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Who is to blame for US outsourcing
39

Who is to blame for US outsourcing

Who is to blame for US outsourcing

(OP)
I bring this up not to start a political war. I am an independent by the way but find myself leaning more towards the conservative side as many engineers do.

Democrats are starting to blame Republicans for loss of jobs due to outsourcing.

The way I see it both Democrats and Republicans are responsible for not securing good trade agreements. It seemed both supported NAFTA heavily in 1992. That is but one small treaty governing trade for North America.

What is the solution. I honestly don't believe any politician will have a solution for such an economics driven problem.

RE: Who is to blame for US outsourcing

5
Politics is the Big Business of Power and Control.  Politicians have very little direct influence on what companys do and the effects on the economy other than determing how much taxes anyone person or business pays as well as stimulating the economy through an influx of their own business whether it is military expenditures for equipment or infrastructre improvements such as the Interstate Highway Development.  In my opinion most politicians are just trying trying to figure out which "sound bites" will get them enough votes to get into and stay in office.

The following is an article in an "American" forum to promote offshore outsourcing of cad services to a gentleman who is educated at the University of Michigan and now has a business in India doing, you guessed it, selling cad services to US businesses.  He states how you should break it gently to those employess that are your friends:
http://www.webpronews.com/it/itmanagement/wpn-18-20040727OffshoreCADOutsourcing.html.

I wonder if this person was accepted by the University of Michigan on a quota basis which resulted in the  exclusion of an American?

RE: Who is to blame for US outsourcing

    Personally I think that outsourcing has alot of similarities to the dockside(trickle down) economic theory. Which makes me believe it favors the Republican viewpoint. It looks like outsourcing is going to benfit only the upper tax bracket by giving them another source of cheap labor. It also appears that the more work that gets off-shored the smaller the middle class will get. As I stated in one of the other topics, off-shoring has taken my job with an engineering firm in the Chicagoland area. I have been out of work for over a month now, after being laid off and re-hired at a lower wage without benefits, and am still looking with no bites yet.  One of the main points should be not who started it..but how are WE going to stop it. If there was a way we would get the rest of country to realize the type of foundation for the future we are laying, maybe then we could get enough people to stand up to the companies that are off-shoring the engineering and put a stop to it.
  I do however disagree with you pmkPE in thinking that politicians have little direct influence on business. If the policy makers would quit giving the corporations tax breaks and other incentives to companies that do outsource the work, I'm pretty sure it would stop. It still boils down to we the people though..and we will have to stick together, and start being heard by our representatives. If we can get them to understand that we're not going to allow all of the good paying jobs overseas, then hopefully we can get back to work.
  Sorry if I seem a little on the doom and gloom side, but I was the first one in my family to go to college and get a degree. I did it because my father was a truck driver amd didn't want me to have to live that kind of life. Now looking back I'm thinking it would have been safer to get a CDL......

            Take it Easy...
                  Don

RE: Who is to blame for US outsourcing

3
Here is my 2 cents worth;
There is no solution to outsourcing (loss of work internal to a company but is still performed in the US by another company) or off-shoring (work that is eliminated in the US and is obtained over seas). The outsourcing and off-shoring of goods and services is the direct result of the IT revolution and productivity improvements that occurred during the 1990's. This IT revolution enabled underdeveloped countries to begin prospering under a global economy that is still evolving. The world no longer consists of isolated economies and separatist behaviors. We have instant communication allowing us to conduct business transactions, video conferencing and exchange information with the press of a button.

One of two things will happen - either our standard of living in the US will diminish and eventually intersect with the world's standard of living OR we will have another discovery or revolution (not a revolt) that will enable the US to capture the lead.

People like to blame the government and politicians for outcomes that really can't be prevented. Globalization was bound to happen and it did! We live in a free society - there should be no entitlement in the US. I don't want the government to force quotas down the throats of companies for the sake of keeping work here in the US. This approach being proposed by the Democrats will slow our current recovery and result in a severe recession. Those who want job entitlements in the US should live in a socialist society.

Despite current unpopularity with the global economy, I believe we will make the necessary adjustments under globalization and continue to develop innovative ways to further increase productivity.

RE: Who is to blame for US outsourcing

In my opinion, it comes down to profits that the company can make.  And who is the President of the company trying to appease?  That would be the stock holders and the board.  Which is funny, if you own any mutual funds or stocks, you are contributing to the problem.  Everybody wants their investments to rise.  But back to my point, if the CEO wants to turn a bigger profit for the fiscal year so that he can get his 15 million dollar bonus, that means he has to take it out from overhead.  That means that employees will be cut loose and then he will get the same function/services from a cheaper source.  And where can you get cheap labor doing the same thing?  That’s right, from over seas.  Capitalism has its ups and downs.  Don’t get me wrong, capitalism is what made this country great, buisness is business.  But I think we are going to see a downward trend of buying in this country because the unemployment rate will start to rise.  That is where the politicians will step in and realizes how bad the practice of bleeding out work out of the USA can affect the economy.  At that point the politicians will bring in the tax tariff to target receiving/sending services over seas.  This will force the companies to hire within the country and give the USA economy a boost.  It has to get worst before it gets better.

I guess to answer the question; the people to blame would be the CEO/President of the company.  They made a decision to lay off their own people and send the work over seas.  They are the ones who start the ball rolling for this action to start.

Go Mechanical Engineering
Tobalcane

RE: Who is to blame for US outsourcing

For many years now the only route to profit has been cost
reduction. As most manufactured items and services move
into the commodity class there is only one way for
corporate profits to continue and this is cut costs. The
interesting thing is where this all ends. People loose jobs
and buy less then companies reduce prices in a frantic
pace to stay afloat. Some companies fold and release more
workers then even less is purchased. Positive feed back
for us engineering types. What happens when there is
excess capacity world wide and not enough people making
enough money to afford discretionary purchases.
The class of people who contribute something are going to
loose out. Witness the squeeze on doctors. They are not
making the money they use to and their fortune will
continue to erode.
The new mentality for earning money is
"What can I take from someone" instead of what can I
contribute for a wage.
 

RE: Who is to blame for US outsourcing

Jeez, I hope you guys continue to outsource engineering work, otherwise I'll be out of a job.

Mind you it was the same in the 80s when we did work for the Americans, and the Koreans, and the Japanese and the Germans and the Malaysians.

And the nineties when I did work for the British and the Americans and the South Africans and the new Zealanders.

And now I do work for the Indians, the Chinese, and the Americans, the Poms, the Germans, and the South Africans.

It's called global trade, fellas, it's always existed and hopefully it always will.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing



The race for the lowest price is a race to the bottom and we all end up losing.  We also all participate in our own demise, both through our investments and our own purchasing patterns.  It's an inevitable result of capitalism's value system.  Businesses are algorithms that maximize profit and don't consider outcomes beyond this unless they can be quantified in dollar terms.  The results are entirely predictable.  

You can counter-lever against this tendency with taxes and tarrifs and direct this revenue toward social spending to redress the impacts somewhat, if your government has a mind to do that, but the effect is ultimately limited by the fact that trade is a two-way street.  There's always someone who'll lobby the government NOT to implement those tarrifs because they're depending on the low import prices, or because they're depending on sales to the same country and worried about countervailing duties.  Add to this the fact that capital is mobile and there's always somebody else who wants the jobs and economic growth desperately enough to cut taxes or even take money from the public purse and use it to subsidize industry.  And even if you wanted to try it, an effective tarrif system for services provided over the Internet is just about impossible to imagine.

Inevitably, some of the developed world's economic resources will trickle away toward the developing world.  That's a good thing for the developing world, in the short term.  In the longer term, the only way the developing world will be able to sustain its industrial capacity is through increased local consumption as the developed world's purchasing power evaporates with the high-paying value added jobs it loses.  Unfortunately, that's bad for the planet.  If consumption patterns in India and China move toward the Western model, with these countries' massive populations it's doubtful the planet can avoid choking in its own filth- especially when you consider the lax environmental regulatory conditions under which much of this third- and second-world industrial development is occurring.

