Offshore outsourcing: can it be reversed?

For as long as most of us can remember, our society collectively has been sending work and jobs abroad.

I just saw the holiday exhibit at the Brandywine River Museum, including the usual model train display. What struck me there this time, since I was mulling over my current topic, was that after World War II the US government encouraged the importation of model trains from Japan (some under American brand names), in order to help restore one small part of a defeated enemy’s economy. That was very nice of us. I suppose American importers got a good deal, the taxpayer probably helped, and US model train factories probably lost business and workers.

In the 1950’s I recall struggling along with my father to install in our front hallway a sliding closet door made in Japan. It was a real operational challenge and the instructions were virtually incomprehensible, clearly written by a Japanese worker with a spotty school background in English. Well, that situation evolved rapidly.

For a couple of decades now, Chinese imports (almost entirely cutting off the Japanese and subsequent Mexican sources) have had clear and fluent instructions. Our phone operators in India are trained to speak with American accents, and Dinesh is given a new customer service identity as Dennis. After all, this is globalization, which for us means that everyone should sound like us (or, at a minimum, they should make sense to us).

Will jobs that have been outsourced abroad ever return to the US? According to the AP story “Apple to produce line of Macs in the US next year” (Daily Local News, 12/6/12),

Apple CEO Tim Cook says the company will produce one of its existing lines of Mac computers in the United States next year. … “This doesn’t mean that Apple will do it ourselves, but we’ll be working with people and we’ll be investing our money,” Cook told Bloomberg. …

The company and its manufacturing partner Foxconn Technology Group have faced significant criticism this year over working conditions at the Chinese facilities where Apple products are assembled. The attention prompted Foxconn to raise salaries. …

Cook said in his interview with NBC that companies like Apple chose to produce their products in places like China, not because of the lower costs associated with it, but because the manufacturing skills required just aren’t present in the U.S. anymore.

He added that the consumer electronics world has never really had a big production presence in the U.S. As a result, it’s really more about starting production in the U.S. than bringing it back, he said.

But for nearly three decades Apple made its computers in the U.S. It started outsourcing production in the mid-90s, first by selling some plants to contract manufacturers, then by hiring manufacturers overseas. It assembled iMacs in Elk Grove, Calif. until 2004. …

As we learn from “Outsourcing” in Wikipedia,

Outsourcing can offer greater budget flexibility and control. Outsourcing lets organizations pay for only the services they need, when they need them. It also reduces the need to hire and train specialized staff, brings in fresh engineering expertise, and reduces capital and operating expenses….

In sending production to foreign suppliers, Apple acted just as Walmart and others do in Bangladesh, where they can then claim non-responsibility when workers deprived of all human rights burn up behind locked factory doors.

My 9/16/12 post “Burning up workers” has already fallen behind the times now that Bangladesh has entered the running with another 100+-victim fire.

Of course, those workers weren’t sacrificed for Bangladeshi consumers; see Jim Yardley, “Horrific Fire Revealed a Gap in Safety for Global Brands,” New York Times:

… On the third floor, where firefighters later recovered 69 bodies, Ms. Pakhi was stitching sweater jackets for C&A, a European chain. On the fifth floor, workers were making Faded Glory shorts for Walmart. Ten bodies were recovered there. On the sixth floor, a man named Hashinur Rahman put down his work making True Desire lingerie for Sears and eventually helped save scores of others. Inside one factory office, labor activists found order forms and drawings for a licensee of the United States Marine Corps that makes commercial apparel with the Marines’ logo. …

I’m not convinced that “the manufacturing skills required just aren’t present in the U.S. anymore.” It seems to me more that companies no longer wish to train workers as they once did or to pay them what they deserve. But it’s much better PR to say Chinese (or whatever) workers are so much better trained that Americans, what could our poor employers possibly do about it?

This graph of offshore outsourcing from “CHART: Top ‘U.S.’ Corporations Outsourced More Than 2.4 Million American Jobs Over The Last Decade” by Zaid Jilani, ThinkProgress, 4/19/11, goes only through 2009, but the relation to loss of US jobs is all too clear:

wherejobs

Under the very limited program to reverse this trend announced by CEO Cook, Apple won’t be training workers anyhow. As in China, Apple won’t own the means of production for any manufacturing it returns to the US, but will outsource production to other domestic providers.

Even though company executives routinely say all they can legally consider is profits to shareholders, the embarrassment factor and loss of face count for something too–or maybe, they count because consumers might turn against a company that cuts into the US job market by outsourcing production to factories that burn up workers.

Apple, like Walmart and their other colleagues, has been under some pressure in recent years to act or at least sound concerned about workers and environment–in any country where they are outsourcing production.

At the same time, the atmosphere in some other countries may not be as favorable to US companies as once thought, when at the end of the Cold War it was widely assumed that everyone in the world wanted to live and think like us and would behave just like us as soon as they were exposed to the virtues of democracy and free markets.

Evan Osnos, “Boss Rail: the disaster that exposed the underside of the boom,” The New Yorker, 10/22/12, moves from the 7/23/11 high speed train accident that killed 40 passengers (not even in three figures, but still noteworthy) to the underlying causes: political meddling in technological issues, career-building, fear of telling the truth to one’s superiors, bribery, and corruption. Osnos’ weekly letters from China reveal far more on such issues as human rights violations and what one of his other reports bluntly labels “kleptocracy.”

Wouldn’t it be nice if some American companies could avoid those problems, improve their own image, find good workers, avoid foreign entanglements, and get good press for keeping or adding jobs in the US?

I’ve been thinking about all this as the result of an interview I am writing up with West Chester resident Anil Budha, founder of GBP Financial Solutions, LLC.

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About politicswestchesterview

Nathaniel regards himself as a progressive Democrat who sees a serious need to involve more Americans in the political process if we are to rise to Ben Franklin's challenge "A republic, madam, if you can keep it," after a passerby asked him what form of government the founders had chosen. This blog gives my views and background information on the local, state, and national political scenes. My career in higher education was mainly in the areas of international studies, foreign languages, and student advising, most recently at Franklin & Marshall College in Lancaster, from which I retired in 2006. I have lived in West Chester since 1986.
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One Response to Offshore outsourcing: can it be reversed?

  1. Pingback: Job Creation and Onshore Outsourcing: An Interview with Anil Budha | politicswestchesterview

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