Is outsourcing low skilled assembly jobs overseas good for USA economy? You decide?

Question

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.

Answer 1

Sure its good for the American economy, well for everyone but people who keep their cash in off-shore accounts

Answer 2

Manufacturing junk in China may be cost effective from the standpoint of a transnational corporation, particularly when these corporations use a cut-out so they never directly get their hands dirty using child/slave or underpaid labor. If some Chinese factory turns out tons of pollution along with it's lead painted products, the corporate honchos can plead ingnorance. What a good deal for them! If a mass marketing corporation like WalMart buys goods from China, made by child/slave or underpaid labor the least they could do is actually pass on their 'savings' to the public.....but oddly, they don't do that. The cost of a Chinese made T-shirt at WallyWorld is only pennies below the cost of the same shirt made in the USA by union labor. The profit margin is much higher to WalMart, but there's really not that much savings to the consumer. If most of the stuff made in China was made in the US the quality would be higher, manufactured with less pollution and because of the magic of technology the price would be comprable to that of China. Also on the plus side there would be more moderate paying jobs which means more people paying taxes and buying goods right here in River City. Let's put the Ameircan wage-earner first and the trans-national corporations second and let China buy up its own junk!

Answer 3

The problem with this thinking is that there won't be anything produced in the USA any more because these cheaper sources of labor would have put them out of business, and the Americans, who could have bought the higher priced goods, which were made in America, no longer have jobs, to provide them with the wherewithal to do so.
On paper, it might look good, but in reality, the profits are elsewhere, and even American companies have to look at the fiscal reality.
By the time the other countries come up to speed, we won't have any economy to contribute to this wonderful new economic "level playing field".
We need to clean up our own house.
There are many low-skilled workers in this country who need jobs. We need to allow them the opportunity to work on their skills too.

Answer 4

Outsourcing ensures corporations get the cheapest labor possible with the least environmental and safety constraints.
It's not just low skill either. Skilled trades and white collar jobs are also outsourced.
Outsourcing ensures workers will never earn a decent wage or be secure in their line of work.
It's good for immoral corporate profits but a kick in the teeth for the working class.

Answer 5

Keep telling your self that. The ultimate crime is, instead, neo-liberalism placing profits before people. The higher human activity is not going shopping. It is, not shopping. Shopping is not a prerequisite for a good life. Free market capital circulation is not necessary for well being and living a good and content life. Quite the contrary, the simple life with fewer materials wants contributes to contentment. In neo-liberalism's eyes, the people who opt-out of the consumption treadmill are traitors, and unpatriotic. Rejecting consumerism is a mortal sin. However, it is neoliberalism that betrays humanity. New Orleans, in the aftermath of hurricane Katrina, shows us what that betrayal looks like. The theft of indigenous land is another.

The New World Order is based upon governance by the best to avoid the voices of the minimal. Isn't this the attitude that underlies the structure and institutions that manipulate global organizations? Assimilation requires conformity and compliance, for the vision is more important than its components. The power to apply the course for success means that the individual is an interference. The social good is equated with with the scale of harmony in the conformity, as diversity acts as a mirror for the new found conformity. (Global Gulag. Revisit the Planet of the Apes).

Neoliberalism defines liberty as the ability and the demand that we buy and sell anything and everything, often, and at any time. Cindy Sheehan said that,

A new world is necessary and it can only be possible if we rein in the depraved corporations that thrive off of the flesh and blood of our neighbors all over the world and here in America.

Those who want to break from neoliberalism's dictatorship of free market capital circulation are not the criminals. They are the freedom fighters. And, far from committing the ultimate crime of rejecting consumerism, these freedom fighters are the best hope in saving a planet ravaged by neoliberalism's arrogance, avarice and greed. We, the people, are the freedom fighters.

Answer 6

Please remember everyone NEEDS a good economy! Keep in mind that a major part of US property is foreign owned and receiving US profits. Also, 95% of all products are forgien made and packaged or assyembled outside the US.(65% Chaina) Many major firms move outlets and manufacturing to other countries for less wages and taxes. If we patronize those firms and allow them large import and export gov't. tax in addition, then we support our own job and profit losses. The US is made up of all Countries! How can we not relize if we allow our nation not to balance it's budget and tightening our wallets by buying American, that "A poor Nation cannot help other poor nations." and there are many! "Be frugle, or "be made poor and suffer WITHOUT later!" Most countries have suffered for centuries! Do we want to go back, after 200+ years of strife to make a great America? Our fore-fathers DIED for freedom from a penny tea tax!!!! I'll bet they sure are mad at us!!!!

Answer 7

Bob, there is an expression that one must crawl before one can learn to walk.