What galls me is the profiteering and selective application of tarrifs in the developed world.  We still have huge tarrifs against products from the very poorest countries (i.e. the ones in Africa with no buying power and hence no political clout), and even where there aren't tarrifs the lion's share of the profit on items like clothing and agricultural products is going to parasitic distributors and retailers who add little value.  The manufacturing jobs go offshore, but only a small fraction of the benefit follows.  The majority of the profit generates wealth for a select few in the western world, and our tax structures ensure that it contributes virtually nothing toward dealing with the societal tragedies that result from the export of jobs.  It's the middle class who suffers, because the jobs that are leaving are the ones that underpinned their way of life.

RE: Who is to blame for US outsourcing

Well, it looks lke everyone has their own unique viewpoint on an issue that effects at least half the populace directly. Funny that neither party is discussing this as a negotiable item for the November elections.

For one thing, I think there is an economic  theory that the best way to sustain  long term economic growth is to spread the wealth around; if you increase the stratification of wealth then not only do he poor get poorer but the wealthy don't do as well either. This is true not only on a national level but also internationally as well, and as long as the intelligentsia have a pet theory that is not countered, then modern "liberal "politics will let it play out that way.

Another effect is the basic elementary economic notion that , if open trading between nations is good overall, then there is no basis for not allowing nations to compete economically on service jobs that can be easily shifted overseas.

And finally, the way most modern democratic republics have evolved, only organized interest groups are heard by the policymakers and legislators, while the vast majority of the unorganized electorate are not heard. Perhaps the rationale is that they are heard indirectly  via the interest groups that depend  on the electorate's support in some way. In any case, since corporations are officially and legally "persons" with the same legal rights as individuals, and since it is in the interest of these "persons' to submit an organized lobbying effort to minimize their overhead by shifting high paying service jobs to low wage countries, the practice will grow  in an unbounded manner until we are all at the same wage level.

RE: Who is to blame for US outsourcing

“Funny that neither party is discussing this as a negotiable item for the November elections.”

Well I don’t think it is on their radar screen yet.  The escape goat for today’s high unemployment rate is the technology big bubble bursting and company scandals (Enron syndrome).  In a way, it is the politicians best interest to “look away” for awhile until the hurting companies regain there footing in the market place.  It all comes down to money and profit.  Once the hurting companies are back in the black, the politicians will swoop in like a super hero and proclaim that “out sourcing over seas is bad and hiring our own is good”.  

Go Mechanical Engineering
Tobalcane

RE: Who is to blame for US outsourcing

2
The only person you can truly blame for outsourcing is yourself - the consumer.

If you were willing to pay top dollar for the products made in America so that companies would have what they felt to be the desired profit return there wouldn't be a need to outsource.

Buy products made in America with American materials and don't buy anything outside of that and your outsourcing problem goes away.

Anything else is just a complication of the issue and trying to point to something that isn't truly a root cause.

BTW, similat to GregLocock, I don't mind American outsourcing in the slightest.

RE: Who is to blame for US outsourcing

I believe that WalMart is now the largest retailer in the United States. They achieved this success by offering consistently low prices, and management aggresively promotes this idea in their ad campaigns. The end result is that peolple love to shop there. The next time that you shop in one of their stores, check to see where their products are manufactured by looking at the labels. You will have difficulty finding ANYTHING that was made in the United States. So if the goal is to buy American, maybe you shouldn't be shopping at WalMart at all. Whether or not you are conscious of it, you are making a decisive statement when you lay your money down.


                                              Maui

RE: Who is to blame for US outsourcing

We need to all get used to a global economy - it's only going to get more global with time.

If you can hire a qualified individual in Indonesia for $30k/year to do the job of a $60k/year person in the U.S. and the result is the same, then you'd be stupid not to do it.  There are tasks that can be packaged for a remote performance.  Other tasks cannot be successfully packaged and have to be done here (it is hard to drill a Wyoming Coalbed Methane well in Bangladesh).

The interesting thing is that just a few years ago I would have written "... qualified individual in ... for $10k/year to do the job of a $55k/year ...".  Nothing inflates wages like the presence of work.  So you start pumping money into a poor economy and the people making the good money spend it.  They spend it in stores and buck up employment in the retail industry.  They spend it on stuff and buck up manufacturing industries.  In a pretty short time, the differential across markets shrinks to the point that wholesale job exports stop making economic sense.

I am absolutely convinced that in this century the world will make the same sort of progress the west made in the last century.  Within the next 100 years it will be as common for an Indian firm to use U.S., Canadian, or Australian tech support as it is today for a U.S. firm to use Malaysian tech support.

Exporting jobs is an economic aid program that has a heck of a lot more chance of success than any government program ever has.

David Simpson, PE
MuleShoe Engineering
www.muleshoe-eng.com
Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

The Plural of "anecdote" is not "data"

RE: Who is to blame for US outsourcing

I find it vaguely amusing listening to the contributors in the US contemplating the demise of their manufacturing industry. We Brits are in certain respects envious of the US, which at least has a manufacturing industry to worry about! The bulk of US utilities are US-owned. Your government imposes unlawful import restrictions on European steel to protect US steelworkers jobs. You pay next to nothing for gasoline. You guys don't have it so bad!!

Have a look at British industry, if you can still find any bits big enough to see from 4,000 miles away. Struggling? I can find few enough bits of British industry that I can recognise from my own childhood, not to mention the ghosts of the great engineering companies from my father's and grandfather's era. The problems you are seeing are no different to what is happening all over the Western countries.

Globalisation is collectively our own fault to a large degree: we sold our technology to the upstart nations and pocketed the profit; our companies went to the East for cheap labour and we bought the products; we shut down our polluting industries to move the mess onto some third-world country; our oil companies - and the US is the chief offender - set up shop all over the world to drill for the black gold to feed our vehicles; and so on.

None of those things could have been done without the western nations wanting more for less. Does the old phrase 'reap as ye sow' strike a chord?

And finally, to quote Bruce Springsteen,

"They're closing down the textile mill, 'cross the railroad tracks.
Foreman says 'these jobs are going boys, and they ain't coming back'"

A star for the first person to get the album and track title!

----------------------------------

If we learn from our mistakes,
I'm getting a great education!

RE: Who is to blame for US outsourcing

2
I had been involved (in my last company) heavily from a technical point of view with outsourcing engineering tasks to other countries.  The top level management view was that an overhead rate of $15 USD per hour against our internal rate of $100 USD was a no brainer BUT what they didnt consider was that for evey hour of design and development we used from (in this case) Taiwan we had to hand hold for an equivalent hour thus the rate was $115 per hour.  The rate of rework was high and had not (over three programs) reduced by any great amount.  

Another draw back was that we were essentially training foreign workers whilst laying off our own, thus leaving a widening experience gap that in 15-20 years will be crippling.  

Imagine a war in Asia for instance that would sever our ties to that particular area and there would be no one at home with the relevant experience to pick up the work.  

I believe this is a dangerous path to tread without back-up.

My real point, after this tome, is that the savings associated with outsourcing to "third world" countries (couldnt think of a less demeaning description - my apologies) are not as they would first appear.

Enough said, I will dismount from my soapbox :)

RE: Who is to blame for US outsourcing

Who is to blame for US outsourcing?  I am when buy products that are imported or designed outside of the USA.  I can afford to buy domestic, but I like to get the best value for my dollar.  Apparently, most other Americans like value too, including other people making comments here.  My recommendation is if you don’t like outsourcing, spend your time trying to find domestic products instead of shoping for value.

RE: Who is to blame for US outsourcing

2
Who is to blame for US outsourcing?

It is those damn poor people in other countries.  Shame on them working for low wages.

We have got to put an end to this!

RE: Who is to blame for US outsourcing

The products I am referring to are gas turbine aero engines and the technology and expertise to install them in aircraft, helicopters, tanks etc.

Once this experience is left to die out and/or exported then we will no longer have our lead in these fields.  I nor anyone I know, will ever buy one of these products but they represent a massive export base for this country.  

I left the UK for the USA many years ago precisely because engineering was being swapped out for a service economy - well guess what, if we dont produce saleable goods, then there will be no one with money to but those services.

I can't fault the logic of "spreading" the wealth but we need to keep our core competencies (sp?) in some fields at least to allow continued growth for this great country.

In reference to your last comment, I actually do hunt out U.S produced goods where at all possible since to me (in my tattered mind) it still represents the quality I require.  This is getting harder to do and I am very fortunate to be able to spend more for some items to get that "Made in USA" tag.

