Outsourcing

[CubsSuck1]

For those who don't know, outsourcing is replacing jobs held by American workers with jobs overseas, where workers can be hired for much less of a price. Sometimes you can get a dozen foreign workers for the price of one American worker. This obviously is not creating any new jobs in the US, only giving big business financial breaks. From what I have heard, Kerry plans to give tax breaks to companies who don't outsource, and penalize those who do.

 

Outsourcing sucks and needs to be stopped.

Edited August 2, 2004 by CubsSuck1

[southsider2k5]

For those who don't know, outsourcing is replacing jobs held by American workers with jobs overseas, where workers can be hired for much less of a price. Sometimes you can get a dozen foreign workers for the price of one American worker. This obviously is not creating any new jobs in the US, only giving big business financial breaks. From what I have heard, Kerry plans to give tax breaks to companies who don't outsource, and penalize those who do.

 

Outsourcing sucks and needs to be stopped. 

Except for that convient loophole for Heinz....

[FlaSoxxJim]

Except for that convient loophole for Heinz....

Details, details...

[Texsox]

Couple thoughts:

 

1st Off, could someone find a link to the food exception that would benefit Heinz? I couldn't find anything.

 

2nd: Whenever you buy a product bought offshore you benefiting the workers in that country. If that happens to be a foreign owned company, you also benefit the owners in that country. If it happens to be a US firm, with an overseas subsidiary, you are benefitting the US owners. Either way the workers in logistics, transportation, customs, etc. benefit, and they are Americans.

 

3rd: I thought if we let the owners keep more money via tax breaks etc. they would expand their businesses and hire more US workers? Is there a flaw in that logic? Would these people actually use that money to hire workers in Malaysia?

 

4th: Outsourcing has been going on for decades. Using the auto industry as an example. The "Big 3" in the 60's made everything for the car except the tires. Buy a GM and it would have a GM stereo, GM seats, GM steering wheel, GM plastics, GM cast aluminum parts, GM transmission, etc. Then they started going to other firms to buy some of this stuff. They would go to a stereo manufacturer and buy stereos, they would buy plastic parts from plastic einjection molders. We didn't pay that much attention because those suppliers were near the point of assembly and jobs were not impacted as greatly. Now they are outsourcing to companies overseas.

 

5th: Not just manufacturing jobs are going bye-bye. Now it's the better paying jobs and it has the nation's attention. Lose 500 assembly jobs at a textile plant in New England and no one really cares. Lose 500 IT jobs in Boston and whoa.

 

6th: Finding cheaper labor lowers prices. Company A is from China and makes widgets. Company B is a US company and makes their widgets in Michigan. Wal*Mart is buying 1,500,000 widgets for their stores. Company A is at $4.80 Company B is at $5.50. Wal*Mart knows that selling the widget at $5.99 will allow them to sell a lot, not so at $6.75. Company B needs to somehow get closer to Company A's price. Hmmm, how do they do that?

 

In defense to the companies, and I have worked with and for many in this boat. They need to be competitive in a global economy. Someone can build products in Yugoslavia and ship them to the US cheaper than someone can build them stateside. It becomes surival mode. No company that I've ever worked with was eager to outsource off shore. It is a logistics nightmare. I've set up several procurement offices in various countries and watched companies agonize and agonize, but they realize it is either that or going out of business.

 

Get an education. Low skilled, easy trained jobs are leaving this country. The Dems are holding out, trying to stem the tide, but they can only slow it down, they cannot prevent it.

[DBAHO]

Outsourcing has long been a problem down here, a lot of the telecommunication companies down here are outsourcing to India due to the cheaper labour and costs over there.

[mreye]

Is this the same John Kerry that outsourced his phone campaign to a Canadian company during the primary?

[LowerCaseRepublican]

Is this the same John Kerry that outsourced his phone campaign to a Canadian company during the primary?

The Bush/Cheney campaign outsourced their campaign solicitation etc. phone campaign to India. They're all a bunch of two faced schmucks. What the f*** did we do to get stuck with these guys? Out of all the people in the US, the best we have to offer is a boozed up cokehead whacked out on anti-psychotics and who has the intellect of an 8 year old vs a guy who looks like Lurch from the Addam's Family and has the exact same policy beliefs?

