In president Obama’s Internet Town Hall yesterday he responded to a video question from a woman identified as Harriet in Georgia. Her question related to his plans to bring “outsourced” jobs back to America. Sadly he failed to directly answer her concern.
When our corporation was formed in 1977-79 we sold products for east coast electronics sources to OEM’s and military contractors in California and were called “carpetbaggers” as there were many qualified local sources right here in California. A few years later we were told that in order to be competitive we needed to sub contract with off-shore sourcing. My joking response, during a 1985 international electronics conference presentation in Anaheim, is that we import products from Catalina Island thereby qualifying them as “imported” goods.
Fast forward to a 1991 Plenary Session presentation that I made in Dallas at another international IEEE electronics conference where I addressed “protectionism” against the USA coming from a unified market of 345 million people in Europe. To crack that market, we had to move operations (or establish joint partnerships). Major factors in that decision included local manufacturing start-up and sustaining capital costs, ideal plant locations, banking and legal issues to employee hiring and worker benefits. Having a “local” presence helped us deal with smoothing of peaks and valleys related to different demand cycles between the US and the European markets.
Another aspect of my presentation dealt with establishing manufacturing operations closer to the US, just over the border in Mexico. This “in-bond” program is better recognized as “Maquiladora” plants. At that time, quoting 1988 data provided by the Committee for the Promotion of Investment in Mexico, Maquiladora’s comprised a work force of 460,000 in 1700 plants exporting $15 billion in products, duty free, to the US. In that presentation I wrote that unlike Pacific Rim manufacturers, who use Asian suppliers, Mexico imported 70% of its goods from the USA which creates jobs in America.
As I reflect back to that timeframe I am reminded of 1992 presidential candidate Ross Perot who warned us about a “giant sucking sound” of job losses to Mexico (and Canada) as he strongly opposed the NAFTA Agreement.
With close to 19 percent of the votes cast in that election many Americans agreed with Ross Perot who in truth possibly cost president Bush 41 his bid for re-election to former president Bill Clinton.
My point in providing this now ancient history is that major factors are considered by management before moving any part or all of a manufacturing operation be it off-shore to Europe, Mexico and South America or any of the many low cost labor nations in Asia.
To Harriet in Georgia, and everyone else who watched president Obama’s Internet Town Hall, I would opine that the vast majority of outsourced jobs are not coming back.
We’ve visited Pittsburg and Cleveland. Try to find Bethlehem Steel or huge smoke stacks belching soot into the atmosphere as we address global warming and greenhouse gas emissions. You can’t have both fully functioning steel mills and clean air simultaneously.
Try to find major appliances or big screen TV’s made in America. How about camera’s and infant toys. They are all imported.
Speaking of outsourcing. April 15th is just around the corner. Did you know that Bangalore, India may be processing over 100,000 tax returns as a cost savings for domestic CPA firms? Have you heard that US hospitals have outsourced to radiologists in Bangalore who are reading your x-rays?
With a focus on going green perhaps we should return to being an agrarian nation and simply feed the world.
There are more honor role students in India than there are children in the USA.
The top 10 percent of honor role students in India, the smartest one’s that will invent and produce future innovations worldwide.
USA under age 14 61.9 million
India under age 14 362.9 million
“I guess the answer to the question is not all of these jobs are going to come back and it probably wouldn’t be good for our economy for a bunch of these jobs to come back, because frankly there’s no way that people could be paid a living wage on some of these jobs,” the president said.
The truth is often hard to swallow!
Cook.
Is this what many say represents “cleaning our clock”
Another forgotten Obama promise, this guy (Obama) is a termer.
Of course, outsourced manufacturing doesn’t come back.
Manufacturing is not where the US can compete.
What the US needs to focus on is the things that can’t be outsourced.
Sure, people in India can innovate. But, lots of innovations rely on the appropriate culture. Something like the iPod could not have come from innovators in India or China. The iPod wasn’t the first mp3-player, nor is it the best one, but it’s intuitive user interface is what made it a success. And to come up with that, you need to be immersed in the culture.
Not surprisingly, the iPod packaging says “Designed in California, Manufactured in China”.
What you get when you are detached from the actual culture is Windows Vista, designed by geeks who didn’t understand the real usage patterns. Or Microsoft “Bob”, for anybody who remembers that fiasco (the “clippy” in MS Office is a leftover from that.)
Another reason why other countries may soon be ahead of us:
Here, we have religious nut-cases who are pushing to teach idiotic stuff like creationism in school. Heck, we even had a Vice-President candidate who supports creationism. She is now back to her Alaskan backwater, thankfully. But her acolytes try to push creationism into schools nationwide, right now in Texas.