As a side note, when I became a U.S. citizen, a neighbor gave me an American flag for the front of our house...it was made in China!!

RE: Who is to blame for US outsourcing

Outsourcing is part of an economic cycle. Now, you outsource parts to Taiwan, Korea, etc. When those countries standard living start to increase, they too will outsource it to another third world countries.

SLTG

RE: Who is to blame for US outsourcing

QCE, perhaps I was too quick to blame myself for outsourcing.  It is all a mater of perspective.  

Your comment made me laugh out loud.

Thanks for your extraordinary insight.

CRG

RE: Who is to blame for US outsourcing

ScottyUK, "Born in the USA" is the album. The song is titled "My Hometown". This song paints a sad but accurate portayal of the gradual erosion of the manufacturing base here in USA.


                                         Maui

RE: Who is to blame for US outsourcing

“It is those damn poor people in other countries.  Shame on them working for low wages.

We have got to put an end to this!”

Yes, lets talk about those ingrates who are trying to support their families.  The flip side of us loosing our jobs, on the manufacturing side in the third world countries that are run by USA companies or USA companies hired third world companies to do the dirty work for them, I am sure that the workers are being taking advantage of.  If OSHA or unions ever got a chance to go over and see the conditions that the workers are working in and to see how they are being treated, they would be applaud.  Wonder why their wages are so low, one part is economy and the other is that the company (third world and ours) knows they can get away with horrible working conditions (no over head to keep employees comfortable), most are women desperate for work (down to the bone wages), and long hours (if the employees don’t get the order done, they will hire other people to replace you).  Worst of all, some turn to child labor, the American flag the you have bought was probably made by a twelve year old who worked 70 hours for the week and only got paid $1 and hour.

Now being a son of an immigrant, I have mix feelings for this practice.  Yes it is bad to take advantage of them, but they need the work.  If the work was not there, there could be worst ways to make money.  From their perspective this is great!  I have seen a documentary on PBS on working conditions in third world countries.  Most workers that they interviewed were glad that they had jobs so that they can support their families.  That they were in worst conditions be for the companies opened up in their town.  

I guess my point is that if these third world country workers were treated like first world employees, third world country cost to produce product would start to reflect the first world’s.  I don’t want to take the work away from them, but they should not be taken advantage of because of the greed of the company.  

Well I’m going home, have a great weekend everybody!

Go Mechanical Engineering
Tobalcane

RE: Who is to blame for US outsourcing

Just a point there. I've been to countries where the pay for a dangerous day's work for an adult was $2, so $10 for a ten hour day in a shed is looking pretty good.

That is the advantage of industrialising, sure it is ugly in many respects, but the money DOES filter down. Not in a fair fashion, but overall it does eventually get to where it is needed.

If the Isolationists won, and Fortress USA closed its borders to all trade, what sort of standard of living would you have? Who'd be picking the tomatoes? Who'd be buying your airliners?



Cheers

Greg Locock

RE: Who is to blame for US outsourcing

2
Hello All!

I agree with metengr that there is no way to stop what is happening, and I cannot blame poor people in developing countries from jumping at any opportunity to provide for themselves and their families.

That said, I have heard reports that while prices in the 1st world may be slighter lower due to off-shoring to low wage countries, the wages paid to the workers is so low that the profit margins for companies involved in this practice are skyrocketing.

I recently heard of "free trade" or "fair trade" coffee, where consumers are guarranteed that the product they are drinking was not produced under conditions that exploit the workers.  And I just found the link below:

http://www.fairtradefederation.com/index.html

If there must be off-shoring, at least let it result in a substantial improvement of the living conditions to the newly employeed third world workers.

Perhaps politicians in the 1st world could be encouraged to pass legislation that bans imports that were produced under exploitive working conditions.  This of course would help workers in the developing countries, and it might make off-shoring of some jobs less attractive.

RE: Who is to blame for US outsourcing

3
AS many of you have stated the demise of manufacturing has been progressing for my entire 25 years in the machine tool business. The loss of companies like Ingersoll Milling Machine and many other machine builders has left a sadness every mechanical engineer should feel, whether or not you are winning or losing from global competition.  Only in America would our goverment allow the divisions of Ingersoll to be purchased and operated on our soil by the Chinese. Remember Henry Ford said years ago, in order to create wealth in this country you need to manufacture things. We as manufacturing people make this economy move, we buy what we can afford and have always purchased products we helped create.  We are in a difficult transition into a technology based versus manufacturing based economy of which thousands of our citizens will not fit in. Our polititians say to just retrain them and everything will work out. That is just blowing smoke. As an Engineering Manager, I have seen and worked with hundreds of people in the trades of whom their careers are over, lives torn up, and are finantially ruined. Our standard of living will drop, just as in the trades, as we attempt to earn a living by tradeing service dollars with each other.  What is wrong with protecting the standard of living we enjoy and that of our children? We as Americans, as in this string, need to stop being so idealistic and do what is best for our citizens, we are the country. It is facinating to watch how capitalism continues to churn and recreate itself, but there will be seious consequences for all of us.  By the way, I never shop at Walmart, Dollar stores or any other outlet for exploiting cheap labor, and will pay more to purchase American goods, if I can find them.
Dorfer (Mechanical)

RE: Who is to blame for US outsourcing

Dorfer
 The way the national debt works is the government sells bonds to finance the ongoing operaton of the government.  Guess who is the largest holder of US government bonds?
  The Chinese and the Japanese, whether Smoky the bear needs to put out a fire or the army needs to buy some bullets, it depends on a foreign government or bank buying US bonds.  They make enough profit on the intrest and other things they sell to buy Ingersol Rand and whatever else they want.  Look around your desk, how many things can you find made in China? If they sell us enough fifty cent items they can start buying whole states.
The Wall Marts etc. selling cheap consumer goods  are the way they have gotten a hold on the country.  They hold the mortgage on this country and call it in when they want to.  It may not be fatal now but it would hurt if they stopped "loaning" us the money to run the government. I don't care if your Liberal or Conservative, Republican or Democrat running the national debt to record heights is beyond stupid it's treasonous.

RE: Who is to blame for US outsourcing

The original post is entitled “Who is to blame for US outsourcing?”  Why blame anyone.  We need to understand it If another country was outsourcing their jobs to our country we would be thrilled to have it.  I think the concerns are that the corporate environment that our parents and/or perhaps our grandparents worked in is changing.  It has only been a blip on the time line of history that companies had direct employees and set them up for health care and pensions.  Prior to just 100 years ago everybody either was an indentured servant, worked for themselves or with relatives and most likely worked on the farm.  In the agricultural pre-industrial era people grew their own food, hunted their own meat etc.  

With the sky rocketing costs of health care (which is not helped by multi-million dollar law suits for personal injury) greedy corporate executives robbing pension funds, and the increase in competition it is no wonder that company’s here and abroad are looking for ways to cut costs.  It is their responsibility, it is necessary to stay in business to make money via profits.  Money and profits are not wrong, or evil.  It is a fact of business that without making profits, raises are not funded (cost-of-living and merit), capitalization is also not possible - building up with new buildings, vehicles, equipment and new staff.  If a company does not grow, or earn more they must cut costs to maintain a margin in the black.  If they don’t they go under and then even more jobs are lost.

College taught us how to use our abilities to solve technical problems, call it a tool box - college didn’t tell us the answer to many problems - only what “tools” to use to evaluate and solve the problems that we would encounter.  Well now we need to utilize our “tools” and solve our problem of how to be in demand.  It is called marketing and yes it may also require relocation (there also is telecommuting which is a form that many outsourcing jobs are taking).  Outsourcing of blue collar jobs has been going on for decades but the white collar crew was not concerned until it started happening to them.  (After all a recession is when your neighbor is unemployed, a depression is when you are unemployed). Remember the exodus of jobs from the rust belt to the sun belt?  Hey, what’s the problem, if they wanted to work they could have relocated instead of griping about what things used to be like. Now the exodus is from the sun belt to Mexico and then in many cases from Mexico to China; some even skip Mexico and go straight to China! Having an education should  mean that we should be better equipped to recognize changing trends and be ready to deal with those changes.

