I still feel that outsoursing may have been good for the company's bottom line, but it is not good for the American populace. The expectation of companies for hiring employees at "reasonable wages" is unreasonable because the cost of living in America is high so how do you negotiate below that. If the compnaies are paying reasonable wages for their executives, no unreasonable pucks and company jets, they will not be forced to go overseas to find skilled labor at a lower cost. There will be enough money for the hard working employess and profits for the companies.
The government extension of unemployment benefits is necessary. There are no jobs and the people laid off have to house and feed their families. Many have sold all they have to keep the basic needs. Many are willing to work but there are no jobs. I know of a lot of people who are unemployed that have gone back to school to get "re-tooled" and really need the unemployment benefits to hang in there till they get new degrees to work in such areas as healthcare that is still hiring.
Outsourcing is something that I have mixed feelings about. It came about due to necessities for the large corporations. Costs were exponentially rising whether is was supplies, labor or energy. In order to stay in business they needed to find a way to operate with lower costs. Unfortunately we as Americans have become accustom to having the best and being paid the best and not willing to negotiate to insure that we have jobs.
The government is not helping this now by continually extending unemployment benefits. What this is doing is creating a large amount of the population that don’t have jobs and aren't willing to look for jobs because they are getting paid to do nothing. Now these companies need employees at reasonable wages, so they are forced to go overseas to find skilled labor at a lower cost.
Now on the other hand there are a large amount of Chinese companies that are building plants and taking over operations here in America because the government is making it more cost effective for them to be here then for them to be in China.
The hope is that this is a reversing trend, that some of these jobs that were lost either to NAFTA or overseas are returning due to those governments increasing taxes and costs on those companies.
You role with the punch! As Bola said, 20 years is too far out. What is certain is changes will occur with oursourcing as global events and national priorities change. We all need to just plan to go with the flow.
Rich, Great question. 20 years in the business world is a lifetime. Only 10 years ago, many of the companies that now dominate the high-tech sector were bit players. In fact, Apple was considered roadkill. I know we'll still have taxes 20 years from now and crude oil will most likely be a lot more expensive but anyone who tells you they know how the fine details of business processes will play out more than five years from today is hallucinating.
That shouldn't stop us from speculating, though. So, here goes: 20 years from today most manufacturing would be done by specialized companies that also compete with their customers. We see the trend today and I see no reasons for this to get reversed. Also, contract manufacturers will be so much bigger than their customers and their clout in the electronic supply chain will be huge; some of them already dwarf their customers. And finally, my safest prediction for 20 years from now: The sun will still be rising in the East and setting in the West.
I'm more interested in what the outsourcing situation will be in 20 years. Things have changed a lot in the last 20 years. Imagine what they will be like 20 years from now. If energy costs are higher (much, much higher), imagine what that will do to outsourcing and supply chain management. For one thing, much higher transportation costs should hurt outsourcing tremendously. Potential wars will affect it, too, let alone simple changes in political outlook. Then what do you do?
This is a subject that still generates a lot of passion because it directly impact people's lives. So, the issue is not going away. Numerous jobs have been lost in the West and tens of thousands created in developing economies as a result of outsourcing. That's the fact. Now, workers in the West and many politicians are asking if the trend should continue. We may not like the conversation but it is happening and it should continue.
Personally, I believe there is a middle course companies should chart. Unbriddled outsourcing hurts communities and eventually even the company carrying out the outsourcing. Many executives have issued blanket outsourcing orders without regard for the long-term implications for their companies and sometimes even in disregard of the benefits. One reason for this is that Wall Street now demands it.
Here's one example. A long-term executive serving at Solectron Corp. before it was acquired by Flextronics International Ltd. told me how he and his colleagues tried to explain the subject of "total cost of ownership" to a CEO at a major OEM. They told -- and tried to show -- the CEO why moving manufacturing to China would not reduce costs for his company once all additional expenses were added to the admittedly lower wage labor. As they finished, they expected the CEO to reflect on their presentation and were stunned when he retorted: "How soon can you move us to China?" Apparently, it was more important that the company be portrayed as trying to cut costs than to be actually cutting costs.
I have been in the engineering industry for 20 + years and have observed many techniques utilized with outsourcing of both components and labor. It should be done thoughfully so that one gets the work done or is not short on parts if the supply chain is disrupted. Money should not be the only consideration, unfortunately it usually is. This impacts everyone involved. There is enough work for everyone if project managers pay attention to ALL the issues, not just the monetary ones.
I think that logistically, as long as people are looking for work, there will be outsourcing. There are always shifts in the balance of buyers and providers, but some form of outsourcing will always exist.
This is one topic, which is under never ending discussion. Personally I do not like to see the discussion of outsourcing, its impacts to be done again and again. Every one knows US was the technology spearhead for decades and it is still. But in the mean time there are countries like china and India lead by great people who understood that technology is a great necessary for a country. So they have put into the curriculum, next there are enough people who studied this and became eligible engineers.
We see outsourcing everywhere it can be with in the country or it can be to different country wherever there is a quality and cheaper services are available. In future we don’t need to wonder if the Indian or Chinese companies outsource the jobs to companies in US or Europe. So what Americans or Europeans are going to say? Is outsourcing a bad thing. Even though I can write more regarding this I feel most of the engineers are clearly aware of the situation and this is not a topic requires to be discussed anymore.
Good Question, Ojo, about how do you strike the balance between the in-house and outsourcing without loosing out your key strengths. Here I think we can take the project management lessons from Department of defense where strategic weapons are developed, or department of space where mission critical systems are developed. As per my guestimate, 90% of the work on these strategic, top secret projects is outsourced, yet the totality of the final product is kept within the department as a closely guarded secret. I remember to have worked in Department of Atomic energy, in India, way back in 1974, when India exploded their first Atomic Bomb. Hundreds of people within the department and also the outside vendors worked on the project but only the top key people knew what was going to be the final product.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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