From my blog:
The idea of outsourcing is a much politicized issue these days as manufacturing facilities are shifted to other countries. Being a Mechanical Engineer specializing in Manufacturing, I hope to address some of the concerns with outsourcing and how it actually benefits everybody, not just corporations.
The first thing one must realize is the ideal number of manufacturing jobs is zero. Humans are inefficient, inaccurate, weak and slow. Over the history of manufacturing, we have made great strides to reduce the amount of labour needed to manufacture goods. For example: before forklifts, people would have to lift and move goods manually; forklifts alone eliminated many jobs, is this a bad thing? No, it?s the natural progression of the business. We are so technologically advanced these days that we literally don?t need human labour at all for some manufacturing applications. Europe with its extreme protectionist regulation is on the cutting edge of this technology, there are now ?dark factories? (requires no humans to operate) scattered around Europe and continue to be developed. German companies at one point made it company policy to invest $1 million in equipment if it could reduce one human job, saving the labour costs and benefits of employees. (Note the high unemployment in Europe)
Another misconception about outsourcing is the idea that we are losing jobs; nothing could be further from the truth. There has been a shift of jobs from the rich 1st world nations to the poorer 3rd world nations. During this shift, labour costs in the new country tend to be so low, machinery is being used much less, creating many more jobs than we could ever expect from manufacturing domestically. The shutdown of a 100 person plant here is sure to generate many times the number of jobs overseas, and that?s not even considering tertiary business like products and services people buy with their new income. ?We? as a human race are increasing the number of jobs, at the same time, helping the 3rd world build sustainable wealth.
A large concern for people in the 1st world looking in on manufacturing in the 3rd world is working conditions. This is one area I do feel people should be concerned with, as there were many mistakes made in our industrial revolution which should be prevented in the 3rd world as they become industrial powerhouses. There is a progression, and with time, people will gain wealth and demand more from their companies and countries which will give them some of the luxuries we have been accustomed to. The perception of these companies coming into the 3rd world to do business are not looked down upon by locals, they are embraced and loved. I asked this question of a new Vietnamese immigrant whom I worked with last summer. He said that the companies are well liked and they don?t consider the working conditions poor at all. The alternative to working for these companies is struggling to get by on no income whatsoever and slaving away to accomplish basic life tasks. Also, over the many years outsourcing has been practiced, 3rd world wealth has been growing drastically; these countries are gaining wealth faster than the 1st world nations and we are closing the wide gap between the rich and the poor in the world.
Outsourcing has been practiced since the 70?s and was accelerated in the 90?s; throughout this time period we were ?losing? jobs to outsourcing. The result of this was not higher unemployment and lower income jobs as some advocate, but a steady and declining unemployment rate and increasing income, well above inflation. The median (middle income, not weighted to the rich) American income since the 1990 has increased 61%, outpacing inflation by over 15%. If outsourcing is the culprit of high income job loss, it has had little to no effect on the progression of domestic wealth in a country that staunchly supports free trade and outsourcing of production. With the introduction of outsourcing, comes cheaper products, instead of buying a shirt made in the US for $30, people are now able to buy a shirt for $5; freeing up $25 in capital to invest in more products and services, raising people?s standard of living and livelihood. Cheaper goods will always be better for consumers as they are not confined to spending all their money on core essential items, but an opportunity to spend money on education and the like.
In conclusion, outsourcing is not something to be afraid of, but something to accept and embrace. The future in manufacturing is no jobs; outsourcing is not causing the loss of these jobs but allowing a transfer of effectively dead jobs to the poor of the world. The decline in domestic manufacturing has had little to no effect on our ability to generate and increase our wealth, and at the same time given the 3rd world a chance to bring themselves up out of poverty and generate wealth much faster than the richer 1st world. Leftists feel trade barriers, tariffs, and regulation is the way to save jobs; the opposite is true, this does not save jobs, but allows the jobs to die off slowly and restricts the 3rd world from benefiting from this natural progression. Where you are born should not be an issue in today?s world, restricting the good jobs for the 1st world and our own countrymen at the expense of those who actually need jobs and wealth is just wrong. If you cannot see how outsourcing benefits us domestically, try to understand how it helps those in other countries and do what is best for the human race, not just for our own chunk of the planet. To borrow a concept from the movie ?The Corporation?, the bread maker does not work to feed people, but to earn money to feed his own family. Similarly with outsourcing, companies are there for financial reasons, but in the end benefits the 3rd world more than any other form of aid ever could.
