11 Articles on Outsourcing
11 Articles on Outsourcing
Date: Wednesday, December 10, 2003 10:01 AM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.upi.com/view.cfm?StoryID=20031114-052912-7678r
Analysis: Is U.S. tech self-destructing?
The real advantage that overseas competitors may have against their
U.S. counterparts in the tech sector, however, is the cost of top
management. ... if you outsource top management, you are sending the
entire nexus of the company overseas. At that point, if its top
management is outsourced overseas, the tech business may thrive
worldwide, but it will no longer have a significant U.S.-based
component, beyond a few salesmen.
Article 2:
http://www.washingtonpost.com/wp-dyn/articles/A29819-2003Dec2.html
Mexico Now Feels Pinch of Cheap Labor
An Economy Built on Low Wages Finds Itself Undercut by Influx of
Chinese Imports
Article 3:
http://www.azcentral.com/arizonarepublic/business/articles/1206callcenters06.html
Filipinos embrace the 'in' job
At Ambergris Solutions, most of the work starts long after rush hour,
as lights wink out in other high-rises in Manila's Ortigas business
district. On the other side of the world, the company's American
clients are just beginning their day.
Behind Lavin, senior vice president for operations for one of the top
Philippine call center companies, a steady stream of 20-something
recent college grads scurry to work stations on six floors of the
42-story Discovery Suites hotel and office complex.The company is among
45 Filipino and foreign players in the Philippines' booming call center
business, which has generated 30,000 jobs in just five years here.
Article 4:
http://www.azcentral.com/arizonarepublic/arizonaliving/articles/1205levis05.html
Levi's fades as pop icon as last factory moves overseas
SAN ANTONIO - On Jan. 8, the last of the Levi Strauss & Co.
manufacturing plants in the United States will close, fading this
American icon like a pair of its own 501s.
Article 5:
http://in.news.yahoo.com/031203/137/2a19o.html
Ford to use $1 billion in Chinese-made parts in 2004
DEARBORN, Mich. (Reuters) - Ford Motor Co. Chairman and Chief Executive
Bill Ford Jr. said on Tuesday the company expects to use about $1
billion in automotive parts made in China in 2004.
Article 6:
http://www.nytimes.com/2003/12/07/international/asia/07CHIN.html
THE WORLD'S SWEATSHOP: THE ETCH A SKETCH CONNECTION
Ruse in Toyland: Chinese Workers' Hidden Woe
Etch A Sketch is the same child's drawing toy today that it was in
1960, when Ohio Art first produced it in Bryan, Ohio. But efforts to
keep its selling price below $10 on shelves at Wal-Mart and Toys "R" Us
forced the company to move production to China three years ago.
Article 7:
http://www.ctnow.com/business/hc-otis1206.artdec06,1,4658808.story?coll=hc-headlines-business
Otis Scaling Back In Indiana, Moving More Work To Asia
Otis Elevator Co. plans to end its manufacturing operations in
Bloomington, Ind., by the end of 2004, further scaling back what was
once one of the company's bigger U.S. operations and moving more work
to Asia.
Otis said it will eliminate about 165 jobs in Bloomington. About 200
jobs will remain at an Otis logistics and engineering center there.
Some work now done in Bloomington will be shifted to Otis operations in
China.
Article 8:
http://economictimes.indiatimes.com/articleshow/344564.cms
'China's IT industry to become world's largest in 2010'
BEIJING : China 's Information Technology industry output will be over
$280 billion this year, the third highest in the world, and would
triple by 2010 to become the world's largest, a senior Chinese official
said.
Article 9:
http://news.zdnet.co.uk/business/employment/0,39020648,39118282,00.htm
HP marks Indian employment milestone
Beating more well-known contenders such as IBM, Intel and Microsoft,
Hewlett-Packard has recently become India's largest multinational IT
employer, with more than 10,000 employees.
Article 10:
http://seattlepi.nwsource.com/business/151620_wamu09.html
Wamu plans pilot project to outsource IT work
Washington Mutual Inc. said yesterday that it plans to expand a pilot
project in which it has been outsourcing some information-technology
work to contractors in India.