One solution is to support our team, i.e. the people we work with, rather than trying to cut them down so we appear to stand taller.  Help them learn their job better.  When everyone performs better the company (i.e. the team) benefits which results in better profits and therefore better raises and working conditions for the team.  The Army has a marketing call “Be Your Best”.  If everyone on the team could learn as much as possible, to do as much as possible they would not only be more valuable to their company but also to their selves.  When you look for a job an employer doesn’t need to hear what you want from a position with them, (they already have a good idea) they are looking to hire someone so that someone will do something for Them so they/their company can be more productive, have better quality etc in order to make money and improve profits and stay in business.  We as engineers need to market ourselves better.  Our first client is the company that we are working for, not just the other company’s that our company sells to.  Also think of your  associates as your clients, by helping them you help the company and in turn that helps you - remember better conditions, raises etc through growing profits.  If you’re concerned that you won’t get the recognition from helping others do their jobs your wrong.  Your associates will see it and they will not only appreciate you but they will remember you when it comes time to refer someone for a project or a job.
Which leads me to the next part: remember the type of job conditions where people signed on to a company for life, with health benefits and a pension is probably only a blip in history.  Therefore the better known anyone is, the better chances they have of finding new work when the time comes to move.  Those people you helped in the past will remember you and someday one of them is going to be somewhere that their influence can help you.  If you are known as a chronic complainer only out for your self - do you think the people that know you will help you when you need help?  Only if you are the very best and they have no other alternative, maybe.

Back to outsourcing - some jobs can’t be outsourced.  And if you want one of the jobs that is being outsourced you need to find a way to market yourself and your abilities to save a potential client some money by using you rather than someone much less expensive.  (You may have to cut your pay,  i.e. costs, just so you can do the work you desire.)  Most of us want more money but that may not be practical, even if you are up to your eyeballs in debt.  Be competent and be able to verbalize why you are competent and think of ways that you can quantify what a potential (ethical) employer wants.  Just because they are in the position to hire it does not mean that they are using you as in abusing you.  Employers have stresses just as great if not greater than employees when it comes down to remaining employed i.e. in business.  The finiancial burdens are great for small business which are usually fininaced by one or more individuals using their homes for collateral - they are well aware of the pitfalls.  The only solution is to be better, be quicker or cheaper.  Pick two.

RE: Who is to blame for US outsourcing

I notice that the same theme keeps surfacing regarding Wal-Mart and other companies that sell goods not made in the US. Putting on my consumer cap, I shop at Wal-Mart or any other store for that matter because of PRICE - pure and simple. Sorry folks but I, like other Americans, can't and won't go out and pay a high price for what, something that is made here and is of comparable quality as manufactured overseas??? I don't shop to maintain jobs, I shop because I like most people have a budget and need to survive.

No, I don't like the fact that products are made overseas, but this is life and we must move on.

Regarding trades, I don't know about you, but homes are sprouting up like weeds by me. Trades people consisting of carpenters, bricklayers, plumbers seem to be actively working in my location. In fact, a friend of mine, his cousin owns a company that makes street sweepers. He can't find experienced welders.

I work for a power company that is contracting boiler repairs left and right because our maintenance folks don't want to work the overtime and don't want to work in hot, dirty boilers. They are an older work force, and frankly who could blame them. We have not been hiring younger union guys to take the place of older workers - we simply outsource this activity.

If I had kids in high school that were not compelled to go to college, I wouldn't force them to attend college. Instead, I would send them to a trade school and learn an employable trade. There will always be road construction, housing, repair services to maintain our standard of living in this country. These jobs WILL NOT be off-shored. The fact is white collar jobs (certain engineering occupations, middle manager types) will decrease over time and working in targeted trades and services sectors will increase.

So, I like other Americans, will shop PRICE and VALUE. This will apply to cars, homes and other goods and services.

RE: Who is to blame for US outsourcing

Outsourcing is only a symptom of the bigger problem.  As manufacturing
effeciency improves it takes fewer and fewer people to make the goods.
That leaves most people in service industries. Globalization is a further
increase in manufacturing effeciency.  What has happened to machine tool
builders, farmers, electronics, steel,   and now software and engineering is the
expected progression of a global economy.  Formerly professional people
are not going to be needed in the future just like those blue collar people
have allready learned. Many say to hold on there are new industries just
waiting to be born.  The trouble is that in the past decades before the internet
and computer boom people still had an inkling of an idea about the future
of computing, cell phones,  internet because these things had concrete
value for human activity. The wait was just on technical achievements to
make them possible. In all past times one could say "wow we have a lot
of stuff but if we only had ***** and **** we would be there".  Now I
challenge you to guess now what it is that we can manufacture that will
have a serious impact on our lives.  Weren't we suppose to arrive one day
as a society and see our work hours decrease and relax and let the
machines do some work for us. We are there. However with the current
economic situation you will be able to afford to buy only commodity
items which will be available in abundance and rent a decent place to live.
The technical middle class is in trouble. The economists say that the
standard of living is higher now because even homeless people can afford
to buy a DVD player. I don't know about you but the ability to buy gadgets
does not affect my contentment. People like to build wealth and security
in form of savings and professional skill building.  
Lets all go to Law, Medical, Pharmacy, Nursing school.

RE: Who is to blame for US outsourcing

Some great points being made here, it's no wonder engineers never get picked for civil suit juries and rarely run for office. We are just too smart!

Some suggest banning the off-shoring of white-collar jobs to where white-collar labor is exploited, but realize that as exempt employees that means we are often exploited anyway. I'm convinced that I work mandatory 60 hour weeks (unpaid OT of course) because my company can only afford to hire 2 engineers for every 3 required. And there are no unions or laws fighting such exploitation here. My wife is steaming mad about it and after some weeks my options boil down to "pick a new career" or marriage counseling by Dr. Phil.

I've known a few engineers from other 1st world countries who ran into the same issue (in the UK entire graduating classes of engineers have been "thrown away" during recessions, it's not a pretty picture). They either went into manual labor and heavy drinking, or got very innovative and took the plunge into developing leading-edge technology, usually as owners of their own business. It's a desperate situation and will depend on how desperate you are. Our jobs are being taken by hungry people who are happy to work 18 hour days, so you have to be hungrier. Or smarter.

It might be time for you to stop designing widgets and jump on new trends like nanotech, hydrogen, etc.

RE: Who is to blame for US outsourcing

Hi Liberty,

Only 60 hours a week?

My wife has a similar opinion of the hours I work. She's even suggested that I wrap at work and she will pay the mortgage while I retrain as a gas fitter. It is a  shameful state of affairs when a Chartered Engineer is seriously considering abandoning his profession to pursue a trade where the hours are just as bad, but at least they are paid hours and I don't have to work O/T for free.

Our department is carrying the workload of twice our number, and in the meantime we see the numbers of people employed in politically-correct non-jobs elsewhere in the company rise and rise. To add further insult, these non-jobs are all 9 'til 5 and well paid!


----------------------------------

If we learn from our mistakes,
I'm getting a great education!

RE: Who is to blame for US outsourcing

One way to dampen the increase in outsourcing is to add a value added tax VAT to both goods and service provided from overseas. If nothing else, it contributes to the tax revenue and offets the loss in revenue caused by increased unemployment, and is permitted under WTO rules.

RE: Who is to blame for US outsourcing

davefitz, the US imposed protectionist policies in the early 1930's to try and protect the economy. We are all familiar with the resulting disaster that ensued...

RE: Who is to blame for US outsourcing

Davefitz, those are import tarriffs. Your protected industries will become lazy and inefficient. You will find it very hard to export things, since most countries maintain some sort of tarriff parity. The net result is that your industries will die.

To take an obvious example, look at the US steel industry. They succesfully petitioned for tarriffs, and got some huge bailout for 'restructuring', about 10-20 years ago. They did nothing, got fat and lazy, and now they're pretty much dead.

The fundamental issue for this forum is that USAn engineers are paid about 30% more than other first world engineers, and while I am sure that they are as good as other engineers, that is a 30% cost saving that cannot legally be ignored by a shareholder owned company.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

60 hours is a short week lately. And when I'm traveling for 3 weeks at a shot, I stop counting. Since my work is defense-related I don't have to worry about my job being offshored, but these contracting firms know how rough the job market is, especially for guys who would rather not relocate. This pressure drives the insane hours and stress levels, and I guess life is a little easier on the single no-kids guys -- they don't have to worry about the lack of another life so much. Engineering will make for a nice hobby someday because I love doing it, but these hours would be better spent as a doctor, lawyer, or Jeopardy contestant.

