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Friday, April 02, 2004

But, but ... outsourcing must be bad, right?

Instapundit links to this article comparing jobs "lost" by our outsourcing compared to jobs "gained" by outsourcing from others. And, big surprise, it turns out that trade works both ways. When foreign companies want to take advantage of our market, they tend to hire Americans to get that done. John Kerry doesn't think this is a problem, but he does think it's a problem when American companies do similar things in other countries.

The article closes with this example:

Even companies from India are creating jobs in the United States. India's Essel Propack, the world's largest maker of laminated tubes for packaging consumer products, based in Mumbai, is adding 50 positions to its toothpaste tube manufacturing plant in Danville, Va. The additions will bring total employment at the factory to 137.

It also makes some important points about the overall scope of outsourcing and comparing the competing factors of outsourcing and what I will call "insourcing."

While U.S. companies including Hewlett-Packard Co., the world's second- largest computer maker, and AIG Life Insurance Co., the world's largest insurer, have transferred white-collar work to low-wage countries such as India and China, more jobs are coming the other way, according to government estimates and trade analysts.

"Any way you slice it, the world is creating or transferring more jobs to the U.S. than we are doing to the rest of the world," said Daniel T. Griswold, a trade specialist at the Cato Institute, a research organization in Washington.

India's Essel Propack Ltd., Taiwan's Teco Electric & Machinery Co. and Denmark's Vestas Wind Systems A/S all have built plants in the United States in the last year and a half.

Other non-U.S. companies announced plans to increase hiring in the United States last year including Japan's Nissan Motor Co., with 3,350 jobs in Canton, Miss.; DaimlerChrysler AG of Germany, with 2,000 at a new Mercedes-Benz plant in Vance, Ala.; German appliance distributor BSH Bosch and Siemens Hausergate GmbH, with 1,300 in New Bern, N.C.; and Magna International Inc. of Canada, with as many as 800 in Bowling Green, Ky.

The movement of U.S. jobs abroad "has been blown out of proportion" mainly because domestic companies in the United States have been slow to increase hiring, said Martin Baily, chairman of former President Bill Clinton's Council of Economic Advisers. "There was lots of offshoring going on in the 1990s, but job growth was so strong in the U.S. that nobody really took much notice."

While reliable figures aren't available for the last two years, the Commerce Department estimated on March 18 that the number of Americans employed by U.S. affiliates of majority non-U.S. companies grew by 4.7 million from 1997 through 2001. In the same period, the number of non-Americans working at affiliates of majority-U.S. companies abroad rose by 2.8 million.


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