19 April 2010

The real cost of overseas manufacturing?

Cheaper, faster, same quality. Ok mostly cheaper, but essentially that's the rationale for more and more sourcing of jobs overseas, right? Cheaper to make equals cheaper to buy equals better for Bob Anybody who's being forced to do more with less.

A report from the
National Labor Committee recently put a light on a manufacturing company who makes products for a number of US companies. (I presume that the report is mostly somewhat true, but in any event I'm sure the practices described are happening somewhere.)

Outside of what looks to me like an ominous downward spiral (Bob's employer wants to cut costs to maximize shareholder value, so they source Bob's maufacturing job to China, but since all the other companies are doing the same thing Bob can't find a new job, and with a family to feed he's forced to shop for the cheapest prices. The increased competition challenges companies to find more ways to cut costs which to them means sourcing more jobs overseas, putting Bob's neighbor Barb out of a job...) I think we keep getting caught up either thinking or making ourselves believe that the overseas operation would be acting in the same ways an local operation would.

Either that or we care less about what happens on the other side of the globe. It's probably a little of both, and both equally scare me. And as the world economy either stays in the funk it's in or becomes worse, I would guess that reports like this will just increase.

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