I was not happy with the amount of H1Bs that were coming into the country.
She sent back a form letter that "Americans need to get more education". She sent this to a person with a Phd in engineering and a masters in Mathematics/Computer Science from the U. Of Michigan.
Getting people all the education in the world isn't going to help them compete against bottom barrell wages. The Chinese are graduating people from college as well. How many bio-tech PhDs can an economy support? Most good paying jobs are middle range jobs that can be easily moved to Asia.
I think your suggestions are good-hearted and up-beat. I just don't think they are very realistic. If we had leadership on how to adapt to the changing labor market, that would go a long way. But we don't have anything and slowly as wages disintegrate, people will lean toward tariffs, unions, etc. because no one else is looking out for them.
The more "free" we become, the more Americans will start to demand less "free".
QUOTE(Tim-Mello @ Mar 16 2005, 11:32 PM)
QUOTE(PudriK @ Mar 16 2005, 11:02 PM)
Would you demand the same loyalty of Japanese firms? For example, should a Japanese auto manufacturer not create factories in the US in place of factories in Japan?
That's up to Japan and the Japanese. When they are selling cars to Americans, and they build the cars in America, should Japanese have much to complain about?
QUOTE(PudriK @ Mar 16 2005, 11:02 PM)
I think your idea of corporate loyalty is misguided, and the danger is that we'll seek to enforce it in the future through tarriffs, quotas, or other laws.
I agree on the 2nd part. If Americans start to become largely impoverished, then you will definately see the things you mentioned (and there are definite signs that this is happening).
I'm not sure why it's wrong to expect some loyalty. Our gov'ts are very loyal to companies, people change their lives for companies, is there any reason the same should not be reciprocated?
QUOTE
More profit means more investment, which means growth, and more jobs. It is not a zero-sum game.
That's not necessarily true. More profit is sometimes, just more profit, i.e. more money to stockholders and billionare CEOs. See the WalMart plan of success and who leads the Forbes 500.
QUOTE
Protections to trade would only raise the cost of living, making our work force less attractive.
So is the goal to make our work force the absolute cheapest on the globe? That's whats happening in Asia and Centro/South America. They are all claiming to have the cheapest workers and are bitterly fighting to keep wages down to keep companies around.
Is that what you consider "attractive"?
QUOTE
Instead we need broad-based investment in education, from high school through professional degrees, with emphasis on marketable, productive skills. And we need to allow for more immigration, to provide a larger workforce to balance our reitred population, reducing the load on pension and welfare programs.
That reminds me of a particular event in the past 5 years. I had become unemployed due to a consolidation within a major international company. I went seeking employment at another major "American" company and to my amazement their entire work force were H1B visa workers (mostly Chinese and Indians). This is an "American" company, mind you.
The hiring manager who interviewed was from India. And despite having no doubt the best qualifications for the job, I didn't get it. So I sent a letter to my representative, Debbie Stabenow (D-MI) letting her know that I was not happy with the amount of H1Bs that were coming into the country.
She sent back a form letter that "Americans need to get more education". She sent this to a person with a Phd in engineering and a masters in Mathematics/Computer Science from the U. Of Michigan.
Getting people all the education in the world isn't going to help them compete against bottom barrell wages. The Chinese are graduating people from college as well. How many bio-tech PhDs can an economy support? Most good paying jobs are middle range jobs that can be easily moved to Asia.
I think your suggestions are good-hearted and up-beat. I just don't think they are very realistic. If we had leadership on how to adapt to the changing labor market, that would go a long way. But we don't have anything and slowly as wages disintegrate, people will lean toward tariffs, unions, etc. because no one else is looking out for them.
The more "free" we become, the more Americans will start to demand less "free".
Attractive really means best-bang-for-the-buck. This could mean cheap, menial labor, but I don't think we can really compete there. It also doesn't mean we should all be PhDs. But there is a middle road of technically skilled, professional workers that I've heard several people say we are short on. If we could offer these sort of workers at a decent price, they would be attractive on the global market. That entails reducing the cost to obtain the necessary skills, as well as probably reducing the pay and benefits that unions have ensured. While I do bemoan the loss of pay, it is better to have a job rather than none... if the job pays better than a non-skilled job.