Article 11:
http://www.ctnow.com/business/hc-savejobs1210.artdec10,1,4792302.story?coll=hc-headlines-business
Outsourcing Sparks Boycott Threats
The fight against outsourcing jobs to foreigners has jumped to a new
level with a Bristol business owner threatening to pull his firm's
retirement plan from ING Group, and advocacy groups planning to
encourage similar actions.
http://www.upi.com/view.cfm?StoryID=20031114-052912-7678r
Analysis: Is U.S. tech self-destructing?
By Martin Hutchinson
UPI Business and Economics Editor
Published 11/14/2003 5:46 PM
WASHINGTON, Nov. 14 (UPI) -- "Is high-tech offshore outsourcing a
threat to innovation and economic prosperity?" asked a New America
Foundation forum on Thursday. Rather the question should have been:
Given outsourcing, the relative cost structures, and its current modus
operandi, is the U.S. tech sector headed for long term decay?
Make no mistake about it, there is nothing magical about tech that
makes it intrinsically a U.S. based industry. Consumer electronics, for
example, pioneered by RCA and Zenith in the 1950s, is now dominated by
Japanese and South Korean producers. If other countries develop a tech
capability that outstrips America's, in terms of innovation or cost,
they will get the business.
Outsourcing research and development, or high level software, or
complex engineering, or middle management integration between different
elements in the "value chain" of tech products has very different
implications from outsourcing low level manufacturing operations.
Whereas the workers in say an assembly plant in Malaysia are unlikely
to develop the capability to compete with the plant's U.S. owner,
Indian software engineers and researchers, with education very nearly
as good as that in the U.S., and with experience at a responsible level
in a U.S. company, will quickly acquire the capability to compete with
the U.S. The largest semiconductor manufacturer in the world, in terms
of volume, is no longer Intel but Taiwan Semiconductor; there can
potentially be many more such stories in the future.
Of course, many factors are required for business success beyond
entrepreneurial ability. Professor Michael Porter has identified the
tendency of regions to form a "pole" of excellence in a particular
activity, whose residents will dominate that activity worldwide,
providing the majority of the activity's innovation and new business,
as well as a high proportion of its overall revenues and employment.
Naturally, in the tech sector, this factor has tended so far to favor
the United States. However, as higher-level functions are outsourced
overseas, "poles" of capability are gradually built up in overseas
locations. Once such "poles" have been established, new competitors in
the industry are as likely to arise in the new "pole" as in the
original one. Two excellent examples of such "poles," both of which
have arisen in the last decade are Taiwan in semiconductor
manufacturing and Bangalore in software. In both cases, there are
plenty of opportunities for new competitors in those locations, and
little competitive advantage for U.S. companies against such
competitors.
The real advantage that overseas competitors may have against their
U.S. counterparts in the tech sector, however, is the cost of top
management. In the United States, this can run into the billions, even
the billions per person. John Chambers, for example, not the founder of
Cisco but a professional manager brought into the company in the early
1990s, cashed in $38 million worth of stock options Friday, but this
still left him with options worth $363 million at today's prices, all
of which he has received since 2001. In total Cisco's stock option plan
has issued 321 million shares, with a total value of $7 billion --
considerably more money than the total earnings of the company since
its formation. Except for social security tax, of course, none of this
money has been reflected in Cisco's income statement, only in its
balance sheet, where the company is buying back shares at a frantic
rate -- more than $7.8 billion of scarce cash has been spent on share
buybacks since 2001, in years of a tech downturn.
Cisco, paying out 100 percent of its profits to executives through
share options, is exceptional (though there are companies such as eBay
that pay more.) However, many tech companies pay out 30-50 percent of
their profits, when the math is done properly. At this level, top
management remuneration is not just significant, it may be the largest
single element in the company's costs, an element that is almost wholly
out of control while that management remains in the U.S., with
remuneration standards as they have been since 1995.