Who is to blame for US outsourcing/offshoring? We are, for demanding good pay and reasonable hours. And info tech is, for making it so easy to outsource design and manufacturing.

My hero is Dilbert's janitor.

RE: Who is to blame for US outsourcing

Greg Locock knows what he is talking about.
Until about 25 years ago, the manufacturing industry in Australia lived behind massive tariff barriers. Our company had 45% protection on some products. Guess what, we never exported anything.

These days we have virtually zero tariffs on most things. A lot of companies have felt a lot of pain and many have disappeared.

However, those that cut away all the fat that was being carried by the tariffs, have found that they have a global market. One of those is the Australian automotive industry and the component suppliers. The engineers at Ford and GM Holden here are making great cars and selling them everywhere(The Pontiac GTO for example.)

Yes, most of the cars sold here are imported. Yes, I think every stitch of clothing I am wearing was made in China, but we are all in the process of finding a new balance and I don't think artificial government imposed regulation is going to change that.

Jeff

RE: Who is to blame for US outsourcing

The facts will remain to be seen in the next five to ten years, but most people now agree that reduced prices brought by globalization are not worth the sacrifices made by Americans today. Let alone the sacrifices made by the poor people creating all the junk we buy. My experience in the Machine tool industry with suppliers and other manufacturing companies reveals that people are learning to to with less. I don't buy new cars anymore, appliances, own a boat, campers, jet skis, ect. Most of my counterparts, who used to earn good salaries and bought all these toys are buying no longer. They are underemployed, working in other low paying industries, not looking anymore or just plain unemployed. Add these people to the unemployment roles and the number far exceeds the government 5.6% rate. Which means we pay less taxes to support our city, state, and federal governments. We are the guys who cranked up the economy. All this so we can save a few bucks at the register? It is no wonder the economy cannot get moving again with any real strength.

The perception is correct that as long as we are driven by Wall Street quarterly profits, and do not adopt any real long term rational thinking as a nation, we will continue to export our skills, technology, and way of life. All we have to do is mirror the mission statement from Toyota and execute their business model, they got it right. They move slowly, methodically, quality driven, with a long term strategy to build every car in the world.  Fortunately I have convinced my five kids to stay out of manufacturing and go into the health sciences, or research. As a professional engineering manager I cringe every time I talk to a graduating high schooler who wants to be a mechanical engineer. There are still jobs available but I tell them be flexible, willing to relocate, and work some pretty long hours. Go for it.
 

RE: Who is to blame for US outsourcing

Greglocock;
As per WTO rules, the VAT cannot be imposed only on imported items, but can be imposed on a whole class of goods and services equally whether local or imported.

If we were to switch from  an income based tax to a consumption based tax ( VAT), then it would make US goods and services more competitive in that it would lower the implied overhead of income tax, social security tax, medicare tax, ( and medical insurance premiums, if one also goes to fund a national health insurance via VAT)by a maximum of 25+15+10 % = 50%.

To avoid burdening low income people , the VAT would have to not apply to foodstuffs, nonluxury clothing , housing,medical services, etc. And to custom design the VAT to primarily address only items which are typically imported ( while remaining valid under WTO rules) then it would  not tax the types of service taht are almost certainly local only, such as child care, home health care, equipment repair + maintenance , etc.

Of course, everything else would have its price increase by 50% max, which would be a hard pill to swallow, and temporarily it would boost teh value of every item and service which is not similarly taxed.

Anyhow, it is not a new idea- most other countries are already using a VAT to fund social programs and to reduce teh competitiveness of imported goods and services.

RE: Who is to blame for US outsourcing

CRG,CalEngJohn, Dorfer, and others have nailed this one, there is noone to blame but ourselves.

<Start of Rant>
Personally, I NEVER enter WalMart.  I pay more at small local shops and buy less. 90% of the stuff WalMart sells is crap we don't need anyway.  The US has become a disposable society. We buy too much, use too much, and throw away too much. Our standard of living is too high, we take too much for granted. We wouldn't need such high salaries if we didn't buy so much stuff.
<End of Rant>

Bottom line: Globalization will continue, and so will outsourcing and standard of living parity. In the end it may be good for everyone.  But in the short term (20-30 yrs?) it will be hardest on those with the highest standard of living, namely us yanks.

RE: Who is to blame for US outsourcing

Davefitz please reconcile the following quotes from your two preceeding posts.

"One way to dampen the increase in outsourcing is to add a value added tax VAT to both goods and service provided from overseas."

"As per WTO rules, the VAT cannot be imposed only on imported items,"

As I have great difficulty understanding your point of view.

WTO does not forbid the imposition of duty or tarriffs on imports. The import duty on say light trucks into the USA is actually quite high (for example) never mind the many other barriers to entry for other goods. (steel, semiconductors, lamb, etc etc)

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

No one is to blame.

It's a fact of life. If you have an economy shaped a certain way then outsourcing is one of the consequences.

There are things politicians can do but probably won't and, frankly, it's probably better they don't tinker with something they don't understand. Who does? No two economists ever agree on anything so what is the right and wrong? We should accept the situation and look instead at how we deal with the consequences.

Outsourcing puts cheap goods on the table. It drives sales and sales make the world go round.

I would suggest that our economic ills lately have little to do with outsourcing which is a slow process and one to which the economies of nations can adjust naturally, and more to do with 9/11 and OPEC.

I'm not connecting these two, just saying, 9/11 and OPEC both have an immediate and dramatic effects on global enconomies.

OPEC is a legitimised example of what is not tolerated in any other area of business; price fixing. At the moment oil prices are very high. For some sectors of the economy this is good, for others bad.

The problem is how to plan any kind of strategy when overnight, these guys can push the price of oil through the ceiling or through the floor.

Outsourcing is a consequence of longer term economic effects that can, like many things, be measured and predicted, within reason. Actually it is a beneficial means toward redressing the imbalances of our gobal community, along with other things, and we have discussed this before.

The main problem without outsourcing, or any other problem, is response. Trying to put the clock back or stop the waves rolling in is a waste of time and effort.
 
Firstly, to reduce the number of engineering graduates emerging from universities expecting a good income when they should have gone and learned to be lawyers or something else on the rise. Fewer engineers ought to mean just the cream stay and provide the skills that don't get outsourced. This is a supply and demand world and the educators and legislators need to more accurately predict how many new engineers, doctors, nurses etc are needed and plan accordingly. That is where governments can be useful, helping create a responsive education system.

Secondly, retraining of skilled engineers mid career. Every industry or sector of industry goes through a life cycle just as products do. Proper product management includes life cycle planning, and end of life planning. What to do to wind down the product and support it in its remaining years, spares, technical support etc. These structured approaches seem lacking when applied to jobs and it always seems a surprise when the coal industry dies or buggy whip making comes to an end but that is life. It will happen to every sector of activity. If it isn't outsourcing, it is something elses affecting another sector of the industry.

As engineers have said all over this web-site, you never stop learning. Learning is a key attribute for anyone, coupled with, not forsight, but fatalism, we should all expect an end to our happy days, or an interuption. What's the other saying? P*** poor planning produces poor results? We apply a lot of skills to products and designs that we could also bring to bear on our own lives. Stop expecting politicians to make things right, they never have and never will. Don't expect them to tackle the problem, better to ask them to tackle the solution which is more mid-life training, career change education, new skills courses. If we are to be engineers, it doesn't matter what we know, but that we can learn to do something new and that is the only real hope we have.

Let's find what we can do something about and do it and stop wasting time on things we have no control over; though we may have little we can do about 9/11 events, there ought to be something we can do about moderating the effects of OPEC.

PS, how is the New Democratic candidate going to make the US self-sufficient in energy? It makes good speach writing, but .... hey, don't answer that here, I'll post it as a new thread.

JMW
www.viscoanalyser.com
Eng-Tips: Pro bono publico, by engineers, for engineers.

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

RE: Who is to blame for US outsourcing

JMW;

I agree and just want to add its not so much what you know as what you do with what you know.  And to do so you must have a plan to put "it" to work.