The reality is, though, we either become cheaper, or we become unemployed.
Your story amazes and depresses me. I don't doubt you... I am trying to imagine why the company would make that choice. Did they think you would demand higher compensation? Were they saving money on payroll taxes or some other behind the scenes numbers? Did they just prefer a homogenized workforce? Were the Chinese some sort of package deal? The form letter response certainly doesn't help you know how to become more competitive.
When I received my masters a couple years ago, in Aerospace Eng, almost all of my classmates were foreigners... as in, from another country. The few Americans were, like me, taking classes part-time. Anecdotal, yes, but it reflects the larger problem.
Are American companies selling out American workers to get in good with the new big markets?
I think the outsourcing issue is an overblown one. We are not "selling out" American workers, we are outsourcing jobs that are not core competencies overseas.
In the US, of course some jobs go to resident aliens (H1B workers or other workers here with work visas) but these jobs are in a fairly targeted market.
I know when I was in Engineering school, I often wondered why a vast majority of Engineering professors were foreigners. The fact is that, as a country, Americans tend to turn away from these fields. The labor gap must be filled from somewhere, and that is often overseas.
Here is an article that deals with several myths about outsourcing. The first one deals with job losses to American workers:
Business Roundtable President Challenges Outsourcing Myths
Of course outsourcing does have an effect on individuals, but looking at the big picture, there is no sound reason not to outsource some jobs.
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
I personally have never had a problem finding a job (as an engineer). There are jobs everywhere, often not filled for months. Of course, I am optimistic about my abilities and my accomplishments, so maybe I am the exception. I have never noticed much of an impact from Asian labor in my own experiences (either hiring in a small company or seeking employment).
I think the outsourcing issue is an overblown one. We are not "selling out" American workers, we are outsourcing jobs that are not core competencies overseas.
In the US, of course some jobs go to resident aliens (H1B workers or other workers here with work visas) but these jobs are in a fairly targeted market.
I know when I was in Engineering school, I often wondered why a vast majority of Engineering professors were foreigners. The fact is that, as a country, Americans tend to turn away from these fields. The labor gap must be filled from somewhere, and that is often overseas.
Here is an article that deals with several myths about outsourcing. The first one deals with job losses to American workers:
QUOTE
Myth 1: Offshore outsourcing is costing U.S. jobs.
A recent study by the McKinsey Global Institute calculated that for every dollar spent on a business process that is outsourced to India, the U.S. economy gains at least $1.12. The largest chunk -- 58 cents -- goes back to the original employer. And U.S. companies perform 30% of Indian offshoring, so money returns home as earnings.
The U.S. has lost 2 million jobs due to global trade over the past 20 years but in just 10 years has added 35 million new jobs.-[1]
It was U.S. technology -- the boom in telephony and fiber optics -- that directly contributed to the viability of offshore IT outsourcing. U.S. innovation will remain the largest competitive advantage we have over developing nations taking on outsourced work. Many jobs that aren't materializing during the economic recovery are lost not through outsourcing, but rather through improved efficiencies and business automation.
A recent study by the McKinsey Global Institute calculated that for every dollar spent on a business process that is outsourced to India, the U.S. economy gains at least $1.12. The largest chunk -- 58 cents -- goes back to the original employer. And U.S. companies perform 30% of Indian offshoring, so money returns home as earnings.
The U.S. has lost 2 million jobs due to global trade over the past 20 years but in just 10 years has added 35 million new jobs.-[1]
It was U.S. technology -- the boom in telephony and fiber optics -- that directly contributed to the viability of offshore IT outsourcing. U.S. innovation will remain the largest competitive advantage we have over developing nations taking on outsourced work. Many jobs that aren't materializing during the economic recovery are lost not through outsourcing, but rather through improved efficiencies and business automation.