In other countries, needless to say, such largesse is unnecessary. The
Indian software company Infosys, for example, paid its executive
directors 60.7 million rupees (approximately $1.5 million) in 2003 --
between the two of them. Admittedly, they got stock options as well --
to a value of approximately $700,000 between them in the same year. By
Indian standards, of course, this may be princely remuneration, but
American top executives of a company of Infosys' stature ($1 billion in
sales and $250 million profit after tax) would not be satisfied with
ten times the amount, and might call in compensation consultants to see
if they could boost their income even if they were paid 100 times the
amount.
Taiwan Semiconductor, located in a richer country than India, pays
somewhat better than Infosys, in terms of salary and bonus -- its
remuneration to Directors in 2002 totaled 133.9 million Taiwan dollars
($3.8 million.) The company's stock option plan issued options on 19.7
million shares in 2002, 0.1 percent of the total shares outstanding
with a total fair value (at 2002's rather depressed share price) of
34.9 million Taiwan dollars ($1 million), around 0.25 percent of the
company's Net Income. This was spread between the entire management
team.
Of course, because of the sector's energetic lobbying, investors are
not directly informed of the true cost of stock option grants. Indeed,
they currently appear to take no account of them when valuing companies
(else, why was eBay, a loss-making company when stock option grants are
taken into account, valued at $35.1 billion Friday?)
While U.S. investors allow their interests to be diluted ad infinitum
in this way, the cost of capital for U.S. tech companies is
exceptionally low, even negative, and hence the companies can flourish.
However, can it be doubted that at some stage in the future, whether or
not the Financial Accounting Standards Board forces proper valuation of
stock option grants, the U.S. investor community itself will finally
take their cost seriously, and factor into its earnings calculations
the true remuneration of the top management of tech companies in the
United States?
At that point, the U.S. tech sector will be in trouble, as the true
unattractiveness of further investment therein will become apparent.
Labor cost differentials can be overcome, by outsourcing, even if the
labor is highly skilled, such as top engineering or research and
development. But if you outsource top management, you are sending the
entire nexus of the company overseas. At that point, if its top
management is outsourced overseas, the tech business may thrive
worldwide, but it will no longer have a significant U.S.-based
component, beyond a few salesmen.
The short-sighted greed of U.S. tech management, and the foolishness of
a regulatory system that has allowed them to hide the true costs of
their overpayment, will bear true responsibility for this development.
Copyright ) 2001-2003 United Press International
http://www.washingtonpost.com/wp-dyn/articles/A29819-2003Dec2.html
Mexico Now Feels Pinch of Cheap Labor
An Economy Built on Low Wages Finds Itself Undercut by Influx of
Chinese Imports
By Mary Jordan
Washington Post Foreign Service
Wednesday, December 3, 2003; Page A19
SANTA ANA CHIAUTEMPAN, Mexico -- The "China threat," as people around
this textile town call it, struck here last week, costing 80 jobs in a
factory that makes blankets.
"Maybe next time, I'll be the one who gets fired; China is going to
make Mexico go broke," said Bernarda Parada, 27, as she hemmed blankets
that sell for $10, while similar ones made in China sell here for $6.
Turn on any radio show, attend any business conference or talk to
workers in small towns like this one and the buzzword is China,
particularly how its rising fortunes are causing pain in Mexico. Since
2001, industry officials said that more than 200,000 clothing, textile
and other factory jobs have disappeared in Mexico and hundreds of
factories have relocated to China, where labor is typically four times
cheaper.
A popular reaction is to disparage goods made in China and to call for
higher trade barriers to protect Mexican goods. Many are even invoking
a new slang expression, to be "China-ed," word play on a common
vulgarism in Spanish. With Chinese-made Mexican flags and Chinese-sewn
traditional Mexican serapes now filling street markets, some people say
dejectedly that the only Mexican commodity left that China does not
make -- at least not yet -- is tequila.
The U.S. textile and clothing industries and U.S. government regulators
are also upset; late last month, the United States imposed import
quotas on several types of Chinese clothing and textiles. But the China
challenge in Mexico is more profound because the Mexican economy
depends so heavily on low-skilled, relatively cheap manufacturing. That
edge is now being chiseled away by a country of 1.2 billion people half
a world away. So, now, officials are scrambling to reposition the
nation's workforce toward higher-skill jobs and higher-end
manufacturing.
