18 Feb Offshore outsourcing affects American workers
There has been so much media attention focused on the effects of outsourcing technology and offshore manufacturing that it’s finally shedding some light on the issue. Whatever the product, there is an effort to ship it outside America to cheaper labor. The effects of this are hurting many aspects of Americans’ industrial and personal lives. It doesn’t matter what you are making, whether you manufacture low- to high-tech products, maintain technology support call centers, write code or create the next generation of microprocessor chips: Outsourcing is affecting American industry and it will only become a larger issue.
We used to think that high-tech jobs were safe from the outsourcing vacuum. It was those nasty metal, rust belt jobs that we were depleted of. It was also thought that America would always be the high-tech job of the future. This is no longer the case. By the latest count, America is losing more than 2,000 jobs a day, across every field — from manufacturing to engineering and software design positions — due to outsourcing. I think that number is an underestimate since it’s unclear if it accounts for the other support jobs that are also affected by technology or manufacturing layoffs.
There are several reasons why outsourcing occurs. Corporations are under constant pressure from their investors to increase profits. Going from $9.00 an hour for tech workers to 27 cents an hour for labor, has prompted corporations to overlook other costs associated with outsourcing. Bonuses are defined at the year’s end and that is long term enough to these corporations. As the saying goes, “Wall Street doesn’t do real ‘long term’ well.”
Another reason outsourcing is growing involves America’s social infrastructure and cost structure and how they are very different than the countries’ we are shipping our jobs to. There is no OSHA, health care or child labor laws in many outsourced countries. In addition, more and more companies are viewing the world as a global marketplace and sometimes that requires building factories within outsourced countries in order to sell products. Also, manufacturing companies don’t want to be left behind: everyone else is moving offshore too.
American companies will do what they need to do in order to keep profits up but there are things that can be done differently; there are new ways of combating the flight to other lands. How can manufacturing companies slow down this tidal wave of economic poison? There are things that businesses of any size can do to catch their corporate breath.
1) Remove the hidden waste in your businesses. Not the people, but the cost of inefficient processes. Thirty to 40 percent of any given process may be wasteful and can be removed, making your products more appealing.
2) Get close to your customers. Design your company to make it so easy to work with you, that your customers won’t be tempted to look elsewhere. View your processes as your customers see them, not necessarily as you designed them.
3) Quality. Harden your processes. Design processes so they don’t allow for anything but superior quality. Nothing less.
4) Responsiveness and speed. Get your customers the right products, in the right quantity, at the right time for the best value.
5) Value. Compete on value, not price. After his trip to China, Rep. James Sensenbrenner, R-Wis., said “It’s not just hard to compete with 27 cents an hour: You cannot, just cannot, compete with 27 cent and hour.” Focus on value, not price.
6) Innovation. Keep one step ahead of counterfeiters by designing better and faster and adding more value to your products. If you find one of your products is being manufactured offshore, you have a choice of losing money or making the next generation so much better that you eliminate the copy cat.
There are always opportunities, start by finding new ones as the old ones are most likely gone. This is a new global economy. It’s responsive to the needs of your customers, even if they are not on this hemisphere.
Bill Bryant is a manufacturing specialist with Wisconsin Manufacturing Extension Partnership and President of eInnovate.