Business Roundtable President Challenges Outsourcing Myths
QUOTE
In a speech to the Detroit Economic Club today, John Castellani, president of the Business Roundtable, an organization comprised of CEOs from America's largest companies, challenged critics of outsourcing to "reject isolationist thinking and isolationist rhetoric."
"When you look at our nation's history, every generation seems to have its own new job-killing monster. In the early 20th century it was immigration; in the 1930s it was capitalism; in the 1960s it was automation, and in the 1980s it was Japan," Castellani said. "Outsourcing is not a threat to this nation's economy," Castellani added. "It is an opportunity to raise American earnings, productivity and prosperity."
Speaking before an audience of Michigan business leaders, media and academics, Castellani put the current outsourcing debate into perspective, noting there are more than 138 million Americans with jobs today and, in recent years, only a small percentage of white-collar jobs -- approximately 100,000 annually -- have gone overseas. In addition, the Bureau of Labor Statistics predicts that the U.S. will net 21 million new jobs between 2002 and 2012.
"When you look at our nation's history, every generation seems to have its own new job-killing monster. In the early 20th century it was immigration; in the 1930s it was capitalism; in the 1960s it was automation, and in the 1980s it was Japan," Castellani said. "Outsourcing is not a threat to this nation's economy," Castellani added. "It is an opportunity to raise American earnings, productivity and prosperity."
Speaking before an audience of Michigan business leaders, media and academics, Castellani put the current outsourcing debate into perspective, noting there are more than 138 million Americans with jobs today and, in recent years, only a small percentage of white-collar jobs -- approximately 100,000 annually -- have gone overseas. In addition, the Bureau of Labor Statistics predicts that the U.S. will net 21 million new jobs between 2002 and 2012.
Of course outsourcing does have an effect on individuals, but looking at the big picture, there is no sound reason not to outsource some jobs.
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
I personally have never had a problem finding a job (as an engineer). There are jobs everywhere, often not filled for months. Of course, I am optimistic about my abilities and my accomplishments, so maybe I am the exception. I have never noticed much of an impact from Asian labor in my own experiences (either hiring in a small company or seeking employment).
My question is are American companies selling out American workers to get in good with the new big markets?
To some extent, yes. But the blame can be spread around like bad peanut butter on cheap white bread. (more about that later) If we are not educated enough to fill all the high tech jobs (I doubt that is true now, but the trend is going that way) then why are we not revamping our education system? If we are overpaid for what we do, why haven't our companies frozen or reduced our pay instead of just dumping us for the first foreign worker who speaks English well enough to be almost understood. If some of us are too good to work the menial jobs and are willing to allow imported labor, then we share some of the blame as well.
And do you feel like as an American worker your future is not going to be as bright as it has been in the last 50 years because of Asian labor?
Times are changing, that is certain. This won't affect me much as I am already retired, but I am concerned for my children and grandchildren. We are facing the kind of competition that we are least prepared for, that of cheap labor. I doubt the companies are overlooking entirely the power we have as consumers. If we were able to wield that power collectively, we could put some companies completely out of business. But, as was said about inertia, we are more likely to continue acting in a way to best suit our own selfish interests, and the companies know that.
And it isn't just big business, it is also our government. About the bad peanut butter. A neighbor couple gets free commodities based on low income. They don't need it, but go for it anyway. They gave me a jar of peanut butter that came from India! It did not taste good, and I trashed it. But it bothers me to think that our own government is importing nasty tasting peanut butter from the other side of the world to help feed our poor. Don't we have peanut farms here anymore?
QUOTE(PudriK @ Mar 16 2005, 11:55 PM)
But there is a middle road of technically skilled, professional workers that I've heard several people say we are short on.
There are organizations that want to increase visa worker limits. They use propaganda like "we're short on IT workers". What they really want is an excuse to bring in more foreign workers, regardless of the impact on American workers. But believe me, there is no shortage.
See the following regarding engineering:
Record engineering unemployment spurs IEEE-USA to call for ...
ceenews.com/mag/electric_ record_engineering_unemployment/
Any job that is not highly specialized is easily done overseas, for much, much less. Engineers in India make $5/hr, less than US minimum wages. Now try competiting for that salary here in the US, you may as well skip school and go right into your local McDonalds for a job.
