Fog Creek Software
Discussion Board

outsourcing to america

Good news for the economy - outsourcing TO the States is said to be coming, which will provide many new jobs for Americans. The following article says that chinese auto parts manufacturing plants are going to be located in the US in the future, apparently because the US will soon be competitive with Chinese labor costs:

I wonder what other kinds of jobs will be outsoured to the US from China?

Tony Chang
Thursday, May 6, 2004


if you read teh article carefully, you'll see that the plan is to manufacture the auto parts in china, then ship them to Louisiana, where teh 'employees' at the 'factory' there will place the parts into boxes, this qualifying the parts for a "Assembled in the USA" logo with a little american flag. The parts will then be shipped to Mexico and Latin America and sold there as american made auto parts. All perfectly legal, but there's only so many jobs that will be available for box-packers and it's neither high skill, high wage ,nor fulfilling - expect minimum wage with no benefits for 30 people max. That will replace tens of thousands of high paying jobs with benefits making auto parts that have long left. It will be touted in the pro-globalization media as a fantastic benefit to doing trade with china, that the chinese are creating so many wonderful jobs in these economically depressed areas. if the Chinese play their cards according to plan, they won't even have to pay the minimum wage - wages will be paid for by the federal government under a 'jobs retraining' grant.

David Hathaway
Thursday, May 6, 2004

Where can I signup???

Anon-y-mous Cow-ard
Thursday, May 6, 2004

"In 1969, his father led a delegation to Fruit of the Loom in Bowling Green, Ky., and persuaded the company to build Martin Mills. "

Do you think that some other state object when jobs moved from XYZ to lower cost south Louisiana?

(I'm from south Louisiana. )

"Aren't those little 'Made in the U.S.A.' labels made in Mexico?"

- President Bartlett on the West Wing
(At least, I THINK it was him).

Competition for jobs will always be a problem as long as equally qualified people are living in dirt-floored huts.

Mr. Analogy
Thursday, May 6, 2004

Aside from the Made in America label, don't they also get government tax and tarif exclusions for assembly in the US?

I seem to recall GM doing the same thing with Mexican or Canadian parts in the early 80s.

Thursday, May 6, 2004

Yes, also, the Chinese 'investors' are 'buying' the old fruit of the loom building. What the news article fails to mention, but has come up in the local papers, is that it will be 'sold' to the 'investors' for $1. Also, a special tax-free 'revitilization' district' consisting of the building only is being created for which no no property taxes will have to be paid.

David Hathaway
Thursday, May 6, 2004

> "Aren't those little 'Made in the U.S.A.' labels
> made in Mexico?"

I recall actually seeing a badge with Mount Rushmore saying 'Protect Democracy' and 'Made in China' on the back. Go figure.
Thursday, May 6, 2004

In the 80's most power supplies for things like computers ended up being made in Mexico.  Through the 90's some of that moved to Thailand and Malaysia.  In the Naughties a lot are made in China.  In many cases the same companies are involved and own vertically the manufacturing and distribution.

You could think that this is a bad thing, that workers in Mexico had had their jobs replaced, just as they'd replaced jobs in the US in the 70's.

Or, you might think that this is a normal economic wave and whilst some might not be able to swim, many more will both swim and create their own shipbuilding industry, or whatever.

What's certainly the case is that whingeing about it is only going to speed up the process.

There is one significant difference in the nature of the outsourcing, or migration of jobs, to what it was in the past thrity years.

In the past the countries outsourced to could not provide the end user, or distribution, markets for the products they made.  The products were distributed to exactly the same markets as before but at a reducing cost.

Now, in China, India, Korea and the rest of the booming asian economies there is a growing local market which can more than absorb the demand.  The Asian economies are now becoming detached from the Western economies, soon it won't matter that Dell can't sell in the US, because it will be able to sell directly in the Far East, at a lower per capita rate at a much lower distribution cost to a potentially far larger market. 

Unless the Western economies get their act together they will be outconsumed.  At which point manufacturing and the like will move back to the US because it will be cheaper to have it made in the diminished economy there.

Probably take a couple of hundred years though.

Simon Lucy
Friday, May 7, 2004

Why does the title of this thread remind me of Rocky IV?

Friday, May 7, 2004

Simon, I agree with your analysis but think the time scales will be much compressed. I think two business cycles -about eight years - will see the transformation you're talking about.

Economies are finely balanced and even relatively small rises in unemployment can trigger catastrophic changes. If unemployment went up to eight percent, the effects would ripple uncontrollably through America, the UK and Australia and become self sustaining.

Conventional economic responses won't work this time because the impetus is new and we don't know how to deal with it.

Saturday, May 8, 2004

good thing un-employment numbers came in at the low side.  Of course that tanked the stock market for some reason

christopher baus (
Saturday, May 8, 2004

> Of course that tanked the stock market for some reason

Because they assume the 'feds' are waiting for signs of a robust economy before increasing interest rates: so, good unemployment numbers => higher interest rates => lower stock values.

Christopher Wells
Saturday, May 8, 2004

*  Recent Topics

*  Fog Creek Home