RE: Who is to blame for US outsourcing

"Outsourcing" i.e. international trade in goods and services is inevitable.  It's a necessary result of the search for the lowest price.  The overall standard of living in the developing world will rise, as will consumption patterns there, and the standard of living in the developed world will fall.  The rich in both locations will get richer, and some of that will trickle down, but most of it will not.  The middle- and lower-class in the developed world will get poorer as the good-paying value-added jobs they once had go overseas.  These are the only certainties.

Tarrif or tax-based protectionism won't work.  It'll only help to keep down the truly powerless, the nations without any purchasing power and hence no effective lobby on their behalf.  Just TRY enforcing protectionist measures against Chinese imports- your own internal lobby won't permit it- the Chinese won't even have to open their mouths in protest.

It's true we've ignored this trend while it was primarily blue-collar jobs that were being lost, and now we're a little more attention to it as the white collar jobs go.  Too little attention, too late.

2dye4 had the key point:  increasing productivity. As the productivity of the world's population increases, the world's economy will have to grow at staggering rates to keep everyone employed.  The consumption necessary to fuel that economic growth that scares me most.  I doubt the planet can handle it.

RE: Who is to blame for US outsourcing

What will become interesting as we helplessly watch this economic shift unfold, are the social changes. I personally do not mind downsizing and simplifying my own life, how far is the issue. Woe to the polititians who ignore the clout of the middle class. This November will demonstrate that. Moltenmetal makes a great point about protectionism, as the Chinese become the equivalent of the Japanese economic powerhouse, will the flood of their imports eventually subside to a reasonable level with the loss of our own discretionary buying power? Americans have an uncanny ability to create new ways of making money, overcoming tough engineering technical problems and boosting our quality of life each time. I hope our best and brightest are on that trail to energy independence, stop filling landfills with plastic garbage and improving our environment.  

RE: Who is to blame for US outsourcing

I regularly outsource FEA work to an Indian consultant. The consultant that I use is approximately 30% cheaper than the average UK consultant.

I also used a UK consultant the other day and found them to be arrogant, aggressive and patronising. I got the impression that they couldn’t be bothered to present the results to me in the way that I requested because they decided I didn’t need to know and they had probably used up their fixed price hours.

This is in contrast to the Indian company that can’t do enough and often provides a service that is over and above what was originally agreed. They probably claw back any loses on future work but I accept that, after all they have to make a profit.

I will never use that particular UK consultant again not because they are a little more expensive but because their level of service did not compare.

I have also used a different Indian consultant that was around 60% cheaper than the average UK consultant. I will never use this particular consultant again either because of the poor service I received.

Choosing a consultant based on price is a recipe for disaster. I always choose to outsource work to companies based on performance and service. The next job I will outsource will be to a UK consultant that has a specific area of expertise. This one is about double the cost of my usual Indian consultant.

RE: Who is to blame for US outsourcing

Good observation there Chris. If I pay twice as much for good service, that will almost always be remembered as a good project. Half as much for average service, I can live with, but the truth is that at an individual level the difference between a good analyst or draughtsman, and an average one, is more like 4:1 in my experience. And of course bad contractors are just money wasted.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

Remember the saying, "Quality, Price, Service: Pick Two."

Most development cycles I am familiar with choose Quality and Service (in terms of cycle time). Another successful approach chooses Quality and Price, because they are willing to wait (sacrificing Service)

A leap in technology usually lets you do the same thing (Quality) either in less time (Service) or with less money (Price). So, if you were choosing Quality and Service you can now also have a Price you like. If you were choosing Quality and Price you can now get faster Service.

You can pick all three only so long as management views the improved Price and/or Service favorably. Expectations in these areas quickly catch up with reality and you will soon be back to Picking Two again!

RE: Who is to blame for US outsourcing

Hang on a minute, why are you so quick to cut of the hand that has fed you for years?  Out sourcing is stripping your local supply chain. If you do not support them they will close and that will make you totally reliant on your overseas contact. Now while they they might be cheap and talk to you nicely, are they going to be there when the shit hits the fan? Who's going to bail you out then? Building relationships is fundimental to achieving 'good service' and that cant happen at the end of a telephone.  The best service I have every had came from the most obnoxious person you could ever meet, but who new exactly what I wanted, he supported me throughout and therefore I would never out source while there were businesses in my local area who were capable of doing the work. Supply chain development is not just about finding the cheapest or expecting the supplier to lick your ar**. I wonder if, before you decided to out source whether you asked the supplier what he thought of you as a client. Its supprising what you get told and you have to be prepared to eat humble pie sometimes.  he might of been glad to see you go? You will be supprised at what you can achieve by talking. Anyway thats my two pennith good luck

RE: Who is to blame for US outsourcing


I see alot of reference to the USA outsourcing in the above postings.

I just returned from a trip to China (yes, my company is buidling a plant there, instead of the USA because it can be built cheaper and the labor is cheaper).  One thing I noticed is all of the different accents and languages I heard: Finnish, German, French, UK English, etc..  Seems to me it's not just USA wanting the cheaper products.....It's the world.

It's a GLOBAL economy.  Get use to it.

RE: Who is to blame for US outsourcing

OK so you take all this work from the people in your own country and give it to soemone else.  That makes a lot of people who will need to find something else to do or be supported by the state, that is unless you're going to just watch them starve.  Now that costs money, money that has to be paid by those who work. Who is it going to be cheaper for, dare I say not I.

RE: Who is to blame for US outsourcing

(OP)
What the heck can we do about this now?

RE: Who is to blame for US outsourcing

Controlnovice, Like everyone including myself stated earlier there are those winning and those losing in the new global economy. You happen to be winning (keeping your job) but a visit to Saginaw MI, Flint MI, Detroit MI, Rockford IL, and many others to see the true cost of outsourcing, globalization and chasing cheap labor. None of these people will be able to afford a new Chevy Equinox with it's Chinese motor no matter how inexpensive it is. I too spent time in China working on an engine program a few years ago and realizing we were just training them to soon begin export entire engines and soon cars to eventually replace us here in the states. That is what is going to happen. It is just pure economics (capitalism) at work in a very competitive business. Tough luck most say, go find something else to do. That will probably happen also.

I have a 72 Chevy Chevelle SS in my garage that just screams of American power, self determination, self reliance and built in times with American cooperative manufacturing strength. Those days unfortunately are gone forever.
Here is my plan. I vote, write to my congressman, buy goods and services from companies with integrity that not necessarily originate here but invest here, reduce or eliminate consumption of plastic foriegn junk, buy fuel thrifty cars(except for the Chevelle), ignore the foriegn telemarketers and finally invest in companies only, that improve our American productivity and way of life.

RE: Who is to blame for US outsourcing

....and kill progress! How are the US products going to get any better if they don't compete against foreign products. Look at the former Soviet Union, look at the Trabi that all former-East Germans bought because there was nothing else. As soon as the market opened up, nobody anymore wanted a 40-yrs (or god knows) old incompetitive design. Competition is a blessing for the customers.

RE: Who is to blame for US outsourcing

Not if those customers don't have jobs so they can buy your products.

Edward L. Klein
Pipe Stress Engineer
Houston, Texas

"All the world is a Spring"

All opinions expressed here are my own and not my company's.

RE: Who is to blame for US outsourcing

It is my opinion that as the job markets gets tighter and more people become affected, this will become a political stand for someone and we all will be pushed into buying from home soil. I agree with the above and have started, I am stopping all policies that are not being run from the UK. I have found that in general there is only a minimal extra cost to do so. If we cant be bothered to stand up for ourselves how can we expect anyone else too.

RE: Who is to blame for US outsourcing

Funny to read that someone from one of the great trading nations of the world is turning their back on 150 years of free trade policies.

However, given the current state of engineering in the UK I can't see that having much effect on anyone else.



Cheers

Greg Locock

RE: Who is to blame for US outsourcing

Outsourcing may be inevitable, but we must all look at the consequences.  CEO's outsource to guarantee their bonuses (There's a question as to whether they are serving the shareholders based on companies losing money yet still rewarding their executives). The CEOs are looking at the short-term picture and are missing the long-term problem.  If we are buying the imported goods and services, what happens when our economy shrinks to the point where we can't afford to even buy the cheap imported goods.  The modern generation of MBAs seem to have forgotten some of the wisdom of past business leaders such as Henry Ford. Against the will of all of the other automakers, Henry Ford went against conventional wisdom and raised his worker's pay to the now famous $5/day.  The reason Ford raised the wages was that only a limited number of people could afford to purchase cars at that time.  By raising wages, his workers then made enough money to be able to afford cars themselves, thus creating a huge new market.  If only our CEOs were smart enough to think so proactively.

