Here is the logic behind shipping jobs overseas, in particular assembly jobs that low skilled workers can do. I am not defending the position, just giving you the logic.
The items America produces the best in the world are complicated industrial machinery. Best example of this would be bulldozers, earth moving equipment, and farm equipment made by companies like John Deere and Caterpillar.
Because of the standard of living in the USA, American labor cannot compete in the manufacture of consumer items that sell for $100 or less on the international market. In order to compete, production cost would have to be cut, which effects the quality of the item. In other words, it would be junk.
In countries like China and India, in particular, labor is so cheap that hiring 1000 people with shovels cost less than buying an earth mover to build roads or whatever. The notion is to send these assembly jobs of small consumer items to these countries to raise the standard of living there so it is no longer cost effective to use manual labor over machinery on big projects.
This is starting to work in China. Both China and India are several decades away from having a skilled labor force that will actually be able to produce complication industrial machinery that works.
Bear in mind that selling a boat load of bulldozers to China is much more revenue, requires higher paying manufacturing labor, than a boat load of shoes China would sell to the USA.
Right now, companies that make highly engineered industrial equipment like 3M and GE are sending lots of equipment to China. Given time, the industrial expansion of China will create great demand for quality produced industrial equipment from the USA.
2007-11-13
00:22:52
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15 answers
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asked by
Perplexed Bob
5