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(ASQ)   Companies who send their manufacturing jobs overseas come to a major discovery: "The problem is that you can see now in looking back, once you move your manufacturing offshore, you're training your supplier to become your competitor"   (asq.org) divider line 25
    More: Obvious, killer  
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3531 clicks; posted to Business » on 22 Sep 2012 at 7:40 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-09-22 08:30:43 PM  
9 votes:
Short sighted asswipes. Didn't these morans realize that as the third and second world countries rose to first world status (like South Korea) they would want to make the sh*t they needed not only for themselves but for the rest of the world... and that by outsourcing american manufacturing you were giving them the keys to the truck that was about to run over your ass?
More manufacturers, call centers, and other businesses are finding this out as well... the MBA morans who pushed these ideas so hard in the 80s and 90s should be lined up against the wall and shot. They have done more to destroy the middle class and long term economic health of this nation for short term profit than any recession of the past 50 years.
2012-09-22 06:47:07 PM  
6 votes:
Most of the people who moved the manufacturing didn't care about the long term consequences. They've cashed out and they live on their private islands.
2012-09-22 07:52:35 PM  
4 votes:
So many business decisions seem to be made only with short-term gains in mind, rather than long-term sustainable profitability - a negative consequence of the bonus culture?
2012-09-23 12:50:17 AM  
3 votes:
CSB:

One of my off-shored jobs was in the corporate IT shop of a Fortune 50 retailer. They began swelling their software development ranks with contractors (including Yours Truly) until the IT department had a ratio of about 2 to 1, contractors to employees. The contractors were highly skilled and actually did the work. The employees supervised the contractors and filled the copious paper pushing jobs that their little corporate IT empire scheme had proliferated over the years. Unbeknownst (at least for a while) to the contractors, the employees started having employee-only meetings with IT management to plan the off-shoring of all of the contractor jobs. This process took about 18 months, and the contractors were kept in the dark until the last possible moment -- and coincidentally right about the same time that the economy was tanking and jobs were becoming scarce.

Long story short, the company laid off hundreds of US domestic IT workers, replacing them with some H-1Bs on-shore and sending the bulk of the work off-shore.

A couple of years later, the same company fired its CIO, the one who had championed this whole scheme. He didn't "resign to pursue other opportunities." They FIRED him. Then they turned around and fired the VP who had been put in charge of the off-shoring.

A former manager friend of mine told me that after they had swept all of their US contractors out the door, it soon became obvious that they had also swept all of their institutional technical knowledge out the door with them. To this day, they're still trying to salvage the situation. The damage that this caused in wasted time and money, not to mention the hundreds of lives it disrupted and the damage it caused to this company's reputation in the IT ranks, is hard to pin down. So far, I haven't heard of anyone they screwed over going back to work for them. Nobody -- including me -- trusts them. What's to stop them from doing it again?

</CSB>
2012-09-22 09:05:58 PM  
3 votes:

kertus: It took them how long to figure this out?

Corporations are idiots


They have absolutely no foresight beyond the current quarter, if it is even that long. It's all about "fiduciary duty to the shareholders" who a lot of corporate apologists will tell you could be SUED by the shareholders if they don't maximize profits by offshoring production (which, BTW, I have never heard of one of these suits being brought, but you'd swear reading Fark that they happen every single day).

The MBAs that do this and the programs that teach it deserve what is coming to them in the not so distant future.
2012-09-22 07:53:13 PM  
3 votes:
Major discovery? This happened to the U.S. consumer electronics industry decades ago. "Let's make some TV's over in Asia, don't worry it's just to get access to their market."

These examples of Chinese success stories like GM and Caterpillar being held out as how globalization benefits US firms, it won't be much longer before China is selling cars and heavy equipment in the US and the rest of the world.
2012-09-22 10:57:59 PM  
2 votes:
I worked for a personal computer company. We outsourced production to a Taiwanese vendor ... which promptly began selling knockoffs in Europe. Copyright protection? What copyright protection?
2012-09-22 10:16:43 PM  
2 votes:
But, but, we saved the brand!

No. Not really. You kept the name and ruined the quality.
2012-09-22 08:56:40 PM  
2 votes:
Much like you had us training our subordinates to be our replacements
2012-09-22 08:01:45 PM  
2 votes:

DrewCurtisJr: Major discovery? This happened to the U.S. consumer electronics industry decades ago. "Let's make some TV's over in Asia, don't worry it's just to get access to their market."

These examples of Chinese success stories like GM and Caterpillar being held out as how globalization benefits US firms, it won't be much longer before China is selling cars and heavy equipment in the US and the rest of the world.


My company moved manufacturing of products for use in China to China, mainly to supply larger manufacturers like GM and CAT. We only build simple, low tech equipment over there for fear of someone stealing our tech and selling it in our market. What we are building there they can't sell here competitively because of costs, and our newer tech is 30 years past what we are building there.