QUOTE
it is better to have a job rather than none...
That's a pretty grim way of looking at it. That's how someone in the 3rd world should think of having a job, not someone in the 1st world.
QUOTE
I think the outsourcing issue is an overblown one. We are not "selling out" American workers, we are outsourcing jobs that are not core competencies overseas.
Core, like R&D? GE and GM (as well as all the big 3 auto companies) have moved substantial R&D resources to Asia. GE-India is developing engines for GE.
That seems to be the fallacy that a lot of people have bought into; that we're only sending the "unwanted jobs" overseas. Everything and anything is leaving. It has nothing to do with Core or not. Unless by "Core" you mean CEOs and Boardrooms. No, those are staying here.
QUOTE
The U.S. has lost 2 million jobs due to global trade over the past 20 years but in just 10 years has added 35 million new jobs
Didn't we lose a bunch more recently? And what jobs have we added? Food service, janitorial, health care, etc.? Is that an even trade off for good paying skilled jobs?
And you can quote Castellani and 1 billion other CEOs....but what is in their best interest? Cheap labor or happy, employed American workers?
Consider the source. They want outsourcing, it makes them money.
And in regards to how many jobs will be lost in the future.
12000 legal jobs were outsourced in 2004 > Outsourcing > IT Facts12000 legal jobs were outsourced in 2004. ... This year 12,000 legal jobs moved offshore - less than 1% of the total - according to Forrester Research. ... www.itfacts.biz/index.php?id=P1842
Forrester: Outsourcing in 2005 > Outsourcing > IT Facts... Forrester Research estimated that the number of US computer jobs moving overseas will ... to Chinese outsourcing in 2004 12000 legal jobs were outsourced in 2004 15 ... www.itfacts.biz/index.php?id=P106
QUOTE(Tim-Mello @ Mar 17 2005, 03:29 PM)
There are organizations that want to increase visa worker limits. They use propaganda like "we're short on IT workers". What they really want is an excuse to bring in more foreign workers, regardless of the impact on American workers. But believe me, there is no shortage.
See the following regarding engineering:
Record engineering unemployment spurs IEEE-USA to call for ...
ceenews.com/mag/electric_ record_engineering_unemployment/
Any job that is not highly specialized is easily done overseas, for much, much less. Engineers in India make $5/hr, less than US minimum wages. Now try competiting for that salary here in the US, you may as well skip school and go right into your local McDonalds for a job.
See the following regarding engineering:
Record engineering unemployment spurs IEEE-USA to call for ...
ceenews.com/mag/electric_ record_engineering_unemployment/
Any job that is not highly specialized is easily done overseas, for much, much less. Engineers in India make $5/hr, less than US minimum wages. Now try competiting for that salary here in the US, you may as well skip school and go right into your local McDonalds for a job.
Link was broken. So there are other dynamics at play, then, that I was not aware of. My impression from what I'd read before was that most technical jobs that were being shipped overseas were on the low-end... basic programming and engineering. But I could easily be mistaken.
QUOTE
QUOTE
it is better to have a job rather than none...
That's a pretty grim way of looking at it. That's how someone in the 3rd world should think of having a job, not someone in the 1st world.
Yes, it is. But it's true... we might as well face it, we are not the top dog economically, and that has certain painful consequences. The market only provides the jobs that people need at a salary businesses can get... no matter what world you live in, it's nice when you can do whatever you want and make a living, but that won't always be the case.
QUOTE
Core, like R&D? GE and GM (as well as all the big 3 auto companies) have moved substantial R&D resources to Asia. GE-India is developing engines for GE.
That seems to be the fallacy that a lot of people have bought into; that we're only sending the "unwanted jobs" overseas. Everything and anything is leaving. It has nothing to do with Core or not. Unless by "Core" you mean CEOs and Boardrooms. No, those are staying here.