"Many people see China as a big threat, and obviously it is," said
Alejandro Dieck Assad, an economist and top official in Mexico's
Finance Ministry. "But China is also simultaneously a big opportunity."
He said competition from China could be just the push Mexico needs to
accelerate its transition from low-skilled assembly work to more
lucrative manufacturing jobs -- less sewing of garments and more
fabrication of electric circuits. Dieck said Mexico could also benefit
by seeking opportunities in the growing Chinese consumer market and by
attracting Chinese tourists to Mexican beaches.
"There are more and more Chinese tourists going abroad; imagine the
opportunities," Dieck said. "Maybe they would like to go to Cancun,
Puerto Vallarta and the pyramids of Mexico City. We have to exploit
this tremendous opportunity."
Mexico's president, Vicente Fox, is scheduled to host Premier Wen
Jiabao of China for a visit beginning Dec. 12, after Wen visits the
United States. The two leaders are expected to discuss the growing flow
of cheap Chinese goods to Mexico, a staggering $6.3 billion worth last
year. Mexican officials stress that Mexican imports to China increased
by 62 percent to $456 million last year, fueled in part by China's
growing taste for Corona beer. But that still leaves a $5.8 billion
trade deficit and officials are concerned about China's expanding
exports.
Beyond these numbers are large quantities of Chinese goods smuggled
into Mexico, officials said. Mexico imposes significant tariffs on
certain Chinese imports -- some as high as 500 percent -- but those
levies are often not paid. Customs officials said the typical route for
Chinese contraband is for goods such as pajamas, pants, bras and tennis
shoes to be smuggled into California ports by ship, then driven over
the U.S.-Mexico border in trucks. Mexican officials said the goods are
sometimes repackaged to make them appear to be from Pakistan or another
countries whose goods are subject to lower tariffs or none at all to
enter Mexico. And sometimes, officials said, a customs agent is paid to
look the other way.
The volume of Chinese contraband is huge; private industry estimates
say 50 percent of clothes and shoes sold in Mexico are made in China.
In response, Dieck said the government recently began an advertising
campaign called "Focus on Mexico" to urge people to buy legal products
and avoid contraband. Much of it is sold in street markets that also
pay no sales taxes.
Fox has pledged the "full force of the law" to punish those who smuggle
Chinese goods. The Mexican attorney general recently announced seizures
of hundreds of tons of Chinese garments and textiles, including 60
truckloads in a single raid. The Mexican Congress is now debating
tougher penalties for those who sell Chinese contraband, with many
arguing that the trade should be penalized as organized crime.
"It's horrible!" said Carmen Temoltzin Cruz, who has been selling
shawls, ponchos and other clothing in this central Mexican town for 29
years. She pounded her fist on her glass display case filled with
bright shawls that sell for $7, saying Chinese imitations are now
selling for $4. "Things are bad. Business must be down 50 percent," she
said.
Even here in the state of Tlaxcala, which for centuries has been a
national clothing center, Chinese-made fabrics are being sold on the
streets. Temoltzin said she was boycotting Chinese goods, and she hoped
other Mexicans would, too. "We need to buy Mexican things, because if
not, our money will go to another country."
Many Mexicans also feel the impact of China's growing hold on the U.S.
consumer market.
In a landmark shift, the United States this year imported more goods
from China than from Mexico. In the first nine months of 2003, the
United States bought $109 billion in goods from China and $102 billion
worth from Mexico. Canada is still the top supplier of imported goods
to the United States, but China has moved up to second and dropped
Mexico to third place. This shift comes on the 10th anniversary of the
North American Free Trade Agreement (NAFTA), which was designed to give
Mexico and Canada enormous trade advantages with the United States.
Blanket factories such as the one where Parada works, which sell soft
Wal-Mart blankets adorned with Winnie the Pooh, Nemo and other Disney
characters, are finding U.S. demand slowing in the face of competition
from cheaper products made in China.