There are tariffs in place to protect our local market from foreign finished goods but there is not much protecting sub-assemblies. The tariffs and shipping costs on a finished car or heavy equipment is enough to keep that stuff from coming here.
2012-09-22 07:55:20 PM  
2 votes:

Wyalt Derp: So many business decisions seem to be made only with short-term gains in mind, rather than long-term sustainable profitability - a negative consequence of the bonus culture?


That and fickle shareholders... What have you done for me today?
2012-09-24 02:46:33 PM  
1 votes:

imashark: I find it difficult find a way to describe what you're saying to the others in a political context.


That's because politics is the art of twisting the context itself. When both question and answers are designed to fit a narrative, there's no progress to be had.

I don't like to categorize solutions into ideologically purified boxes labeled "capitalism" or "socialism" or "liberal" or "conservative", though I do use those terms the way most people do for lack of choice. I'm an engineer. I see policy as a set of conceptual tools that can be used in any combination to achieve an objective. That's ANY combination. If socialism is the answer to a problem, so be it. If it's capitalism, that's fine too. I just want to go with what works best overall, but that starts with a clearly defined strategy. The only thing ideology has to contribute to a strategy is a disincentive to clearly define it. The details are what count because ANY ideology looks good on paper before human nature is taken into account.
2012-09-24 02:07:28 PM  
1 votes:

imashark: So what then is the endgame? I know you're advocating education and innovation to stay at the front end of that curve, but not everyone can be at the front.


I'm not saying the bottom 80% of the bell curve need to become intellectual elites. I'm saying the push of the tech curve creates jobs. It's inefficient in a sense as compared to most of history we really don't have serious problems to tackle right now, but turning over our infrastructure is a process that will always remain intensely domestic. You can have materials and parts shipped in but a local install is a local job. As for goods, frontier tech is by definition tech that hasn't yet been commoditized, which means the processes are both very dynamic and labor-intensive. It should also force infrastructure changes that can't be offshored. That, in turn, requires a support economy that the bottom 80% can fill. The part that people don't get is that this is NOT driven by private sector. The iPhone5 is NOT frontier tech; it's a goddamn toy. It's been commoditized from the word go. As Neil deGrasse Tyson argues, the government's the only entity that can throw billions of dollars into frontier scientific research or massive infrastructure projects and then let the private sector find ways to make money off all this innovation. And it's very much the wealthy that should fund this because they also make the most profits from it (especially with the government soaking up the risk). That we're letting our infrastructure deteriorate and talking about cutting NASA off at the knees while our economy is hollowing into a shell is what makes me lose sympathy for the plight of the American worker. They are literally endangering their jobs for a goddamn tax break.

By the way, I don't prescribe to the notion that we need full employment anyway. We reached a level of productivity that made that unnecessary even 5-6 decades ago. But in a global economy the push to commoditize products and offshore skilled labor won't go away, so as long as people are opposed to social programs in principle then pushing the tech curve is about all we've got. A bunch of flippers selling houses to each other isn't an economy.
2012-09-23 10:58:12 AM  
1 votes:

forgotmydamnusername: You're overlooking that we've got an enormous number of people who really are best suited for an assembly-line job, and always have.


I'm not overlooking it; nor am I unsympathetic -- at least in principle. I just don't know if we can do a whole lot for them besides provide a safety net via entitlement programs. If someone out there can do the same job for a lot less, companies will always try to reduce costs. That these workers are also the same consumers who happily shop at big box stores without a hint of irony, flock to political narratives about bootstrappiness and push for anti-intellectual agendas against their own interests doesn't help. It'd be nice to enact policies that could provide for them, but how far are we willing to go here when the people who need this the most are fighting it tooth and nail?

Seriously, if we take away all the partisan talking points, what people really want are protectionism and socialism. Unfortunately for them, they're not going to buy their own products or vote for socialists. At least I offered education and innovation as an alternative to "godless" economic policies but they're not biting on that either. So our country really has nowhere left to go but down.
2012-09-23 10:11:14 AM  
1 votes:

dragonchild: The antidote to offshoring is education, of course. . . if you're making stuff that's so cutting edge someone has yet to run process improvements on it, the third-world countries are really only getting leftovers.

You know all those stories (mostly veiled editorials really) about California constantly collapsing, with anecdotes from "business owners" who keep whining that California is hostile to big business? It's a non-stop narrative of confusing the forest for the trees. California has a non-stop boom-bust cycle by design. It starts by being home to many of the best universities in the world, which goes hand-in-hand with being a liberal state. This glut of brain power drives the U.S. economy. It's where a lot of the "Next Big Things" are born, many of which are household names. After a few years these innovations are moved to red states for cheaper enhancements and production, then China, and after a bust Silicon Valley moves on to the Next Big Thing. The Republicans have been predicting the Great Fall of California for decades, and they keep missing the point -- when a company leaves California it's not a sign the state's imploding; the red states are fed a non-stop diet of California's leftovers because that's their role in American industry. I worked in industry and the pattern was always research & innovation in California (or Japan or Europe), development & first-gen production in the Bible Belt, commoditization and consumer-level mass production in China or some other de facto third-world nation. Lather, rinse, repeat. The smart companies don't trust their MBAs to offshore stuff to China until competition is already driving down costs. What keeps you employed isn't asking the government to keep the jobs here; it's being the #1 center of innovation in the world constantly churning out high-skill jobs. China can't rip off the Next Big Thing until someone's been paid to break it down into digestible chunks using time-tested industrial methods. Th ...


