U.S.-based multinational corporations added 1.5 million workers to their payrolls in Asia and the Pacific region during the 2000s, and 477,500 workers in Latin America, while cutting payrolls at home by 864,000, the Commerce Department reported.
The faster growth abroad was concentrated in emerging markets, such as China, Brazil, India and Eastern Europe, according to economists Kevin Barefoot and Raymond Mataloni, of the U.S. Commerce Department.
"Judging by the destination of sales by affiliates in those countries," the economists wrote in a recent survey, "the goal of the U.S. multinational corporations' expanded production was to primarily sell to local customers rather than to reduce their labor costs for goods and services destined for sale in the U.S., Western Europe and other high-income countries."
This is a a point that needs to be stressed when we're talking about the "outsourced" jobs. In reality, there are many regions of the world that are growing at far more impressive rates than the US. In addition, these are new markets with an emerging middle class. That means is simply makes more sense to locate the factories and manufacturing facilities in these countries to sell to that market.
7 comments:
Bonddad,
The authors wrote the goal was "to primarily" sell to local markets, but there is no quantification of what "primarily" means. It could be a relatively modest effect. The term "primarily" is very inexact and thus of limited value.
Another problem here is that using this imprecisely framed statement to infer that it makes the most sense to locate jobs overseas (while losing 864,000+ jobs in the US) is a non sequitur.
In addition, while it would be possible to infer that some proportion of the jobs created overseas led to sales abroad, it is not logical to infer that ALL of the overseas jobs led to sales abroad. MANY of the overseas jobs led to domestic US sales - and there is no quantification of that effect in this posting.
What about the 864,000 jobs overseas - is there no logical (i.e., negative) relation between the surge abroad and the large decrease in the U.S.?
In retrospect, wasn't Ross Perot correct when he predicted the "giant sucking sound" that would take place when millions of American jobs were displaced due to "free trade" treaties?
Why is everything I look at in retail stores Made in China? Kind of like Jeeps were made in some place called Willis, East of the Urals?
More importantly during a stop along I40 somewhere in AZ or NM saw a Native American motive bowl...Made in China.
US Manufacturing means make it locally and sell globally. Not engineer and make it all over the world and then snap together in the US, like a tricycle, like the Boeing 787
Also, This isn't really what most people are referring to when they critique "outsourcing." It's one thing for GM to open a car plant in a foreign country to get those cars it makes to their new customers more quickly. It's another for a US corp to send its customer service or IT functions to center in India or the Phillipines to serve US customers.
Wow - talk about rationalization.
The article to read is Alan Blinder's on offshoring - who estimated that 25% of all US Jobs would be offshorable by 2014. They are being offshored because of labor arbitrage.
The offered explanation doesn't explain, for example, why all of Apple's products are made in China. Or why the Germans continue to manufacture their products in Germany for export abroad. No does it attempt any comparison of labor savings versus the cost of transport.
I can't disagree more with this explanation, which frankly is denial
In fact, if you read the article, it concludes with the following:
"Much of the overseas investment and hiring by U.S. multinationals has been in the service sector and other industries outside manufacturing. Among U.S. multinational firms in manufacturing, about 60% of employment is still in the U.S. But the manufacturers cut their U.S. payrolls by 2.1 million in the 2000s and added 230,000 workers overseas"
The types of service sector jobs (re call centers) could be done anywhere. I have read this before here: the author doesn't, in all due respect, understand that service sector jobs are being offshored, not manufacturing jobs.
More sense (and dollars) to the 1% while they beg to bring their profits back home tax free.
I've read that locating a plant in China is often a condition for being able to sell in the country.
I always wonder why we don't put the same conditions on manufacturers selling to the American market.
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