 

I mean, Bush and Kerry agree on the PATRIOT Act. They agree on the war in Iraq and the war on Terror, they are both incredibly pro-Israel, they are both severely pro-Plan Colombia and pro-drug war. They are both pro-NCLB. I fail to see how Kerry is the clear alternative to Bush. Vote 3rd party because America deserves better than a neo-conservative/neo-liberal coup.

 

And Tex, there was a poll done of American companies in the Wall Street Journal during the debates over NAFTA/FTAA. According to the WSJ: A majority of executives from large companies already had plans to shift some production to Mexico and that a large number intended to use NAFTA "as a bargaining chip to keep down wages in the U.S." This trend continues. According to a recent study, in more than half of union organizing drives, the threat of moving jobs to Mexico or closing plants was used to limit organizing success. (bold emphasis mine)

[southsider2k5]

Question for you Apu or anyone else. If we stop outsourcing, how do US companies compete on a world wide market. The cost structure that they would face would be enormous. Espesially when you factor in added costs like SS tax, unemployment taxes, health insurance, pensions etc.

 

I honestly think if a company like Ford built a car COMPLETELY in the US, from the parts being built in the US, all of the way through the labor, steel, assembly, etc, I can't see how a Focus wouldn't cost $50,000 to make.

 

If it were just US markets I could see it happening, but being a world wide economy, is it possible?

[LowerCaseRepublican]

SS2K4, many of the companies outsourcing are already posting record profits. Also, many times they are the recipients of corporate welfare and many pay miniscule taxes (thanks to Bermuda tax havens etc.)

 

In the late 1980s and early 1990s, a massive wave of plant closures and layoffs hit Canada. Tens of thousands of workers permanently lost what had once been secure and decent jobs. NAFTA has added to the high Canadian unemployment rate and job insecurity. Similar to the United States, after NAFTA, Canada lost jobs as its trade deficit with Mexico grew from $2.9 billion to $4.3 billion. Also, like the United States, Canadian workers' pay has not kept up with inflation and wages have been much slower to rise when compared to gains in worker productivity.

 

NAFTA has also contributed to undermining Canada's strong social programs, particularly unemployment insurance and national health care. The Canadian Manufacturers Association and the Canadian Chamber of Commerce are trying to cut Canada's social programs while blaming cuts on international competition. Rather than maintain Canada's "high road" social safety net, they want to reduce social welfare benefits by forcing Canadian workers to lower their expectations.

 

There has been a tremendous increase in the number of maquiladora plants-foreign owned plants that receive special tax breaks and export almost all of their production to the U.S.-and an almost 50% increase in the maquiladora work force since NAFTA began. According to the Mexican government, the maquiladoras employ more than 800,000 workers. These plants are exempt from tariffs on imported raw materials and components as long as the final product is exported. The wages workers earn at these jobs make it almost impossible to raise a family. For example, a gallon of milk costs almost three hours of wages. Mexican workers have borne the brunt of the economic crisis in Mexico. Despite the increases in productivity and quality, real manufacturing wages in Mexico are 25% lower then they were before NAFTA. According to the Coalition for Justice in the Maquiladoras, General Motors is Mexico's largest foreign employer. The 74,500 employees of GM's Mexican maquiladora operations earn around 70 cents an hour in 54 factories in 27 different Mexican cities.

 

NAFTA's single biggest defect is its failure to adequately address workers' rights- the right to strike, the right to organize and the right to freely associate. The failure to adequately enforce such core labor laws in Mexico means that Mexican wages have failed to rise.

 

While businesses demanded-and got-a provision in NAFTA that requires Mexico to protect the rights of investors, there is no similar provision for enforcement of Mexico's labor laws or, for that matter, Mexico's environmental laws. This means that when Mexico fails to enforce its labor laws, resulting in Mexican workers' wages being held down and their rights denied, there is little that we can do other than complain.

 

There is a labor side agreement-it isn't part of the actual trade treaty- that, in theory, addresses workers' concerns. But in practice, it is nearly useless. Five cases concerning Mexico have been brought under the labor side agreement for labor violations in Mexico. But there has been no noticeable change on the ground. Take, for example, the cases at General Electric in Ciudad, Juarez or Honeywell in Chihuahua where workers were fired for trying to organize independent unions. Those unions remain unrecognized. Those workers have not been reinstated.