We need to push real science education, not religion masking as science.
If you go to NationMaster.com, its statistics indicate that in 2005 only 1.6% of the total US employment was in Agriculture. Clearly, returning to an agrarian nation is not a solution. Due to high wages and competition for water, more and more of our food is being imported. For instance, the CA avocado industry expects to be dead in less that 5 years. Look at the supermarket stickers and you’ll be surprised how much of our meat is imported.
People are going to have to be very inventive and work smart using advanced technical tools to stay ahead.
For more than 20 years experts have advised that workers will hold an average of 7 jobs during their careers – how many are prepared for their industry or job to disappear? At current unemployment levels it seems a lot of people didn’t listen to this advice.
Although the world has grown economically inter-dependent, it has gotten neither safer, nicer, or less likely towards conflict. Population growth, and the rapid modernization of China and India, will increase potential for international conflicts over dwindling energy and fresh water resources. Economic dependence will definitely be a weakness and used as a weapon in such conflicts. Though somewhat less efficient economically, taking into account the irrational propensity of man to fight, and for aggressive dictators to arise, it would be far wiser for local world regions to become economically independent from others throughout the world. The U.S., Canada, and Mexico are joined at the hip, but the three of us could, and should have an economic system that could function well independently from the rest of the world.
The economic world should be constructed like the North American electrical grid. Yeah, electricity flows and is shared throughout the nation, but when trouble strikes, the grid disconnects, the trouble isolated with local regions continuing to generate and distribute energy apart from the rest. Economically, we can’t do that now, but war and conflict will come again, of that we can be certain.
Joe.
There is no question that the USA cannot compete globally in the manufacturing sector. We tried it by installing six figure automation equipment which only bought time as Asia quickly followed our lead. Not to contaminate this response I will not bring up allegations of foreign nations “dumping” their manufactured products in America.
The currewnt challenge for our schools and industries is to see what areas of opportunity are on the horizon and focus education accordingly. During my dozen years as publicity chairman of an International IEEE Conference and Exposition we brought the best and the brightest representing academia and industry from every corner of the globe together to address that very vital challenge. Were the Universities teaching topics that we need for tomorrow’s products? For domestic manufacturing we need to be honest about identifying our areas of expertice and focus future efforts accordingly.
When the president first began his getting people back to work program he claimed that he would “create” x number of new jobs. As we have all seen he has changed that tune to now saying we will “save or create” x number of jobs. President Obama now realizes that it is easier said then done. I might question him if he was referring to jobs that have already left or simply a focus on those which remain.
Before blowing off our automobile industry, and without blaming unions, I must shift gears and repeat what others have stated. There is no question that Walmart is a success story. People shop there because they can find reasonable prices as they struggle to stay afloat. If the Card Check legislation passes let’s see what impact that will have on their competitive prices.
My point on the auto industry follows: We drive Toyota vehicles that are ASSEMBLED in TN with parts procured from around the globe. I read that Nissan is also opening up manufacturing in that same southern state. How can they compete in the USA today when the Big 3 struggles in Detroit? You have to ask yourself what percentage of the US auto industry cost can be attributed to fringe benefits that were negotiated by UAW leaders.
Perhaps we can convince some of our remaining industry leaders to hang in there by easing up on regulations, red tape, offer incentives such as investment tax credits and other inducements to keep them in this country.
At a meeting with my former State Senator Dick Ackerman he handed me a glossy flyer from another state trying to lure manufacturers away from CA listing special incentives. The point being that job losses happen within the “upper 48” not just those “outsourced” to a foreign nation.
Almost 10 years ago, in my eminent domain research, I contaced Peter Enrich, Professor of Law from Northeastern University. At that time Peter was working with Ralph Nader in a property rights case involving a DaimlerChrysler Jeep plant in Ohio where the issue included their complaint relating to violations of the Commerce Clause. In this case they dealt with allegations of unconstitutional tax incentives and other breaks to lure business away from another state.
there is a lot more that can be said about this major issue called survival.
Larry M.
There is no question that the family farms have been taken over by huge corporations who through the use of automation and mechanization grow more food in America with less workers. In the 1930’s we had 6 1/2 million farms in America. By Y2K that number shrunk to 2 million farms while the average size grew from 200 to 400 acres.
My comment about feeding the globe was solely a knee jerk reaction to the focus on greenhouse gas emissions leading to costly and devastating “cap and trade” legislation that will bankrupt this country. We must stop this madness. Developing nations such as China and India get a Kyoto pass? So is the answer outsourcing even more of our industry output while driving up the cost of electricity for every American both rich and poor?