Development of low-skilled assembly jobs is a good place to crawl until we learn to walk. If an American manufacturing job is shipped overseas, those jobs lost from America are not the more serious problem. The problem is the engineers who design and troubleshoot the line who have lost an opportunity to practice before they move on to more complicated processes. The draftsmen, automation technicians, electricians, unless they move to India or China, don't build a base of experience.

In my husband's current plant, the only highly skilled machinist is approaching retirement age. Who will replace him? Who will train his replacement when he is gone? The one highly skilled mechanical engineer on the plant is approaching retirement age. The best electricians are being siphoned off to oil-field because of the boost to the paycheck, and the ones staying are approaching retirement age. The experience the young oil-field guys get is good, but it is different from the demands of a manufacturing facility.

I worry that as the generation who got their experience in the 80s and 90s continues to retire and the opportunities to gain experience move overseas, that we, as a manufacturing society, will lose those who know how to walk the manufacturing walk while failing to train the new generation.

A segment of the plant where my husband worked in the 90's has shut down and sent its production over-seas. They made automotive safety equipment. The idea of a Chinese airbag inflater, given the cost cutting that they will do for toys and dog-food, is really troublesome to me. I WANT safety equipment to be verified as safe. That does take regulation and inspection, difficult for us to do overseas.

Your assessment is well thought out. Thank you for the question.

Answer 8

Good Morning. You have presented a very comprehensive and actual situation.
There is no 'simple' solution to the present set of conditions, now in effect.
Often I have heard the statement that the 'illegals are taking our jobs' and yes, I agree that there are some credence to that statement. However, for the most part, the jobs that the illegals 'are taking' are jobs that the average American feels to 'above' to take. i.e., washing dishes, mopping floors, hard labor construction, mowing and lawn maintainence, etc.
The 'technical' jobs / positions, i.e., machinist, quality control inspections, pipe fitting, welding, millrights, instrumentation and control installation techs, hvac, electricians, 'steel heads', etc. at fixed locations, petro-chem plants, electrical generation, fresh food processing, water treatment plants, etc. these joibs will continue to require skilled 'positions'.
I worked, from August1988, untill mid January 1990 for a "Twin Plant Operation" a.k.a. "Maquiladora" with production of parts in Brownsville, Texas and the assembly line production, in Matamores, Taumpalipas, Mexico. I was a Quality Control Inspector covering a variety of 'measuringments' , visuals and fittings.
THAT plant had been dismantled and shipped, and set up in South Texas and Mexico, AFTER the elimination of 900+ jobs at the plants original location, in Delaware City, Ohio, (with a pay scale of $15.00 to $23.00 per hour). The workers (1200) in Mexico was paid $1.25 (USD) per hour.
Did this help that Mexico city's economy? YES. Did this help the former employees and Delaware City, Ohio? NO !!!
The reasoning behind this was that with the 'cheaper labor rate' in Mexico, the price of the product "Could" be brought down. Did the 'retail' price decrease after the movement to Mexico?? NO !!! But, TWO Years later, that companies Exectives, gave themselves 'bonus's of "SEVERAL MILLION DOLLARS" !!!
I could go to some more examples of the "OUT SOURCING" activities, but I will close with this statement :: Our USA Political Correctness, Detent, and International Trade Agreements, will continue to diminish the American's working, financial, security, and some day, WE Americans will be 'second to everybody else'.

Answer 9

Yes it is. No one nation can handle ALL of its industry and be competative. It is called comparative advantage. If the cost of production and delivery is lower at an off-site location, then it is cost effective. Labor, like capital, adjusts to the changing dynamic, then re-invents itself to the new market situations.

America had this same arguement before....when we moved jobs from the rural sector to the "big cities". The movement of labor from rural to urban was a net gain for America, as is outsourcing.

Answer 10

Good points.

But, what if you have an excess supply of low-skilled labor in the US?

Also, why would we let illegal aliens (who are typically low-skilled) come to the US when the average low-skilled worker is productive enough to pay for his/her share of medical costs, Medicare, property taxes to educate his/her kids, and Social Security for his/her retirement? Also, someone has to pay for national defense too. These people likely take more from society than they are able to contribute --- i.e., a net DRAIN to our economy/country.

Answer 11

anytime you put your own workers out of a job.how can any good come from that.it all ads up to the big corporations cashing in on something that is going to help them in the long run.i understand what you are saying.anyway i don;t think it;s right.we need to keep as many jobs as possible here in this country.big industry is selling out their own country all for the almighty dollar.thank god we did;nt do this during world war one or two.we never would of won those wars.in the long run all these countries that we are helping by sending them our jobs will only turn on us in the end.