"China won't take long to finish off what is left of us," said Oscar
Lopez, who used to work in a textile factory but now sells chocolate
bars on the street. "It's bad in every sense."
Most of the 60,000 people in this typical Mexican town of narrow
streets and a central plaza adorned with a tiled gazebo are still
involved in the textile industry, making, selling or transporting tons
of blankets, ponchos, and shawls. "But each day it gets harder," said
Rafael Torre Mendoza, whose family blanket factory, Providencia Textile
Group, is the biggest in town. "Everybody here has been affected one
way or another" by China, said Torre, citing declining income and
rising joblessness.
But there is still hope that Mexican manufacturers can respond to the
challenges and reposition themselves, much as Detroit did when faced
with competition from Japanese automobile imports in the 1980s. "We
will have to produce new products with new techniques to stay one step
ahead of the Chinese; that's our weapon," Torre said. "We have to make
better designs and higher-quality products."
http://www.azcentral.com/arizonarepublic/business/articles/1206callcenters06.html
Filipinos embrace the 'in' job
Pat Roque/Associated Press
Marissa Serrano answers calls from clients in the United States at the
Ambergris Solutions call center in Manila.
Call centers serve customers in U.S.
Oliver Teves
Associated Press
Dec. 6, 2003 12:00 AM
MANILA - It's 9 p.m. as Tim Lavin walks into his office, but his staff
greets him with "Good morning, sir."
At Ambergris Solutions, most of the work starts long after rush hour,
as lights wink out in other high-rises in Manila's Ortigas business
district. On the other side of the world, the company's American
clients are just beginning their day.
Behind Lavin, senior vice president for operations for one of the top
Philippine call center companies, a steady stream of 20-something
recent college grads scurry to work stations on six floors of the
42-story Discovery Suites hotel and office complex.
The company is among 45 Filipino and foreign players in the
Philippines' booming call center business, which has generated 30,000
jobs in just five years here.
Trade Secretary Manuel Roxas II touted it as a growth industry in
October, when the world's leading billing-and-customer-service
operator, Cincinnati-based Convergys Corp., opened its first two call
centers in the Philippines.
From "almost unexplored territory" five years ago, Roxas projects the
industry will employ 100,000 Filipinos by 2005, providing a variety of
customer and employee care services to Americans: handling call-in
queries and technical support; travel and consumer services; and
medical and legal transcriptions.
"I have never seen the explosiveness or dynamic growth in an industry
such as the Philippine call center business, and we are just getting
started," said Dave Crawford, Ambergris' vice president for information
technology.
Meanwhile, the United States has lost 250,000 call center jobs to India
and the Philippines since 2001, according to Technology Marketing
Corp., a Norwalk, Conn.-based company specializing in call centers and
telemarketing.
That's part of a much larger trend. Forrester Research has estimated
that 3.3 million service industry jobs, including call centers, and
$136 billion in wages, will move to countries like India, Russia, China
and the Philippines.
Lavin, 33, from Austin, said Ambergris' 1,400 "agents" field queries
and assist customers for U.S. clients. The company is obligated not to
identify its clients, but Lavin said they are Texas-based Fortune 500
companies involved in computers, utilities and telecommunications.
The Philippines' chief competitor in attracting call-center business is
India, but the government and industry leaders say the Philippines has
some advantages: a cultural affinity with the United States, its former
colonial master, and its modern telecommunications infrastructure.
Another difference is that Filipinos speak Americanized English as a
second language.
The Philippines has a Call Center Academy that focuses on teaching
English proficiency, as well as American culture, call center
technology and sales, telemarketing and customer service skills.
With rising unemployment - 12.7 percent in July, up from 11.2 percent
the previous year - the Philippines' call centers can be picky with new
hires.
Jack Tuason, a founder and director of Ambergris, said the company has
been hiring only about 5 percent to 10 percent of the applicant pool.
Marissa Serrano, a 21-year-old agent at Ambergris who once considered
becoming a lawyer, says her friends want to work for a call center.
"They ask me, 'What do you do?' I just sit around, talk to the customer
with my headset. That's it," she said. "They ask me, 'How much do they
pay?' Secret."
