Sunday, November 25, 2012
TWIF Flattener 6 - Offshoring
Use one of the current events sources linked at http://mrsfridaysclass.wikispaces.com/Current+Events to find a recent news article that relates to, supports, or refutes Friedman's assertion that offshoring was a "flattener." Your comment should include the title of the news article, a link to the article, and a summary of the article including an explanation of how the article relates to this point. Don't forget to check your rubric for evaluation criteria!
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ReplyDeleteAfter Outsourcing Boom, An 'Insourcing' Comeback?
ReplyDeletehttp://www.npr.org/2013/01/04/168616446/after-outsourcing-boom-an-insourcing-comeback
After decades of predominant outsourcing, companies are beginning to relocate manufacturing back to the United States. Businesses once sought the fiscal benefits of outsourcing to countries such as Mexico and China. However, companies now realize that they save very little money by outsourcing production because of time and cost of shipping. Additionally, a large motivation for companies to shift production in China in the late 1990's and early 2000's was the large Chinese consumer market. Many companies resulted to outsourcing to gain a larger market share. Furthermore, labor costs in China and other countries have increased five-fold. With labor costs increasing in China and a more productive work rate in the United States, companies realize the benefits of returning to the United States. In "The World is Flat", Friedman depicts the benefits of outsourcing manufacturing to China. Friedman refers to offshoring as shifting production to China or another country where taxes and labor costs are lower. There becomes a disconnection between the term "outsourcing" as Friedman uses it and how the article elaborates on the topic. The articles examples more closely allude to Friedman's definition of "offshoring." Therefore, the article parallels to Friedman's concepts that once China joined the World Trade Organization(WTO) businesses must result to offshore production in China to remain competitive on the global market. The article challenges this concept. No longer does China's low labor costs outweigh the costs of operating in America. In fact, companies have been able to reduce prices as a result of relocating to the United States. Conclusively, the global economy is changing--there is a shift to America's constantly evolving technologically skilled work force.
UPDATE 1-Fiat sees at least 100,000 Jeeps made in China in 2014
ReplyDeletehttp://www.reuters.com/article/2013/01/17/fiat-marchionne-china-idUSL6N0AM8NJ20130117
When China joined the World Trade Organization (WTO), countries noticed how the cheap the cost were to create their products in China. Still to this day, America and other countries have been shipping their products to China. China is so inexpensive because its workers do not as for a large salary unlike others. In this recent case, the major company Fiat-Chrysler expects to have 100,000 Jeeps made in 2014 in China. This sample from the article is a quintessence of offshoring. For instance, an American based company is making more money by having factories in China.
Apple Will Bring Some Mac Manufacturing Back to U.S. in 2013
ReplyDeletehttp://www.washingtonpost.com/business/technology/apple-will-bring-mac-manufacturing-back-to-us-in-2013/2012/12/05/991497ac-3fa4-11e2-ae43-cf491b837f7b_story.html
This article talks about the recent decision of Apple to start manufacturing part of the Mac line here in the United States. While the glass for iPads and iPhones are produced here in the United States, most other Apple manufacturing happens in China. One of the main reasons that Apple will not bring over all the production in China to the United States is the lack of employable engineers. This article relates back to "The World is Flat" because it discusses the offshoring of Apple in China and why. The offshoring of Apple in China is similar to the one of ASIMCO because Apple is now trying to bring some of the company back to the United States just like ASIMCO originally had. ASIMCO had a company stationed in the United States and in China and if more students go to college to become engineers, then Apple will further work towards bringing a portion of the company back to the United States according the CEO, Tim Cook.
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ReplyDeleteIn Shift of Jobs, Apple Will Make Some Macs in U.S.
ReplyDeletehttp://www.nytimes.com/2012/12/07/technology/apple-to-resume-us-manufacturing.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1358614969-CKsVKWjEFvRJuWLyzIfgJg
Friedman’s sixth flattener was offshoring, which refers to a company moving its manufacturing or production operations outside its national boundaries to take advantage of cheaper operating costs, including wages. Offshoring flattened the world by allowing companies to expand across the world. In 2001, when China joined the World Trade Organization, offshoring U.S. manufacturing jobs to China greatly increased. Friedman noted, once a few companies started to offshore, others had to do the same to stay competitive due to the cost reductions offshoring provided. However, as reported in this article, some companies are moving manufacturing operations back to the U.S., or “reshoring” jobs, as the advantages of offshoring are diminished. “Lower energy costs in America, rising wages in developing countries like China and Brazil, quality control issues and the desire to keep the supply chain close to the gigantic American consumer base have all factored into these decisions.” Apple is one company joining this trend and has committed $100 million to producing additional products in America. Reshoring may one day be Friedman’s flattener #11, because countries will compete to keep offshored manufacturing operations from moving back within their national boundaries. Offshoring and reshoring have flattened a path between countries for production and trade.