SAHS Teacher.
Both you and Larry M have hit on an issue that flies under the radar screen. Water, a quality of life issue.
There are three different water districts providing safe drinking water to the residents of Mission Viejo. El Toro, Moulton Niguel and our supplier, the Santa Margarita Water District, SMWD.
SMWD’s primary source of water is the Colorado River Aqueduct through our contract with the Metropolitan Water District of OC. A few years ago we were tasked with reducing our consumption by 15% while at the same time knowing that we will be adding connections to thousands of new homes and businesses in Ladera Ranch and other developments to our east.
The key word in this discussion is “zero sum gain.”
The Colorado Aqueduct supplies water to AZ, CA, COLO, NEV, N.M., Utah, WY and Mexico. Prior to the building boom in Nevada and Arizona we were able to take some of their excess. However those days are gone. We had to reduce consumption based on what is called the 4.4 MAF plan. AKA 4.4 million acre feet.
And yes we also get some of our water from the Delta in northern CA where 2/3rds of the water falls yet only 1/3rd of the people live. Our neighbors and farmers to the north are now too eager to share this finite source called water.
Think about the amount of water required to support 35 to 50 million people and the agriculture needs to feed these existing and new residents as we continue to build. I still have one article that has been overlooked by developers and city planners. A Sacramento Appeals court stated “California is fueling excessive development–particularly in southern California –by promising more water than it can realistically deliver.” How true!
PS: I know these facts from having been a candiate for our local water district in 2000.
Hi,
I am “Harriet in Georgia.” My name is Rev. Harriet Bradley. I was honored that my video question was choosen. I was in complete shock when I suddenly show my face and heard my voice during the town hall meeting.
I am just an ordianry American that loves her country. We have a voice and we must continue to let our voice be known. I was disappointed when I heard President Obama say that some of those jobs would not be coming back. That meant that I would still buy products here in the United States and then when I needed to call customer service or technical support for that product, I would continue to have trouble understanding the customer service person. Not to mention to continue to see (I mean literally) Americans lose their jobs because their job was sent overseas! I am not going to give up. I will continue to pray and let my voice be known!
Loosening regulation and corporate tax credits…the siren song of the Freidmanite economists. I’ve never seen so many people unwilling to acknowledge the failure of a philosophy and move on.
anon.
Instead of shooting at the messenger from an Interstate 5 overpass perhaps you can provide a better solution or propose workable incentives for American manufacturers to keep their companies, and domestic employees, in the states as they strive to compete in this global marketplace!
Larry, you should instead ask what percentage of the US auto industry cost can be attributed to fringe benefits that were negotiated by auto executives appointed by the big investment banks focused on short-term profits. The same investment bankers that sold our economy down the river.
We need new industries, not more subsidies for old industries and more concentration on managing the business functions of design, test, and marketing, etc. which can be done here while letting manufacturing migrate to lower cost producers offshore.
Harriet Bradley,
Welcome to the Orange Juice blog and congratulations on your video question being selected by President Obama!
I, too, share your concerns about job creation here in the US and the toxic practice of outsourcing jobs to save a buck and reward the fat cats at the top. We do need to keep vigilant and keep telling our representatives to bring as many jobs home as well as creating new ones here.
I keep waiting for the auto industry to snap out of it – to show significant innovation and perhaps have plans to produce very cheap electric cars in short order. It has not happened and it seems like they are still mired in job cuts, pension adjustments and management sandbagging. WAKE UP people and get an opportunity going!
Juice readers. Just a quick note that after seeing her comment I did exchange private emails with Rev. Harriet in Georgia in which I listed other examples of outsourced service sector jobs.
Her closing comment reads that a friend found the Orange Juice blog story by Googling “Harriet in Georgia” where there were over 300 links.
The Internet is truly a very powerful tool.
Larry M.
Not being a shareholder in any of the Big 3 I have no clue as to their executive compensation packages.
To repeat what I have stated previously “I do not support bail-outs for the private sector.”
Let me respond to your comment about design,test and marketing. many years ago I wrote an editorial that was published in numerous electronics newspapers and industry magazines. In their Executive Comment editorial I believe Electronic Purchasing newspaper used the title “A manufacturers Rights” in which I questioned conduct by a Fortune 500 firm.
Basically my issue was that we invest perhaps $100,000 in R & D only to find them sending a sample of our custom product to a contract house outside the USA for volumn pricing. That source did not have to undergo all of the trials and errors we endured creating that sub-system for which we often recoup the development expenditures in the product cost. In time we were unable to compete with an Asian source and lost that major program.