Is it glamorous?
"Well it is, because of the pay," she said with a laugh. "If you are
not working for a call center, you're not 'in.' "
The trade and industry department says a Philippine agent, with
starting pay of about 12,000 to 15,000 pesos ($218 to $273) monthly,
gets only a fifth of what an American counterpart would earn, but it's
more than what a new bank teller would get here.
Understanding American culture helps agents get a perspective on
customers' needs and the types of responses they require.
At Ambergris, workers are given USA Today and the most recent Texas
travel guide to read between calls. They watch the previous day's TV
news from Texas during breaks in case conversation with a customer
veers to current events.
Operations manager Katherine Ann Fernando said it can help knowing the
weather, the top stories - even how the Dallas Cowboys or Texas Rangers
are doing.
"We can't afford to sound like we don't know anything about Texas," she
said.
http://www.azcentral.com/arizonarepublic/arizonaliving/articles/1205levis05.html
Levi's fades as pop icon as last factory moves overseas
Malcolm Mayhew
Fort Worth Star-Telegram
Dec. 5, 2003 12:00 AM
SAN ANTONIO - On Jan. 8, the last of the Levi Strauss & Co.
manufacturing plants in the United States will close, fading this
American icon like a pair of its own 501s.
Earlier this year, the struggling denim company announced that the last
two of its U.S. factories, located on the outskirts of downtown San
Antonio, will shut their doors, ending an American tradition that began
150 years ago. Although the company's headquarters in San Francisco
will remain open, and contract work at some U.S. plants will continue,
the bulk of the $4.2 billion company's jeans will be manufactured by
suppliers overseas, where labor is considerably cheaper.
That Levi's - which were "born in the USA" and are featured prominently
on Bruce Springsteen's backside on the cover of his album of the same
name - will now be manufactured overseas signals to some pop culture
observers the death of an institution, one that has been stitched into
American imagery like the little red tag on the jeans' back pocket.
"It's an end of an era," says Patricia Leavy, assistant professor of
sociology at Stonehill College in Easton, Mass. "More than any other
garment in pop culture, Levi's are symbolic of America. They've come to
represent some of the ideals this country is based on." Equality, for
example. Anyone can afford to wear them, kids, adults, any age, any
race.
"Taking this all-American thing, which is being produced by Americans
and American laborers, out of the country, you change the meaning of
it," says Leavy, who teaches a one-day class on the history of
bluejeans. "Even if people still buy it, it's not the same thing."
Katie Otto, a spokeswoman for Levi Strauss & Co., was quick to try to
debunk that notion.
"These closures continue the company's fundamental shift away from
being a manufacturer to being a marketing- and product-driven company,"
she says. "The company was founded, and continues to be headquartered,
in San Francisco. We have a strong presence in the U.S., as represented
by our employees, our iconic brands and our extensive philanthropic
work."
Kevin Ingle, a 30-year-old north Texas artist for an
advertising/promotion firm, compares Levi's moving its operations out
of the country to his favorite sneakers, Converse, which are now
produced overseas.
"The quality of those shoes, I hear, is not as good now," he says. "I
don't buy them anymore. I think it'll drive up the price of vintage
Levi's, because they are an American icon and there's always been such
a massive market for anything American-made. I think more people will
be wanting the vintage jeans, not the ones being produced overseas. I
may keep buying them, if only because I'm not a big Gap fan."
Levi's has been struggling for some time now, its sales damaged by
momentary fads and brutal competitors like Old Navy and the Gap, where
jeans can often sell for as cheap as $15 (an average pair of 501s costs
between $35 and $40, although Levi's has cheaper jeans, as well).
Levi's factories, including several in Texas, began closing in the
'90s, when the company's revenues began dropping from a peak point of
$7.1 billion, according to the New York Times.
"The problem in the denim market right now is, there's a hot new brand
every month or so," says Stan Williams, fashion director for Maxim, a
men's fashion and lifestyle magazine. "They're so fast. They come out
every second. That's what young kids want, the latest trend. Kids don't
automatically think of Levi's anymore."