You're overlooking that we've got an enormous number of people who really are best suited for an assembly-line job, and always have. We've been diverting some of the oversupply into the prison system, but that strategy is about at its limit. As a society, we'd be better off if we'd kept the manufacturing jobs here.
2012-09-23 12:30:43 AM  
1 votes:

Wyalt Derp: So many business decisions seem to be made only with short-term gains in mind, rather than long-term sustainable profitability - a negative consequence of the bonus culture?


A negative consequence of our current flavor of capitalism.

Stock prices ("faith" in the company to make higher profits next quarter) matter more than what the company actually produces. Quarterly statements matter more than long term goals.

It's a stupid system.
2012-09-23 12:02:49 AM  
1 votes:

rewind2846: the MBA morans who pushed these ideas so hard in the 80s and 90s should be lined up against the wall and shot.


I don't think they were morans. They got rich AND made America poor, so their dollars are worth a lot more now.

They should be shot, but they're not morans.
2012-09-22 10:11:44 PM  
1 votes:

wingnut396: Wyalt Derp: So many business decisions seem to be made only with short-term gains in mind, rather than long-term sustainable profitability - a negative consequence of the bonus culture?

I've always wondered if it was a shift from dividends to retained earnings. With a dividend, you can get money back from your investment in the company while still holding onto the stock. When profits are reinvested in the company and no dividend is issued, the only way for an investor to make money is to sell the stock at a high price. This requires constant growth. So if you are not growing the company and the stock price, you are are a failure as an investment. So instead of focusing on profitability, you focus instead on stock price.

Yes, stock price should reflect profits, but it does not have to. You can pump that up in other ways that is not always good for the long term health of the organization.


The story of "Chainsaw Al" Dunlap is a cautionary tale indeed.
2012-09-22 09:59:04 PM  
1 votes:

Wyalt Derp: So many business decisions seem to be made only with short-term gains in mind, rather than long-term sustainable profitability - a negative consequence of the bonus culture?


I've always wondered if it was a shift from dividends to retained earnings. With a dividend, you can get money back from your investment in the company while still holding onto the stock. When profits are reinvested in the company and no dividend is issued, the only way for an investor to make money is to sell the stock at a high price. This requires constant growth. So if you are not growing the company and the stock price, you are are a failure as an investment. So instead of focusing on profitability, you focus instead on stock price.

Yes, stock price should reflect profits, but it does not have to. You can pump that up in other ways that is not always good for the long term health of the organization.
2012-09-22 09:33:02 PM  
1 votes:

Wyalt Derp: So many business decisions seem to be made only with short-term gains in mind, rather than long-term sustainable profitability - a negative consequence of the bonus culture?


My friend, who got out of the finance game long ago, called it "Next Quarter Syndrome" or "NQS".
2012-09-22 09:22:44 PM  
1 votes:

rewind2846: Short sighted asswipes. Didn't these morans realize that as the third and second world countries rose to first world status (like South Korea) they would want to make the sh*t they needed not only for themselves but for the rest of the world... and that by outsourcing american manufacturing you were giving them the keys to the truck that was about to run over your ass?
More manufacturers, call centers, and other businesses are finding this out as well... the MBA morans who pushed these ideas so hard in the 80s and 90s should be lined up against the wall and shot. They have done more to destroy the middle class and long term economic health of this nation for short term profit than any recession of the past 50 years.


Not just MBAs...Michael Dell moved from using Asus as a parts supplier to a system integrator. Now Asus under cuts Dell on computers and laptops.
2012-09-22 08:52:26 PM  
1 votes:
this happened to Schwinn Bicycles, twice.

as for automotive, China's policy of forcing foreign automakers to link up with local companies is not working as intended so far. the market share of domestics are plummeting. china's car market isn't growing much right now, but the German and American brands have been making big gains in sales at the expense of domestics (and now, the Japanese).

there are two Chinese car brands for rest of the world to fret about: Geely (via Volvo) and SAIC (via MG Rover).
2012-09-22 07:49:27 PM  
1 votes:
gee what do you know, real life is more complicated than simple profit/cost black/white analysis would lead a simpleton to believe.
2012-09-22 07:21:01 PM  
1 votes:
Just lay off more people
2012-09-22 06:58:18 PM  
1 votes:
Ain't that a shame.
 
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