Local Business Faces Reality: Production Overseas is Cheaper.

Only Republican CEO's who fly in Lear jets expect Americans to live on two bucks a day, like in China.

I thought the Republicans HATED commies?

Now, they are eating our lunch, served by hand, with napkins, by President George W. Bush and the GOP-run Congress.

Enjoy.

What is considered a reasonable profit small business owners and corporations should expect to enjoy after the cost of doing business? I have had the opportunity to read some literature on some companies that have moved production over seas. It turns out some of these corporations that have moved to China or India were enjoying nice profits before they downsized their American work force. I'm really tired of hearing the excuse, "we're moving because of the cost of doing business in Portland, Oregon, or America is too much." Even though the cost of producing the products is 4 times less in China than here, how many products being offered that used to be produced in the USA have also dropped four times the previous price when the manufacturing moves?

I just don't buy the argument that in order to succeed most business need to produce their products in cheaper economies to be financially viable. Didn't we at one time produce some of the most sturdy, best built products in the world? The sad thing is, is that most companies Decision Makers are now making their business decisions based on cost with no loyalty to their own workers or the consumers that purchase their products.

I'd like to find a list of all companies that have outsourced the majority of their manufacturing to other countries in order to stop buying their products. On this blog there was an uproar over WalMart being built in the city in part because their products are made cheaply by foreign workers. I'd like all those people who commented about that to consciously join together and stop purchasing from 3rd class companies. If these companies that expect to sell their products and make a profit off Americans don't want to have their products being made by Americans, than they should take their products off our shelves and see how successfully their offerings do in the foreign markets where their products are manufactured.

If the exodus of good, middle-income, manufacturing jobs keeps declining so will American buying power and with it the American economy. There has to be a moment the American people are going to get sick and tired of watching their incomes slide while executives and shareholders make record profits. I just hope it's before the only available jobs are those bagging groceries at the Super WalMart in Sellwood.

Mark & Sid-

I totally agree- it is sad that the market is currently structured in a way that gives the biggest profits to those companies that value their allegiance to their shareholders more than their country, communities, or employees. (Let alone human rights, environmental standards, labor standards, or anything like that.)

The worst thing about the trend of companies moving overseas is that it puts pressure on other companies to do the same, in order to match their competitor's profit margin- and this creates a vicious cycle. We are bleeding our national wealth, buying more than we sell, and racking up further debt on top of that. We don't make anything in this country anymore, we just sell each other overpriced real estate and houses.

We are in desperate need of a new trade & investment policy in this country because in the not-too-distant future countries like China, who are making all of our products for us, and then loaning us the money to buy them, are going to want us to make good on our loans and pay them back. But if things don't change, then we won't have the wealth, nor the productive capacity, to pay them back.

Things DO need to change - and following Mark's lead by making a conscious effort to buy products manufactured in the USA whenever possible is a good way that the average person can make a difference.

Let it be known that I commit to buying local when possible, and buying American when possible. I hope that a sufficient amount of people choose to do the same. If they do, we can make a difference.

The problems created for us by globalization is that policy and business leaders are used to a world where we had automatic advantages over everyone else in the world. We haven't adjusted to the new realities very well. We have allowed our competitive advantages to atrophy. We continue to disinvest in our education system. We are not creating a sufficiently trained workforce to accomodate the needs of the industry that is here. It is prohibitively costly to produce certain basic manufactored goods here when competing with foreign workers. Most importantly, China and India are huge markets which can be most succesfully reached from (you guessed it) China and India.
But the other reality is that we have created some disincentives for companies to continue to manufactor here. Intel would find it cheaper to build a chip plant in China that in the US and the great majority of the difference in cost is in what they pay in federal taxes here. Our tax code has tended to reward people who relocate overseas and punish companies that keep family-wage jobs here.
At the local level we need to work on keeping the regulatory overburden at a minimum. Companies who are here have a lot of options, we should make sure that we don't niggle them into finding an easier place to do business. At the same time, we have to make sure that the things that attracted them here in the first place, good schools, cheap water, and beautiful natrual surroundings are still here.
Tough job and it doesn't lend itself to easy solutions.

I am a small business owner and I consistently face competition from overseas and from local companies that utilize overseas labor. My company is narrowing its focus to local business for the most part, where we can provide more personalized service in a way distant companies cannot.
As a corollary, we also refuse to do business with companies that we know use overseas labor.
This outsourcing of jobs only increases the divide between rich and poor, both in this country and overseas. While some may feel that at least workers overseas benefit, this is short-sighted. Corporations use globalization to pit workers against each other. One country may benefit today, but the minute another rises as the new cheap labor leader, they will find themselves in a precarious position with their newfound jobs being relocated once again (unless, of course, they are willing to work for even less). If we continue down this road, we will find that one of our country's distinguishing features will soon disappear: the middle class and all that will be left are robber-baron corporations and masses of service-industry workers.

One more thing: the solution to this problem is fairly straightforward and would go a long way toward leveling the playing field: Companies that do business in the U.S. and utilize overseas labor need to be taxed in the same fashion that imported products are. The government has protected the U.S. auto industry this way and I don't see why it can't be used successfully in other industries. I have no problem with foreign workers getting work if they get it because they are uniquely qualified. If a company is willing to pay the same to hire a foreign worker as they are to hire a local worker, then I can only assume that the foreign worker is the right person for the job. If they hire them at 1/4 the pay, then I can only assume they are being hired to maximize profits at local workers' expense.

Cliff's comments about the demise of the middle class are right on - and the competition fostered between countries with cheap labor is not unlike that here in the states when communities vie with one another to locate the latest WalMart, etc. Free land, no cost to develop infrastructure, resulting (at times) in minimum wage jobs with few benefits.

One tack (like it would go over in our materialistic society!) is to reduce our spending. How many items of clothing do we really need? Shoes? Household goods? The latest electronic gadget? People could stop loading up their credit cards - save some money - and reduce the government's reliance on foreign sources of capital to finance the country's debt.

If Americans oppose outsourcing to other nations, which manufacture goods at lower prices, why do they continue to support outsourcing by purchasing the lower priced goods manufactured overseas?

Business is giving the consumers what they want. So who is really driving this trend?