That wasn't always the case. Founded by Bavarian immigrant Levi
Strauss, the company and its trend-setting products - from 501s to
Dockers - became synonymous with American pop culture, the jeans in
particular. More than 3.5 billion pairs of riveted, red-tag jeans have
rolled out of U.S. factories.
"This weekend, I was watching an episode of Leave It to Beaver,"
Williams says. "It was the episode where Wally and Beaver were trying
to talk their friends into painting for them. And Beaver turned around,
and he was wearing a pair of Levi's jeans, rolled up and pegged.
"They have been such an integral part of American culture. Bruce
Springsteen, Madonna, James Dean - they all wore them and helped
popularize them. People have written songs about them. They're all over
MTV. Even Calvin Klein wore Levi's."
No jeans company, Williams says, will have the pop-culture impact that
Levi's has had, though in the past decade, 200 jean brands have entered
the market.
"I don't think there's a company that can even come close," he says.
http://in.news.yahoo.com/031203/137/2a19o.html
Wednesday December 3, 7:57 AM
Ford to use $1 billion in Chinese-made parts in 2004
DEARBORN, Mich. (Reuters) - Ford Motor Co. Chairman and Chief Executive
Bill Ford Jr. said on Tuesday the company expects to use about $1
billion in automotive parts made in China in 2004.
The head of the world's second-largest automaker also told reporters
Ford may eventually open the door to exports from its auto operations
in China.
"At some point we could see exporting out of China," Ford said.
The U.S. company said in October it would boost investment in China's
fast-growing car market by more than $1 billion over the next few
years.
Ford said the company had been slow to get into China but stressed that
it had been taking a more cost-effective approach to the market than
some of its competitors.
Bill Ford did not offer many details about the automaker's plans for
next year in China but said almost all of its parts sourcing in the
country would likely be for Chinese-made vehicles.
On his first-ever trip to China, last October, Ford said production at
the company's joint venture Chongqing Changan Automobile Co. Ltd. would
rise to 150,000 units from a current 20,000 as part of its expansion,
which is also due to include a second car plant and engine plant. He
did not give a precise time frame.
http://www.nytimes.com/2003/12/07/international/asia/07CHIN.html
December 7, 2003
THE WORLD'S SWEATSHOP: THE ETCH A SKETCH CONNECTION
Ruse in Toyland: Chinese Workers' Hidden Woe
By JOSEPH KAHN
HENZHEN, China - Workers at Kin Ki Industrial, a leading Chinese toy
maker, make a decent salary, rarely work nights or weekends and often
"hang out along the street, play Ping-Pong and watch TV."
They all have work contracts, pensions and medical benefits. The
factory canteen offers tasty food. The dormitories are comfortable.
These are the official working conditions at Kin Ki as they are
described on paper - crib sheets - handed to workers just before
inspections.
Those occur when big American clients, like the Ohio company that uses
Kin Ki to produce the iconic toy Etch A Sketch, visit to make sure that
the factory has good labor standards.
Real-world Kin Ki employees, mostly teenage migrants from internal
provinces, say they work many more hours and earn about 40 percent less
than the company claims. They sleep head-to-toe in tiny rooms. They
staged two strikes recently demanding they get paid closer to the legal
minimum wage.
Most do not have pensions, medical insurance or work contracts. The
company's crib sheet recommends if inspectors press to see such
documents, workers should "intentionally waste time and then say they
can't find them," according to company memos provided to The New York
Times by employees.
After first saying that Kin Ki strictly abides by all Chinese labor
laws, Johnson Tao, a senior executive with the privately owned company,
acknowledged that Kin Ki's wages and benefits fell short of legal
levels and vowed to address the issue soon.
He said that the memos might have reflected attempts by factory
to because of a backlog of projects.
"We have a great deal of backlogged work currently in our technology
pipeline, and we need some fast, efficient ways of getting that work
done," she said.
Hutchinson said Wamu does all of its customer-support work domestically
and has no plans to send that work overseas.