 

In the maquiladoras, workers don't have the ability to fight for better working conditions. If they complain, they are fired. Maquiladora owners keep lists of "problem" employees who are blacklisted because of their complaints.

 

If we don't have an effective way of addressing this problem, Mexican workers aren't going to get a fair deal. They won't be fairly compensated for their hard work and Mexican workers will not be able to buy the goods they make, or goods made by workers in the U.S. or Canada.

 

Sorry for posting all these factoids but it goes to prove a point that fair trade policies would be better than "free trade" policies. I know that Starbucks is buying fair trade coffee from time to time. It is not much more expensive than the regular coffee but it pays the farmer who got the beans a lot more money. I would venture a guess that a job where the union is respected and the workers are valued would increase productivity for the company. In the year 2000 our nation’s annual trade deficit climbed to a record $444.7 billion (as recent as 1980 the US had a $17 billion trade surplus), which was over 39% higher than the previous year’s record; a record of which NAFTA imports from Mexico and Canada contributed a new high of a $110 billion to our nation’s trade imbalance, adding to our nation’s obscene National Debt, which is already costing us US taxpayers a billion dollars a day in interest payments alone.

 

US trade deficits translate into the loss of hundreds of thousands of potentially good paying manufacturing jobs, as well as the loss of hours for those working; all of which contributes to the 18.5 million Food Stamp users. The trade deficits have contributed to corporate profits plummeting, along with skyrocketing defaults and bankruptcies soaring to a historical high of 1,253,000 in 2001 alone. All of which contributed to American household debts climbing to the historical high of $7.6 trillion. Trade deficits cost jobs while weakening our nation’s economy, as well as weakening our national defense base by making the US dependent on foreign products. Trade deficits also provide foreign investors with US currency with which to buy American assets, a legacy that should be part of an American Heritage we leave to our children and grandchildren. Reportedly, there was around $900 billion European investments made in acquiring American assets in 2000 alone; leaving almost 4 million American workers working for European investor owned companies.

 

Liabilities of $1.8 trillion to foreigners make the United States the biggest foreign debtor nation in the world; at the present rate of foreign debt escalation, within 10 years our foreign debt could rise to 50% of our National Gross Domestic Product. Incidentally, our national liabilities to foreigners was only 0.5% of our National Gross Domestic Product as recent as 1972. The enormous foreign debt escalation is a harbinger of a national economic catastrophe in the making.

 

Ending this fair trade orgy of feel good rampant uber-capitalism seems necessary and in it's place fair trade policies which will allow for environmental, labor etc. protections to be enforced with the same voracity as corporate protections have been by the WTO. Fair trade policies allow for competition on a global market.

[southsider2k5]

I appreciate all of the facts and research, but what I am saying is would the impact of a fully US produced product be less than the losses through outsourcing.

 

There are so many factors that would go into this. Gosh just the inflationary spiral alone would be huge. Can you imagine what would happen if the cost of most goods just doubled? And with the factor differential in wages, I think it would be a multiple increase, instead of a doubling.

 

If you had to produce every step of a car in the US, costs would explode. And I do understand what you are saying about record profits, but you realize that is what has lead to record equity prices at the sametime. There is a direct correlation between the two. Plus that is where most people's retirement money is. If we go slashing profits, by increasing costs, we are looking at a huge correction in the stock market, which reminisant of what the NASDAQ did in 2000-2002. That would lead to huge job cuts, both to cut margins to save profits, and to stall production because of purchasing cutbacks due to cost increases that would inevitably be handed on to consumers.

 

My question is where is the balance, and where is the line for the greatest good of all?

[Texsox]

I believe that Mexico and to a smaller extent Canada are the best options for most companies trying to compete. We have a much better chance of selling our stuff to workers in Mexico than China. Also, Mexico encourages production along the US border, allowing US companies to keep their higher earning managerial jobs in the US. Most Maquilla managers are US citizens and live, work, pay taxes, and play in the US.

 

The threat to American workers is needing to compete with workers in other countries. US companies have been very successful in overseas operations. Look at Coca Cola, it's in almost every country. They bottle locally, employing local labor. We do not seem to have an issue with that, anyone who owns Coke shares, loves the dividends.