Another Fortune 100 firm told us they loved our design but could not afford our made in the USA product. To help us find a win-win they gave us a listing of Asian vendors who would produce our custom product so that their system could be competitive in their market. My point is that the market controls management decisions that we may be forced to accept in order to survive.
Let’s move ahead to your comment about creating new industries. R& D has been underway for years that the average person will not see for upwards of a decade. Case in point. Members of the IEEE have been working on battery technology for electric vehicles for perhaps a decade trying to address the max range one can drive without recharging as well as safe battery disposal.
These developments are not openly discussed as we surely do not wish to alert our competition to our research successes and failures.
“Case in point. Members of the IEEE have been working on battery technology for electric vehicles for perhaps a decade trying to address the max range one can drive without recharging as well as safe battery disposal.”
How many people own their own gas station?
Why should they own a battery station if they had an electric car?
There are electric bicycles right now on the road with plug in batteries that can be pulled and replaced in less time it takes to pump a gallon of gas.
IEEE needs to stop working on making a turtle a jaguar, and look at a standard battery design for electric stations (like gas stations) so a electric car owner can pull into and pullout their batteries and replace with fully charged ones. (Just like cars replace empty gas tanks with full one from a pump)
The government should not have any problem with figuring out the tax rate due on each battery exchanged. Not much different than those propane tank exchanges that have popped up all over the place.
And if you don’t think it can work because of the weight of cars and trucks, well “trains” are all electric, the diesel motors are used to power generators to run the electric drive motors, and a train weighs a lot more than a car or truck.
Red.
Help me out here. What incentive are you offering to firms who have already left the USA to bring jobs back home?
Pariotism is on the top of my list but providing a living wage with benefits in the global economy is tough to provide.
Perhaps I can pose a different question to all Juice readers.
Ladies. It doesn’t matter if you shop at Walmart or Sachs Fifth Avenue.
Let’s talk clothing. The brand names may change but where are they manufactured?
Check the labels in your closet and see how many read Made in the U.S.A. I just did for this illustration. Yes, we actually have some that read made in the USA. Let me share the other labels to make the point.
Cambodia, China, Costa Rica, Dominican Republic, Guatemala, Honduras, Hong Kong, India, Indonesia, Italy, Jordan, Korea, Malaysia, Mexico, Myanmar (Burma), Nicaragua, Pakistan, Phillipines, Sri Lanka, Taiwan, Thailand, USA and Vietnam.
Red. Perhaps you can convince the garment factory manufacturers, who have outsourced to every corner of the globe, to come back home. No wonder the chains can offer sales at 50 to 80 percent off the published prices. You have to wonder what kind of working conditions exist in these sweatshops. Perhaps we might ask where their clothing is made to see what response you get.
“a friend found the Orange Juice blog story by Googling “Harriet in Georgia” where there were over 300 links.
The Internet is truly a very powerful tool.”
Larry,
Thanks for an interesting story. I always find it fun when someone finds the OJ and leaves a post about what brought them here.
Hey Larry,
Apparently we were posting at about the same time and I missed your #18.
Jobs in IT are coming back to some extent from what my own sources say just because it makes more sense lately. For example, the costs of paying Indian workers to do computer programming work on say business intelligence software has risen quite a bit. The worker is not making double or triple what he was a few years ago, but the outsourcing company has pushed up the contract wages and keeps the difference. The costs of doing business with Indian companies for some services has closed the gap and US companies are finding that they’d rather have local contract help going forward.
I don’t know how we can get around all the cheap stuff made in china, but our family manufactured a little gadget to sell using China as the manufacturer a couple of years ago. The costs were rising sharply and when we need to do another round of items, we will have the injection molding done someplace in the US. We know fellow manufacturers who are now getting display racks made in the US/prison contract rather than using China to make their products as they have been doing the last few years. Wages have risen in other parts of the world and for speed and relative cost incentives it now makes more sense to do business in the US in some sectors.
I don’t shop walmart as a rule. I like to buy my own clothing from Nordstrom’s and I try to buy USA, if possible. I buy from local businesses and I will go to ACE hardware, for example, to get home project materials instead of going to HD or Lowe’s – using the big boxes for the big projects or if ACE does not have what I need. I shop the small ethnic markets and costco. I will pay visits to Whole Foods and support organic farming and green products where it is not cost prohibitive.
If the government closed loop holes to the advantages of outsourcing, or made attractive tax incentives for hiring US workers, I think most businesses would do what they could to use “Americans” to fill slots. jmo.
