Romney: Pioneer in Outsourcing

[CBWx2]

Conservatives love to talk in the most stark of terms when discussing this topic. "There would be massive closing of businesses without off-shoring! Companies simply cannot exist unless they hired cheap foreign laborers to make all their goods instead of greedy, salary-gouging Americans to do it. Off-shoring saved us all!"

It is utter nonsense. Complete garbage. American business survived just fine before outsourcing, and would survive just fine if outsourcing was made illegal tomorrow. Interesting article on outsourcing. Couldn't help notice that "to avoid closing their doors due to crippling taxation and labor costs" was not listed among the chief reason for off-shoring coming into being or continuing to trend upwards.

Where America's jobs went
In a globalized economy, American corporations are rapidly shifting their workforces abroad
POSTED ON MARCH 18, 2011, AT 10:04 AM

Why aren’t U.S. corporations hiring?
Actually, many of them are. They’re just not hiring Americans. In the two years after the Wall Street meltdown triggered the Great Recession, large American corporations slashed U.S. payrolls by a net of 500,000 jobs. At the same time, they hired 729,000 workers overseas. As globalization transforms the world economy, in fact, many U.S.-based companies are shifting the balance of their workforces overseas. Ford, for example, reported in 1992 that 53 percent of its employees worked in the U.S. and Canada. By 2009, its North American workforce (by then Ford had expanded to Mexico) made up only 37 percent of total payroll. With 53 percent of big U.S. firms implementing offshoring strategies, “there is no job security now,” said Lauren Asplen of the IUE-CWA, an electrical-workers union.

When did offshoring become so prevalent?
The trend began in earnest in the late 1970s at large manufacturers such as General Electric. GE’s then CEO, Jack Welch, who was widely respected by other corporate chieftains, argued that public corporations owe their primary allegiance to stockholders, not employees. Therefore, Welch said, companies should seek to lower costs and maximize profits by moving operations wherever is cheapest. “Ideally,” Welch said, “you’d have every plant you own on a barge to move with currencies and changes in the economy.” Not only did GE offshore much of its manufacturing, so did its parts suppliers, which were instructed at GE-orchestrated “supplier migration seminars” to “migrate or be out of business.”

Is offshoring limited to manufacturing?
It used to be, until the Internet boom of the 1990s made it a white-collar phenomenon, too. As economic globalization gathers speed and technology erases geographic boundaries, firms now have instant access to educated workers all over the planet, allowing enormous service companies and small businesses alike to hire Web designers in Thailand, graphics specialists in India, and seismologists in Pakistan. White-collar workers who once seemed immune to offshoring—lawyers, financial analysts, even local newspaper reporters—are now in peril of seeing their jobs shifted to India, Eastern Europe, or China. In recent years, 13 of every 100 U.S. computer-programming jobs shifted overseas, according to the Bureau of Labor Statistics, making it the most at-risk occupation in America. “Any job you can think of now can be done by someone on the other side of the world for less cost,” said Matt Barrie, CEO of Freelance.com, which matches employers and freelancers around the world.

Are labor costs the driving factor?
Yes, but they’re only one reason companies prefer to hire foreign workers. By offshoring, firms can also sidestep more-stringent U.S. workplace and environmental regulations, and take advantage of foreign government subsidies designed to lure foreign investment. They can also tap a labor pool that in many cases is better versed in math and science than the U.S. workforce is. Thus, offshoring has evolved from a simple matter of cutting labor costs to “a multidimensional value proposition,” as the Conference Board’s Ton Heijmen puts it. Part of the value is that foreign workers can be required to work under conditions that would be illegal in the U.S. In Shenzhen, China, for example, Foxconn, the subsidiary of a Taiwanese company, employs 250,000 people to assemble iPods and iPhones for Apple, working long, monotonous days with a handful of timed bathroom breaks. Foxconn workers earn an average wage of $292 a month. Last year 18 Foxconn employees at the Shenzhen complex attempted suicide, 14 successfully.
 
Is the offshoring strategy working?
For employers, absolutely. In the third quarter of 2010, U.S. corporate profits hit an all-time high of $1.659 trillion, despite a U.S. unemployment rate hovering above 9 percent. By no coincidence, in 2009, nearly half—47 percent—of the revenues of the 500 largest U.S. public companies came from outside the U.S. And economic growth rates are much stronger overseas. From 1995 through 2008, the U.S. gross domestic product grew at an annual average of 2.9 percent—a crawl, compared with average annual growth of 9.6 percent in China and 6.9 percent in India. Businesses go where the growth is. “For a lot of American companies, their actual and psychic energy is focused abroad,” said Matthew Slaughter of Dartmouth University’s Tuck School of Business.