Five ways ‘Made in the USA’ can cut your company’s manufacturing costs
ReplyDeletehttp://www.washingtonpost.com/business/on-small-business/five-ways-made-in-the-usa-can-cut-your-companys-manufacturing-costs/2012/09/26/8cb7b3c4-081b-11e2-858a-5311df86ab04_story.html
In The World is Flat, Friedman's assertion suggests that offshoring may be more beneficial to companies than having their product manufactured in the U.S. This article, however, refutes Friedman's statement. The article states advantages in manufacturing products in the U.S. are: inventory cuts without cost-saving minimums, domestic supply chains flow faster than overseas supply chains, more forgiving forecasting trends, reorders can save you money, and jobs are created in the U.S. With these domestic benefits to the company, one can see that there is no immediate need to offshore manufacturing to other countries. In The World is Flat, Friedman also mentions that offshored and outsourced companies are coming back to the U.S. and insourcing, creating jobs in the U.S. and eliminating the need to offshore and outsource in the first place.
More U.S. Service Jobs Heading Offshore
ReplyDeletehttp://www.usatoday.com/story/money/business/2012/12/06/service-jobs-offshore/1751857/
According to Friedman, offshoring is when a company takes one of its factories that was operating in the U.S. and moves the entire factory to another location, over seas. This article explains that offshoring will continue to happen. The author, Paul Davidson, focuses on a strike that took place at the ports of Los Angeles and Long Beach. Davidson goes to explain that the workers at both ports did not want businesses to continue offshoring because they did not want to lose their jobs. Even with the protests from the workers, service companies have been offshoring businesses in large numbers to cut down on the costs. Davidson states that a trend of companies offshoring will continue until 2016, but then offshoring will slow. However, if offshoring continues until 2016 it is estimated that 375,000 jobs will be moved abroad. This article relates to Friedman's sixth flattener, because it proves Friedman's point that many companies are offshoring their factories to other countries such as China and India.
Exporting Jobs: Offshoring is the Way to Go
ReplyDeletehttp://www.nytimes.com/2004/02/07/opinion/07iht-edfarrell_ed3_.html
This article deals with how although offshoring takes jobs away from citizens of the US, it is still improving the US economy. Most companies in any industry, such as software development, now send their jobs off to countries like India or China due to the low labor cost. At first glance this would seem to be a corrupt action, some states even wanted to pass a bill to restrict offshoring, but offshoring helps the US economy. For every dollar that American companies spend offshore, $1.46 is created in economic value. The US will roughly lose 200,000 jobs due to offshoring, but the US economy today employs over 130 million people. Layoffs have become an issue, but workers here have found new work twice as fast as any other advanced country. This correlates to Friedman's sixth flattener because Friedman also viewed offshoring as a positive action. Most citizens of the US view it as a negative because of the job loss here, but Friedman sees it as a positive. It allowed countries like China and India to be able to have a hand in world trade.
How Romney’s Tax Plan Would Encourage Offshoring
ReplyDeletehttp://takingnote.blogs.nytimes.com/2012/11/01/how-romneys-tax-plan-would-encourage-offshoring/
This article talks about how Romney was planning on proposing a tax plan that would encourage companies to offshore to other countries. It would do this by making company's offshore profits untaxable under the law. This is exactly what Friedman was talking about with this sixth flattener. He said that companies would exploit offshoring in order to cut cost and increase the profitability of their companies. With Romney's tax plan we probably would have seen an increase in offshoring.
Home or Abroad? Home Instinct
ReplyDeletehttp://www.economist.com/news/special-report/21569575-companies-need-think-more-carefully-about-how-they-offshore-and-outsource-herd-instinct
This article talks about how businesses try to save money through offshoring and outsourcing and how their instincts influence their decisions. The article specifically cites two French car businesses who use offshoring, PSA Peugeot Citroën and Renault. They both offshore their car-making factories to countries where work is cheap, like Slovakia, Morocco, and Slovenia. However, Renault is doing better financially than Citroën because they make only 25% of their cars in France while Citroën makes 40% in France. This means that Citroën is paying more to make their cars, and is slowly going out of business for it. This relates to The World is Flat because Friedman discusses how offshoring is a great way for companies to cut costs. This supports Friedman's theory that offshoring is a flattener because it allowed one company (Renault) to gain an advantage in financial status over the other (Citroën) because they used offshoring more.
Offshoring: Welcome Home
ReplyDeletehttp://www.economist.com/news/leaders/21569739-outsourcing-jobs-faraway-places-wane-will-not-solve-wests
Friedman argues that offshoring is the 6th flattener of the world. Offshoring is when a company relocates its factory to a location outside of the country. Companies do this in order to decrease the manufacturing expenses. This article discusses how GE withdrew the production of their refrigerators, washing machines, and heaters from China back to Kentucky. The problem with offshoring is that many americans need the jobs that are being granted to foreigners, just because the foreigners have a cheaper paycheck than Americans.
Romney takes on outsourcing claim
ReplyDeletehttp://politicalticker.blogs.cnn.com/2012/07/10/romney-takes-on-outsourcing-claim/?iref=allsearch
This article is about how Mitt Romney says how President Obama is putting money into outsourcing, and how Obama says the same about him. He says that the outsourcer-in-chief is, willingly or not, causing more and more jobs to be created by American companies in other countries such as China. Obama says that Romney is a pioneer in outsourcing. However, Romney says Obama's "facts" are from unreputable sources. This relates to outsourcing by showing how most Americans feel about it, and that it lowers the amount of jobs in America.