And Larry, I will not buy a crappy car from american manufacturers. I already have two american made cars and I won’t replace them soon. The ONLY way I would consider buying a new car if it were less than $15k and all electric. I would keep the extra car around for going more green for erands and travels that seat 2 people – using the other two cars for work projects and for hauling larger numbers of people for outings. I would consider this kind of car from a foreign manufacturer, too, but I am holding out and hopeful that detroit will get a clue in short order. I think there are a LOT of people who would be interested in what I am describing.
While I listed foreign sources of clothing above here is another input on textile imports.
U.S. Denim Trouser Imports in 2007-2008 (Statistical Report)
19 March 2009 – U.S. imports of cotton denim trousers significantly rebounded in the last months, and not only from China. The rise in shipments was stronger on the women’s segment with soaring imports from Cambodia, Egypt or Vietnam. Bangladesh and Pakistan were selected by U.S. buyers on the men’s segment. Prices heavily fell in China ahead of quotas’ elimination.
My point is that we can look at every sector to track those industries that have left our shores.
Where should we look next? Footware manufacturers where we import dress and casual shoes, sandals and sneakers from Brazil, China, Italy and Taiwan. Pick any category and I will research those industries that have been outsourced.
Hopefully someone can provide a category where that industry segment might reconsider the sourcing of their products.
There is one area that it somewhat safe. Agriculture where CA actually exports fruits and nuts. Sadly they are not the ones currently serving in Sacramento.
email response from Cedar City,Utah
I’m looking for the stats to back it up but I believe that it’s closing in on 500,000 US tax forms which are being outsourced to India this year. There are many more countries tax preparers who are now outsourcing their tax preparation to Bangalore, India beside those in the USA. Our CPA’s have to concentrate more on investment strategies for individuals and more middle class individuals will need to pay for those strategies instead of having those fees buried in their investment overheads making Wall Street mavens wealthy. A lot of this information direction is coming from Thomas Friedmans “The World is Flat”.
All of those old “rust belt” towns in the Midwest (Penn, Ohio, Indiana, Illinois, Michigan, West(by God) Virginia) with their 20% unemployment for the past 20 years who are exporting their youth to the south, west and southwest have situations that want to make me puke.
I do believe the Mr.Gilbert is on the track and prying out the truth of the matter. He certainly delves a lot deeper into the political subjects and reasons behind them than the politicos themselves.
COULD YOU POST SOMETHING ABOUT WHY BUYING FORIEGHN CARS IS OUTSOURCIRNG AMERICA’S JOBS?
H3(TOR
This is a tricky question. We drive a Toyota Avalon that was assembled in Tenn by American workers. If you ask around I believe you will discover that their employees do not get the same benefits as “The Big 3” in Detroit.
Does this qualify as an outsourced car? I’ll let you decide.
If you were to look at the material list of today’s cars you will find that the parts found in American cars are from all over the globe. Even our neighbor to the north plays a role in the US Auto industry. Check out the following info:
“For half a century, the risk of catastrophe has loomed over the auto industry in Canada, those who work in the plants, their families and the communities where they live. Though it was not possible to predict when and in what precise form a transforming crisis would strike, the calamity that has befallen the industry and that threatens its future has been entirely predictable. The critical decision that pointed Canada’s auto industry toward this doleful time was made in the 1960s. It antecedents went back further to the beginning of the 20th century.
For over a century, Ontario has prospered as a consequence of the location in its cities of an automotive industry, large enough to be globally significant. From the eastern edge of the Golden Horseshoe four hundred kilometers westward to Windsor, Southern Ontario is home to over half of Canada’s manufacturing and an even higher proportion of the nation’s heavy manufacturing. The jewel in the crown of Ontario manufacturing, which includes steel, chemicals and electronics as well, is the auto industry. Directly and indirectly, hundred thousands of jobs in Ontario are linked to auto industry. Southern Ontario has all the locational advantages, as an auto producer, of Detroit and the American Midwest. Ontario’s automotive industry has benefited from much in addition to its proximity to markets.
The first auto makers in Ontario were Canadian. The most famous of them was Oshawa’s Sam McLaughlin who made the leap from manufacturing horse-drawn carriages to producing the horseless variety. Because he could not manufacture engines as cost-effectively as the Americans could, McLaughlin began importing Buick and Chevrolet engines from Detroit. In 1904, Henry Ford opened a factory in Windsor, Ontario across the river from his Detroit operations, to manufacture cars.”
As the above story confirms we have also exported engine parts to Canada and elsewhere.
Buffalo has buffaloes, Bangalore has brains
Buffalo has buffaloes,Bangalore has brains,Protest in India