 

We also love it when our companies export products. On one hand if an equipment company negotiates a big sale to China for injection molding equipment and dies, we are happy. If those same molds are used to manufacture parts coming back to the US we are unhappy.

 

We are also in love with cheaper prices. When was the last time anyone looked for Made in the USA and paid more for a product?

[southsider2k5]

We are also in love with cheaper prices. When was the last time anyone looked for Made in the USA and paid more for a product?

And to add to that question, how much more would you be willing to pay? Would you be willing to pay double for a car that was totally, from beginning to end, produced and made in the USA? How about on regular items? Would you be willing to pay $2000 for a computer again? $500 for a CD player?

 

Seriously, I want to hear back on this. I keep hearing that we need to stop outsourcing, but I have yet to hear some realisitic answers on how to do so.

[LowerCaseRepublican]

And to add to that question, how much more would you be willing to pay?  Would you be willing to pay double for a car that was totally, from beginning to end, produced and made in the USA?  How about on regular items?  Would you be willing to pay $2000 for a computer again?  $500 for a CD player?

 

Seriously, I want to hear back on this.  I keep hearing that we need to stop outsourcing, but I have yet to hear some realisitic answers on how to do so.

I don't think outsourcing would be quite as bad if there was the ability to have some form of concrete labor protections involved in it.

 

I'm quite involved in a campus campaign against Coca-Cola (getting our school to get rid of our contract with Coke) for their use of a paramilitary death squad in Colombia to murder/kidnap union activists in order to keep costs low for the plant. Disney uses sweatshop labor in China and Nike uses sweatshops in Vietnam and other places to produce their shoes. By making it mandatory to give people a wage they can survive on and allowing avenues for labor to address violations (i.e. beatings of workers by owners that have been videotaped in Vietnam Nike factories) where they have an actual chance at alleviating their problem would make outsourcing a better pill to swallow. It's the unbridled windfall for multinationals that many people take issue to since they use NAFTA etc. as a bargaining piece to keep organized labor under their thumb.

 

As said in the Bretton Woods founding documents, the goal [of outsourcing] is enrichment of the 1st world at the expense of the 3rd.

[Texsox]

If I may clarify a couple things based on 8 years in and around Maquillas. Some easy to understand info

 

The major growth for Maquillas have been Pacific rim companies setting up shop in Mexico. The largest Japane Chamber of Commerce outside Japan is in Reynosa, Tamps. Mexico. For logistical reasons they are investing in Mexico, and hiring US management, instead of shipping products from outside NAFTA. Some of this is also because of import duties on non-NAFTA products.

 

Maquillas are only exempt from import tarrifs if the sub assembly or raw material originates in a NAFTA country. Tarrifs have actually increased on non NAFTA materials. In this area, NAFTA is working. It has brought economic development to North America.

 

It is misleading to compare maquilla wages. For example, most maquilla plants are required by law to have a Doctor on staff to treat the employees and their families. It is mandatory to offer free meals for every employee. It is required to offer free transportation to the workers. Employers pay death benefits. I can assure you that Maquilla wages are not .70 per hour, even before benefits. That is closer to the number that China is reporting.

 

Every Maquilla plant along the Texas-US border is unionized, I cannot speak with authority on the others. The unions negotiate contracts for their workers. Mexico has resisted, and has the maquillas, US unions from coming into Mexico. The UAW and others have tried to bring their unions but so far they have been unsuccessful. The Mexico unions work far closer than their US counterparts in plant operations. I have watched as the Mexico unions have worked side by side with management to compete. They understand they are in danger of losing jobs to China. Already we have seen companies that are very manual labor intense leave Mexico for China and some of the former Soviet block countries.

 

Just like in the US, if you have been fired from 3 jobs in 3 months, you will have a hard time finding another job. Maquilla managers meet regularly and are very organized. You are correct, poor employees have a hard time getting employment. Plus Mexico allows employers to share more information that dates employed. The US courts have stopped US employers from doing that.

[Texsox]

I have a question or two:

 

If a US company opens a plant in China, is it OK as long as they do not send product back to the US?

 

How about if they stop exporting from the US to Europe and instead open a plant in Spain, for example?