In addition, do we really want to outsource our national security?  We have lost most of our manufacturing ability and continue to outsource more each day while transitioning to our "service economy".  At the same time, China, a traditional communist enemy is expanding its manufacturing base with our help.  They even have an ambitious space program which includes development of ballistic missiles.  So what happens now that we have reached the point where the machine equipment to manufacture our next generation of weapons must be purchased from China.  Will our service economy defend us on the battlefield against 1 billion Chinese with advanced manufacturing techniques.  And to help emphasize the message, please look at recent news reports about our joint air manuevers with India - their pilots beat our pilots in joint exercises. We need a wake-up call before we lose our country.

RE: Who is to blame for US outsourcing

Bad analogy:
Ford only hoped that his workforce would be smart enough to save enough money for a car. He created the $5 a day for productivity and control, and gave it up after a few years because it cost the company too much.


http://www-personal.umd.umich.edu/~ppennock/L-Five...

CEOs and MBAs know this story well.

RE: Who is to blame for US outsourcing

I think the point trying to be made is correct.  Years ago we would have all fort this move through unions but now we all choose to live very insulate life styles. We no longer really care what happens to our neighbour, stick your head in the sand and let someone else worry about it and I'm alright Jack rules today.  Its not about free trade or evolution because at the end of the line will be a few people making a huge amount of money at the expence of someone else.  Which of those companies that have outsoursed have passed any of the benefits to the end user?  Ok things might be cheap today but they are really poorly made, shoes cloths and elctrical items will now break before they where out.

RE: Who is to blame for US outsourcing


The readers of this forum are thinking too much like engineers. They are trying to find logical arguements for or against outsourcing/offshoring and looking at how this affects the entire world instead of just themselves. Its time to think like regular people and be a little selfish regarding this issue. Ordinary people are generally for anything that puts money in their pocket and against anything that takes money away from them. I seriously doubt that after someone loses their job due to outsourcing/offshoring they can go to the bank that holds their mortgage and say: "Your going to have to wait until the long-term economic benefits of globalization kick in to get paid".

RE: Who is to blame for US outsourcing

Outsourcing is nothing new.  The NorthEast was the region for textiles.  Then the Southern States offered lower wages and the companies moved.  Then Mexico, then Honduras, then Korea, now China.

Why shouldn't we be concerned with improving the lives of others?  Why not send some jobs overseas if they can do the job better for less money and improve their quality of life?  There are some that keep referencing the loss of Auto manufacturing jobs.  The 1970's should have taught American Auto companies a lesson.  The Japanese were making better quality cars, less expensive.  Why wouldn't the American puplic want to buy that?  But American manufacturers just kept doing the same thing with the same high paid workers.  And the workers kept asking for more money.

My company is building in China.  You know what?  I'm learning Chinese on my own to help maintain my job.  Ya, I may lose my job to a Chinaman, but I've improved myself by doing so, and improved my chances of sticking around.  

When I started here, we had a department of over 60 people.  Now we're down to 18.  I'm still around not only because I'm a decent engineer, but I learned to speak French and Spanish.  I learned control systems when my background was electrical power systems.

If I loose my job, I'm prepared to sell the house, the second car, etc.  I'm prepared to move somewhere that may be uncomfortable.  I'm prepared to do something new.

I guess what I'm saying is if you're afraid of losing you job due to outsourcing, you can do something about it.  Change yourself.

RE: Who is to blame for US outsourcing

First, two different points of view.  Outsource and Off-Shore.  A point listed above by metengr states it best.  But here is my opinion.

Outsourcing allows a company to invest and focus on its product/service.  You outsource to a company who specializes in a process and it can save you time and money.

Off-shore sourcing is just a cheap way to get something done.  I am a Catia product designer, however I create more conceptual and feasibility data.  In my experience with sending work off-shore, they do not have the creativity and experience to do the type of work I produce.  However they can make drawings, section layouts and what I concider "grunt" work while I can get the real product developed.

Now for my high horse.  We are all to blame for outsource and off-shore work.  WE need to have new cars, new homes, new ___fill in the blank.  To get these possessions we work, and get paid.  Some get paid very well.  We invest in stocks, and we want a good return in our investment.  Therefore we push our companies to cut cost and make profit so we get dividends.  Well to cut cost they cut jobs, outsource work state-side and off-shore, and then they become more profitable.  The cycle continues.  

Brandon Jacobsen
Product Design Engineer - Catia

RE: Who is to blame for US outsourcing

Interesting article.  I am not sure if the link will take the user directly to the .pdf

http://www.dfma.com/truecost/paper.pdf

Regards,

RE: Who is to blame for US outsourcing

Well that's quite an interesting study, albeit written with one eye closed. I wonder if the authors would rather work all day in a field for $0 or an Etch a Sketch factory for $3 a day? That is the stark choice facing the Chinese population.

Here's a better idea than whingeing about low labour cost advantages: why don't USA companies go to Chinese companies and offer to redesign their products to make them cheaper and better?







Cheers

Greg Locock

RE: Who is to blame for US outsourcing

Greg,

Growing up on a farm prompted me to get into engineering in the first place (easier work and more pay) .  The study is likely of interest to those companies doing assembled products (they did not show any case studies of base component costing comparisons).  After all Boothroyd/Dewhurst deals primarily with consulting with Design for manufacturing/Assembly.  Still, I think their comment on the total cost of procurement (logistics, tied up inventory, configuration control and stability of supply) has merit.  Time and again when I do a costing analysis for a new product, by far it is component related rather than labor related.  I am also trying to shift my personal measure of success not from cost reducing product where I work but in avoiding cost up front in the design.  Yes it makes me a pain in the ... at times to the design engineers but when you can back it up with $, it helps make points.

Regards,

RE: Who is to blame for US outsourcing

Comes now this from the ASME Capitol Update, dated today:

5. U.S. Job Losses from Offshoring Double between 2001 and 2004

A study recently released by the U.S.-China Economic and Security Review Commission estimates that during 2004, the U.S. will lose as many as 406,000 jobs as they are shifted from the U.S. to other countries. The figure compares to 204,000 jobs in 2001. Nearly one-fourth of the 2004 job losses are expected to go to China. Mexico and India are the other significant beneficiaries of the offshoring trend.

While the conventional wisdom in the U.S. is that companies need to offshore jobs to remain competitive, the report also says businesses engaged in production shifts "tend to be large, publicly held, highly profitable, and well established... The principal motive for production shifts to China is cost reduction rather than producing for the Chinese market."

The authors conducted an extensive media-tracking exercise that examined a broad array of media sources for news of firm and job relocations. The study covered the period January 1, 2004 to March 31, 2004, and constitutes a follow-up to a prior study done for the Commission covering the period October 1, 2000 to April 30, 2001.

The Commission has been on the front lines urging Congress to enact corporate reporting requirements to get this vital information, and this report further highlights the need for such measures.

Among the key findings of the study are the following:

Production shifts out of the US particularly to Mexico, China, India, and other Asian countries have seen a major increase in the last three years.

The report projects that nearly 100,000 jobs will move from the U.S. to China as a result of production shifts in 2004 based on extrapolating the data it collected during the limited period of the study.

The data suggests that in 2004 as many as 406,000 jobs will be shifted from the US to other countries compared to 204,000 jobs in 2001,” of which nearly a quarter will go to China. Production shifts, with consequent employment loss, have spread across the economy and now affect sophisticated manufacturing industries, services, and information technology. All regions of the country are impacted by these shifts, but the Mid-West has been especially hard hit.

The study states that the principal motive for production shifts to China is cost reduction rather than producing for the Chinese market. In the study, the number of jobs lost because of production shifts far exceeds that reported by the Bureau of Labor Statistics in its report on mass layoffs due to overseas relocation.  Also, the study reports that trade adjustment assistance to workers laid-off owing to overseas job relocation is poor, covering less than one-third of the cases where production shifts occur.