Is more offshoring inevitable?
Yes, unless the federal government decides to discourage it. Currently, the U.S. levies no tax on U.S. firms’ overseas earnings as long as those profits remain overseas. That policy essentially encourages companies to reinvest their profits outside the U.S. And to give companies even more incentive to hire overseas, the Internal Revenue Service allows companies that move factories abroad to deduct from their taxable income the cost of closing their U.S. plants. Democrats in the Senate attempted last autumn to close those loopholes and create incentives to repatriate profits and jobs, but pro-business Republicans blocked their proposal. “The whole concept of offshoring,” said Mark Toon of offshoring advisory firm EquaTerra, “is here to stay.”

Training your own replacement
“I’d like my new team to meet my old team,” Myra Bronstein’s boss said, by way of opening the meeting at WatchMark, a Bellevue, Wash., developer of software for cell phone companies. Bronstein and 17 other U.S.-based software testers were meeting the 20 engineers, fresh off the plane from India, who had been hired to replace them. Bronstein and her colleagues were expected to spend the final two months of their WatchMark careers training them. If they refused, WatchMark would withhold their severance payments. “It totally knocked the wind out of me,” Bronstein said. “It was the most difficult situation in the world.” WatchMark managers said they had little choice but to export the jobs. Salaries for U.S.-based software engineers start at $75,000 a year; India-based engineers start at $15,000. Bronstein was left feeling like a sucker. “I never would have gone into the technology field in the first place if I had a crystal ball and knew the bottom was going to drop out. Now they want much more from you for much less.” A lot of Americans know exactly how she feels.

http://theweek.com/article/index/213217/where-americas-jobs-went

[Chief Joseph]

We should force companies to insure their American employees. That will keep jobs here where they belong.

[spartan]

Conservatives love to talk in the most stark of terms when discussing this topic. "There would be massive closing of businesses without off-shoring! Companies simply cannot exist unless they hired cheap foreign laborers to make all their goods instead of greedy, salary-gouging Americans to do it. Off-shoring saved us all!"

It is utter nonsense. Complete garbage. American business survived just fine before outsourcing, and would survive just fine if outsourcing was made illegal tomorrow. Interesting article on outsourcing. Couldn't help notice that "to avoid closing their doors due to crippling taxation and labor costs" was not listed among the chief reason for off-shoring coming into being or continuing to trend upwards.

Things have changed in the last 50 years you know. I thought you believed in change

[Biggs3535]

Interesting article on outsourcing. Couldn't help notice that "to avoid closing their doors due to crippling taxation and labor costs" was not listed among the chief reason for off-shoring coming into being or continuing to trend upwards.

Maybe that's because you didn't read it well enough?

Where America's jobs went
In a globalized economy, American corporations are rapidly shifting their workforces abroad
POSTED ON MARCH 18, 2011, AT 10:04 AM

Are labor costs the driving factor?
Yes, but they’re only one reason companies prefer to hire foreign workers. By offshoring, firms can also sidestep more-stringent U.S. workplace and environmental regulations, and take advantage of foreign government subsidies designed to lure foreign investment.

[CBWx2]

We should force companies to insure their American employees. That will keep jobs here where they belong.

Actually, I don't think that any employer should provide health insurance. It's an undue burden, and quite frankly, isn't their responsibility. I believe that health insurance should be part of "the commons", or a part of the list of things that are owned in common and are kept in the public trust. The government should be charged with ensuring that everyone has access to healthcare, not private industry.

Interestingly, Obamacare, which I can only assume is what you are referring to, is actually projected to decrease the number of companies that provide HI for their employees, because many of their employees would actually qualify for subsidized care at a cheaper cost to them than what they currently pay on their employer plans.

Conservatives love to talk in the most stark of terms when discussing this topic. "There would be massive closing of businesses without off-shoring! Companies simply cannot exist unless they hired cheap foreign laborers to make all their goods instead of greedy, salary-gouging Americans to do it. Off-shoring saved us all!"

It is utter nonsense. Complete garbage. American business survived just fine before outsourcing, and would survive just fine if outsourcing was made illegal tomorrow. Interesting article on outsourcing. Couldn't help notice that "to avoid closing their doors due to crippling taxation and labor costs" was not listed among the chief reason for off-shoring coming into being or continuing to trend upwards.

Things have changed in the last 50 years you know. I thought you believed in change

Yeah, the thing that changed was that companies started to offshore! It created an unfair advantage for the companies that decided to offshore over those who decided not to, and created an atmosphere that forced companies that may have been reluctant to do so to have to in order to compete with the companies that did. Companies have to offshore now in order to keep their businesses because everyone else is doing it, not because American labor and costs were what forced them to in the first place.

Interesting article on outsourcing. Couldn't help notice that "to avoid closing their doors due to crippling taxation and labor costs" was not listed among the chief reason for off-shoring coming into being or continuing to trend upwards.