That seems to be the fallacy that a lot of people have bought into; that we're only sending the "unwanted jobs" overseas. Everything and anything is leaving. It has nothing to do with Core or not. Unless by "Core" you mean CEOs and Boardrooms. No, those are staying here.
Hehehe... are they? I'm not sure the US can claim to have all the capital, either, given the amount of foreign investment in US companies AND that the wealthy may keep much of their money overseas. Their assets may be here.
As for the number of outsourced jobs, first... that number is not tracked by the BLS, so any number you see is inferred from indirect data or surveys.. Regardless, the number still pales in comparison to the overall job turnover rate in the US. Outsourcing may be a problem, but it has not yet become an overwhelming driver in employment... some of the fear may be largely due to the media coverage and not actual effect.
Admission: I am in the military, and none of my immediate friends or family have been affected by "outsourcing," so I do not have the personal experience in this.
I am curious, then... if the larger economic force at work is that even highly-educated professional can be had for much cheaper overseas, what do we do?
In any trade imbalance situation, tarrifs or quotas only delay the inevitable, and eventually must be removed or cause much more economic damage than benefit. They may only be useful in the short term to ease the adjustment.
Would the real problem be that ANY American worker, skilled or unskilled, is too expensive? Why is that? Shouldn't the long term effect then be that wages, and therefore standard of living, must decrease in the US in order for us to be competitive?
QUOTE(PudriK @ Mar 19 2005, 11:25 PM)
I am curious, then... if the larger economic force at work is that even highly-educated professional can be had for much cheaper overseas, what do we do?
In any trade imbalance situation, tarrifs or quotas only delay the inevitable, and eventually must be removed or cause much more economic damage than benefit. They may only be useful in the short term to ease the adjustment.
Would the real problem be that ANY American worker, skilled or unskilled, is too expensive? Why is that? Shouldn't the long term effect then be that wages, and therefore standard of living, must decrease in the US in order for us to be competitive?
In any trade imbalance situation, tarrifs or quotas only delay the inevitable, and eventually must be removed or cause much more economic damage than benefit. They may only be useful in the short term to ease the adjustment.
Would the real problem be that ANY American worker, skilled or unskilled, is too expensive? Why is that? Shouldn't the long term effect then be that wages, and therefore standard of living, must decrease in the US in order for us to be competitive?
Another fallacy that people have is that it's either drastic tariffs or let hell break lose. There are other options that will help.
Other countries often have an economic agenda, something that's stated in a formal document. For instance, India has such a policy and it may state that their goal is to export as many Indians abroad to gain influence around the globe. Or that they want to nurture a particular industry that is vital to their future.
The US has NOTHING like this. IMHO, we should as a nation decide what's in our best interest. If we feel that manufacturing is something that we don't want to lose to cheap labor, then maybe we need to focus in on what is causing it to leave and as a nation try to either educate people or to determine what it takes to compete.
But much of the problem is that the gov't is run by corporations. So the worker and America are not it's highest priorities, getting re-elected is. And so those with the most money influence policy, i.e. the wealthy and the corporate.
There are plenty of solutions to this problem, but it takes our gov't to be part of it. And right now they couldn't care less.
I just thought I would add the following article. FWIW, the company I interviewed with that was using mostly Asian workers here in Detroit was Chrysler.
Take a gander at this:
http://www.autoweek.com/news.cms?newsId=102009
Chevy, now that's American as apple pie and .... won tons?
"It seems odd to debut a design theme for the Chevrolet brand at a European show. But GM intends to make Chevrolet the company's mass-market brand worldwide. Chevrolets are to be sold from Boston to Bonn to Beijing - and engineered and designed, in many cases, in Korea."
Take a gander at this:
http://www.autoweek.com/news.cms?newsId=102009
Chevy, now that's American as apple pie and .... won tons?
"It seems odd to debut a design theme for the Chevrolet brand at a European show. But GM intends to make Chevrolet the company's mass-market brand worldwide. Chevrolets are to be sold from Boston to Bonn to Beijing - and engineered and designed, in many cases, in Korea."
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