U S Economy Why Outsourcing Helps Term Paper

  • Length: 5 pages
  • Sources: 4
  • Subject: Careers
  • Type: Term Paper
  • Paper: #21356072

Excerpt from Term Paper :

Dobb's support of stringent immigration reforms however gains him points with the far right of the Republican Party. Lou Dobbs is best known however for this crusade to save the middle class of America by fighting outsourcing and the reduction in wages of American workers.

Making American Manufacturing Lean: A Perspective

Looking first at the progression of outsourcing from low-skill and low wage jobs to intermediate and finally high-skill jobs including design and production planning, Link (2006) first illustrates through a series of comparisons how widely divergent the costs per labor hour are in the United States relative to nations now generating the majority of outsourcing manufacturing activity. The contrasts are remarkable, and while the author does not describe what isn't available in these locations for manufacturing, including reliable electricity (which is difficult to find in India), or sustainable and replicable production processes where the experience effect can contribute to a drop in production costs (as is the case in many chaotic Chinese manufacturing operations), the author tends to see the outsourcing decision purely on cost and does not add value in terms of the costs associated with moving to a 3rd world nation to do manufacturing.

Instead, the author takes the approach of looking at the concepts of lean manufacturing as the true point of differentiation and long-term growth of American manufacturing. Link (2006) argues that efficiency and cost reduction through lean manufacturing techniques can actually forestall or even stop the outsourcing of jobs en masse. The other side of this argument however is that many Indian outsourcing companies including HCL, Infosys, Tata and others can deliver a 40% reduction in the costs of doing a complex task or process, which would ironically alleviate the pressure on companies to outsource their core business. The author tends to applaud the Toyota Production System too often, and could have made the entire article stronger by showing the ironies of Toyota themselves doing much of their outsourcing work on non-strategic parts of their business so they could focus on the core aspects of next generation auto development.

Conclusion

While American politicians look to capitalize on the pervasive public mood against offshore outsourcing, the reality of the situation is that its much more complex and intricate of an issue economically than the emotional reactions political candidates work so hard to elicit to get votes. Outsourcing is hot as a topic in the United States right now because we're for the first time feeling the pinch of being the have-nots of job influx at the middle and lower ends of the economic spectrum. What the harshest critics seem to not see is that offshore outsourcing is the critical wake-up call for the United States to start getting higher levels of education for its students, invest heavily in the math and sciences, regain world leadership in patents, and in general regain dominance in science and engineering. Further, it makes much more sense to look at any given company looking to do offshore outsourcing and make the existing processes they have more efficient. By offshore outsourcing before taking this step, companies are just automating mediocrity. There is no simple answer to offshore outsourcing. Yet the message to the United States is very clear. it's time to step up efforts to make companies more lean, efficient and intelligent in their processes, gain greater competitive strength in science and math, and look for ways to lead the world in patents and new innovation. The bottom line is that the Internet and globalization has forever changed the face of global competition, and that offshore outsourcing is going to continue and grow due to cost advantages. For American businesses they need to find how to find greater efficiencies so that outsourcing is less of a strategy of last resort to survive but more of a strategy to offload non-essential processes so the core parts of any business can accelerate and grow.

References

Peek (2006) - Shrinking Unions Push Democrats toward Protectionism, New York Sun newspaper. Published November 14, 2006 and accessed from the Internet on February 9, 2007 from location:

http://www.nysun.com/article/43448and http://www.nysun.com/pf.php?id=43448

Gram (2006) - Sanders' vows to continue fighting outsourcing of U.S. Jobs. Boston.com and Associated Press. September 23, 2006. Accessed from the Internet February 9, 2007:

http://www.boston.com/news/local/vermont/articles/2006/09/23/sanders_vows_to_continue_fighting_outsourcing_of_us_jobs/

Hitt (2006) - Protectionist Stance is Gaining Clout. Greg Hitt, Wall Street Journal. November 6, 2006. Page A4. Accessed from the Internet on February 9, 2007 from location: http://online.wsj.com/public/article_print/SB116277226395813918-TvtW_7IYYvHHLZCbZTWcbV3_aQc_20061205.html

McCarthy (2005)- Dobbs Fires Away Against Outsourcing. USA Today. February 22,2005. Money Section. Accessed from the Internet on February 9, 2007 from location:

http://www.usatoday.com/money/economy/employment/2005-02-22-dobbs-usat_x.htm

Link (2006) - Lean Manufacturing Can Save American Manufacturing. Jack Rick. February 20, 2006. Maintenance World Magazine. Accessed from the Internet on February 9, 2007 from location:

http://www.maintenanceworld.com/Articles/rinkJ/Lean-Manufacturing.html

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