Maybe that's because you didn't read it well enough?

Where America's jobs went
In a globalized economy, American corporations are rapidly shifting their workforces abroad
POSTED ON MARCH 18, 2011, AT 10:04 AM

Are labor costs the driving factor?
Yes, but they’re only one reason companies prefer to hire foreign workers. By offshoring, firms can also sidestep more-stringent U.S. workplace and environmental regulations, and take advantage of foreign government subsidies designed to lure foreign investment.

Actually, I think you didn't. That statement is talking about why companies have chosen to offshore. It says nothing about companies being FORCED to offshore in order to keep their doors open in the face of American taxation and labor costs.

[Chief Joseph]

Nice. Now explain where the money that paid for that HC ultimately came from.

[CBWx2]

Nice. Now explain where the money that paid for that HC ultimately came from.

Taxes?

[Freddy]

Nice. Now explain where the money that paid for that HC ultimately came from.

Taxes?

And please explain why I should be forced into a common pool when I could select a better HC plan elsewhere? Is it right to reduce the care I would get just so somone else can get care?

[Chief Joseph]

I put the word "ultimately"in there for a reason. Stop playing dumb. For people to pay those taxes they have to make a product or provide a service.

A workforce that must be insured comes at a higher price than one that does not. Forced Health Care will drive jobs out of this country, there's no way around it. That's what they should have called it from the beginning, Forced Health Care. Instead all the gullible Obamites were falling for "Free Health Care."

[CBWx2]

I put the word "ultimately"in there for a reason. Stop playing dumb. For people to pay those taxes they have to make a product or provide a service.

A workforce that must be insured comes at a higher price than one that does not. Forced Health Care will drive jobs out of this country, there's no way around it. That's what they should have called it from the beginning, Forced Health Care. Instead all the gullible Obamites were falling for "Free Health Care."

Funny how America is the only world superpower that does not have a universal or "forced" healthcare policy, yet, isn't the only world superpower that has huge, multinational corporations, small businesses, or a competitive job market. Your statement would hold more merit if there wasn't already proof that a country or countries can have both a universal healthcare system and a thriving business sector.

[Chief Joseph]

Oh, you can have one alright, they're just not very good.

[CBWx2]

Oh, you can have one alright, they're just not very good.

Some are very good, some aren't. One thing is certain, however. There isn't a single country that has a universal healthcare system where the majority of citizens would opt to scrap it to convert to our system. Not even the staunchest of conservative candidates in those countries would dare threaten to repeal their healthcare systems. Not if he wanted to get elected.

[Chief Joseph]

We'll see how that looks ten years from now when the U.S. is no longer footing the world's bill for medical research.

[Biggs3535]

Interesting article on outsourcing. Couldn't help notice that "to avoid closing their doors due to crippling taxation and labor costs" was not listed among the chief reason for off-shoring coming into being or continuing to trend upwards.

Maybe that's because you didn't read it well enough?

Where America's jobs went
In a globalized economy, American corporations are rapidly shifting their workforces abroad
POSTED ON MARCH 18, 2011, AT 10:04 AM

Are labor costs the driving factor?
Yes, but they’re only one reason companies prefer to hire foreign workers. By offshoring, firms can also sidestep more-stringent U.S. workplace and environmental regulations, and take advantage of foreign government subsidies designed to lure foreign investment.

Actually, I think you didn't. That statement is talking about why companies have chosen to offshore. It says nothing about companies being FORCED to offshore in order to keep their doors open in the face of American taxation and labor costs.

I'm only left to assume that you aren't familiar with the notion that businesses are in business for the evil goal of making money.  When circumstances arise that make it more difficult to make a profit, such as rising labor costs, ridiculous regulations and taxes, those businesses will take their operations elsewhere.

[spartan]

Yeah, the thing that changed was that companies started to offshore! It created an unfair advantage for the companies that decided to offshore over those who decided not to,

And why was that? Because the global economy changed. Doing things the way the used to 30, 40 or 50 years ago ain't going to cut it these days. Your company will go bust and nobody will have a job.

Look, I am not saying outsourcing is inherently good, neither am I saying it is inherently bad. I am saying that it can be good or bad dependent on the circumstances in which it is being done. What I do know is that sticking your head in the sand and saying let's go back to the 'good old days' is only going to result in nobody having a job. Neither can we win with protectionism. We need to trade with other countries because we need resources. Likewise we need to trade with other countries to sell the stuff we make. If we slap tariffs on everything to save American jobs, guess what the other countries are going to do? We might have the workforce to build things, but we won't have a market to sell it because we will be priced out of the market. I certainly don't have all the answers but ignoring basic economics isn't going to help.