The entire report and additional information on the Congressionally mandated Commission is available at: http://www.uscc.gov/

More Offshore related reports, articles, and resources can be found at http://www.engineeringpolicy.org/outsourcing.html

Patti Curtis handles offshore outsourcing issues for ASME.  She can be reached at curtisp@asme.org

Thanks!
Pete

RE: Who is to blame for US outsourcing

<http://www.boston.com/business/articles/2004/11/17/offshoring_accelerating/>
“The most compelling incentive remains the disparity between wages earned in the United States and in less-developed nations. In India, a computer programmer with a college degree and two or three years' experience earns about $20,000 a year, said firms that employ workers there. Indian workers who process financial transactions make $12,000 to $15,000. Call-center workers there earn about $1,200 a year, compared with Brightman's $40,000 salary from AT&T.”

I did not want to bring this thread up again because it is so negative, but wow this is what we have to compete with.  Just for a call center worker who only makes $1,200 per year is disturbing compared to $40,000 for the same job here (USA).  Their standard of living must be very very very cheap.  In the spirit of this thread, can we really blame AT&T for trying to make a buck?

Go Mechanical Engineering
Tobalcane

RE: Who is to blame for US outsourcing

BUY FOREIGN MADE PRODUCTS AND NOT ONLY WILL YOU LOSE YOUR JOB BUT WE WILL LOSE OUR MIDDLE CLASS AND OUR GOVRNMENT WILL LOSE ITS PREEMINET POSITION IN THE WORLD, NOT TO MENTION ITS ABILITY TO SECURE ITS BORDERS.

RE: Who is to blame for US outsourcing

It's probably been mentioned above but I'll repeat it.

What is the value of the accumulated experience lost when local staff are laid off ?

What is the lost opportunity cost of experience not being gained by local staff ? eg.  Designers need to understand production problems to progress to better products.

What is the cost of the real risk of poor corporate memory ?

I'll wager I won't get a reply from the men in suits.

RE: Who is to blame for US outsourcing

Rather than outsourcing, I went overseas to work.  I guess they are outsourcing me.  Sadly, the pay and benefits are getting lesser with each job - but only a couple of more . . .

RE: Who is to blame for US outsourcing

"What is the value of the accumulated experience lost when local staff are laid off ?"

What is the value of working with a new team that does not have entrenched ideas?

"What is the lost opportunity cost of experience not being gained by local staff ? eg.  Designers need to understand production problems to progress to better products."

What is the value of setting up a green field operation with colocated designers?

"What is the cost of the real risk of poor corporate memory ?"

Um, how good is your corporate memory anyway?

Your glass is half empty.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

A:  What is the value of the accumulated experience lost when local staff are laid off ?

B:  What is the value of working with a new team that does not have entrenched ideas?

If you have all of either one and none of the other, you don't have the best situation.  You need *some* new people to come up with improvements, but you need the old wisdom too so the new people with the new ideas don't waste valuable time reinventing the wheel, or rather rediscovering why a particular wheel won't roll.  

Packing up and going somewhere else definitely loses you all of the old wisdom.  Who says the team was necessarily all that entrenched before it got outsourced?

Hg

RE: Who is to blame for US outsourcing

2
The current worries over outsourcing are probably temporary.  The Indians and Chinese will get a LOT more expensive in the years to come when the dollar crashes in value relative to their currencies.  It's already begun to crash against the Euro.  It is starting to crash against the yen.  It will almost inevitably crash against the Indians and Chinese currencies too, unless they are willing to tolerate massive inflation.  But, even if they are, then in that case inflation will make the Indians and Chinese a lot more expense.  Either way, the Indians and Chinese are almost certainly going to get a lot more expensive fast going forward.  Massive current account deficits lead to a plunging currency and the US is running the largest trade deficits in the history of the world.  The dollar should plunge the most against countries it is running deficits with, like China and India.  After Indian and Chinese engineers get a lot more expensive and these countries are no longer sources of dirt cheap engineers, I think engineers will FINALLY be rid of the dirt cheap foreigner problem that has plagued it since like the 1950's.  Back then it was the Japanese though.  In 1971, a dollar bought 358 yen, now it buys 102 and falling.  That 71% collapse in the value of the dollar relative to the Japanese currency was a big factor in Japanese engineers becoming a lot more expensive.  This is assuming that Africa and South America don't become the next source of a massive number of dirt cheap engineers.  That is probably an easy assumption though.  I only wish it would hurry up already.

Paul

RE: Who is to blame for US outsourcing

Ok, you guys with the lowest cost theory of world trade have got me convinced.  Since my company relies on working at individual local sites (many of them are those well compensated executives), I don't have a need to worry about my job.  Therefore, I will ignore the results of  offshoring and enjoy my German car, my Indian Computer (alas, the microprocessor is still US), my new HVAC system made in Mexico, my electrical panels and switches made in Mexico, as well as my home remodeling performed by Mexicans (they work cheaper and it's hard to find Americans to do the work).  It eases my conscience to know that those  who need jobs just have to be satisfied with what they can find. After all, our $5.00/hour minimum wage jobs are dream incomes for many of those inhabitants of third world countries.

Also, some of our advanced technologies, such as the F-22 Raptor are on the congressional chopping block - I know a number of Lockheed-Martin workers at the Marietta, GA plant who livelihoods hang in the balance as our legislators decide if we really can afford these new toys.  Federal Debt vs. National Security - this will be interesting!

RE: Who is to blame for US outsourcing

Incidentally did you know there is a labour shortage in South China at the moment which is forcing wages up?

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

What's the cause for outsourcing? Immediate gradification of greed. I interviewed at a company recently and the company's guideline for buying new equipment, a two year ROI. First off an ROI calculation means you actually invest the money and secondly you have other places to invest your money to generate these returns. When these investments are finally made the company doesn't buy the equipment it leases it and how many places are available today to give a 50% return on investment or even a 25% return.
Thinking long term is not in Wall Street's equation and taking a risk is unacceptable. Its easier to buy a product and sell it instead of building a plant to make the product and selling it.

RE: Who is to blame for US outsourcing

"Thinking long term is not in Wall Street's equation " How's Toyota's stock price these days? Compared with say DCX?

Now tell me about long term planning again.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

Greg
I know there are exceptions to anything which is given as a statement but why is Catepillar, Boeing, John Deere, and many other companies now buying most parts instead of making them? Hyundai on the other hand builds 15% of all commercial ships in one facility and subcontracts nothing?

I stand by my first statement.

Bill

RE: Who is to blame for US outsourcing

Well, let's see.

Toyota invest in the long term. Their stock price goes up. Their market share goes up. Their profits go up (generally).

A N Other car company (pick one of 3) lives from quarter to quarter. Their stock price has flatlined (at best) in the last five years. Their market share has flatlined. Their profits have stagnated.

It isn't the engineers, accountants, buyers, and assembly workers who force the board to concentrate on short term performance. I don't think it is the shareholders either, since I'm sure that Toyota and A N Other share many shareholders.

Or to pick another example. Which of the two major civilian manufacturers actually looks like a confident company with a plan? Airbus. Who'd have believed that ten years ago?

Which kind of leads me to think that maybe the problem is with the guys with bald heads, fat bellies, nice offices, neat suits and lots of options. Rather than do the hard work of reinventing their company as learning organisations*, they just outsource as a short term prop to the share price and hope the options are worth something before they retire.


*OK I know it's a cliche.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

Greg- who are the shareholders in Toyota and A N Other car company?  I expect that most of the shares in A N Other are held by large mutual funds- pension funds, unit trusts etc, who are notorious for only wanting good dividends (you can't blame them, they have their own obligations to their pensioners and savers to service).  Many Japanese companies on the other hand are owend in a complex pattern of cross ownership, which partially insulates them from the requirement to post high returns quarter to quarter.  

There are several writers trying to alter the focus of Anlgo-Saxon capitalism away from 'maximising shareholder value' to wards 'maximising stakeholder value', where a stakeholder is defined as someone with a interest in the company- workers, suppliers etc as well as shareholders.  The Industrial Society (now the Work Foundation) in the UK is one of these groups; www.theworkfoundation.com; people may disagreeee with what they say, but I'm sure it will be interesting and thought provoking!

RE: Who is to blame for US outsourcing

I was talking about USAn shareholders. I was using the Wall St share price for Toyota.

Cheers

Greg Locock

RE: Who is to blame for US outsourcing

Every night here in the UK we get between 4-5 calls from the far east trying to sell stuff. I think people will get so p****ed of with this that they will end up buying nothing and that may bring about a rethink.

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