Foreign outsourcing and the exportation of jobs to countries such as
India have been increasing and become an increasingly controversial
political and business issue. U.S. companies say they have to move work
abroad to cut costs and remain competitive, and because there aren't
enough trained people available in this country.
Critics say foreign outsourcing and job exportation not only result in
layoffs in the United States but raise long-term questions about data
security, loss of control of technology that provides the basis for
future innovation and the economic effect of lost income and jobs.
Although much of the attention in the outsourcing and job-exportation
debate has been focused on the technology sector, the financial
services business also has been part of the trend.
One American investment bank is using employees in India to do
financial analysis of stocks. Bank of America announced plans to open a
new information-technology center in India next year, although the
company said it would not affect employment in the United States. The
bank had previously cut jobs in the United States as it moved software
programming to India.
P-I reporter Bill Virgin can be reached at 206-448-8319 or
billvirgin@seattlepi.com
http://www.ctnow.com/business/hc-savejobs1210.artdec10,1,4792302.story?coll=hc-headlines-business
Outsourcing Sparks Boycott Threats
December 10, 2003
By DIANE LEVICK, Courant Staff Writer
The fight against outsourcing jobs to foreigners has jumped to a new
level with a Bristol business owner threatening to pull his firm's
retirement plan from ING Group, and advocacy groups planning to
encourage similar actions.
Fred Tedesco, president and co-owner of Pa-Ted Spring Co. Inc., said
Tuesday he told ING's Hartford office in a letter that he would switch
his 70-person 401(k) plan to another company if ING outsources more
computer jobs.
He also plans to pressure The Hartford Financial Services Group Inc.,
which he says provides property-casualty insurance for his firm. The
insurer's Hartford Life unit has done some outsourcing of information
technology (IT) functions to Indian companies.
In addition, several groups dedicated to saving U.S. jobs are expected
to urge small businesses around the nation to pressure insurers and
threaten boycotts to reverse the outsourcing trend. Leading the charge
is MADe in USA, a coalition of employees and owners of small and medium
manufacturers that Tedesco helped create more than a year ago.
"We want to have people we do business with keep jobs in the U.S.,"
Tedesco said. "We think other companies should be doing the same
thing."
"These insurance companies want you to pay in American dollars, but
they don't want to pay American wages, and I think that's an
abomination," he said.
His firm, which he owns with his brother Richard, makes precision
springs, stampings and small assemblies used in such consumer products
as cars, appliances and hand tools. Outspoken on trade issues, Fred
Tedesco said his business has shrunk, hurt by customers shutting down
and moving operations to China. His battle against outsourcing, he
said, reflects his dedication to saving American jobs and the middle
class.
Critics of outsourcing have long talked about boycotts as a possible
weapon to fight the trend, and the Web is filled with exhortations to
consumers to avoid businesses that send jobs overseas.
But Tedesco and colleagues believe pressure from businesses will have a
much greater influence on large companies, which stand to lose more
revenue if boycotted by other firms.
"It would be rough for people to push that individually," said James
Pace Jr., national director of legislative affairs for the newly formed
Rescue American Jobs Foundation.
Many insurers including ING, Aetna, CIGNA, and Hartford Life - and many
companies in other industries nationwide - have shifted at least some
of their information technology (IT) work to India or other countries
with lower labor costs to save money. Some of the U.S. companies have
foreigners working here on visas.
Protests and rallies have attacked the resulting layoffs of U.S.
workers and the loss of new jobs that would have been filled by
Americans. Insurers, however, say they compete in a global economy and
need to cut IT and other costs to remain competitive.
ING last year cut 300 technology jobs including at least 100 in
Hartford when it outsourced some IT work to several Indian companies.
ING expects to announce soon a new contract to outsource more IT work,
this time to a U.S. firm.
The new arrangement would affect roughly 100 Hartford employees, though
the vendor will probably offer jobs to at least some of them, said Phil
Margolis, director of external communications for ING U.S. Financial
Services.
Tedesco said it's not enough just to say the contract will be with an
American company because many U.S. vendors in turn outsource to foreign
countries and import workers on visas. "I'm very suspicious about
things like that," he said.
Tedesco called ING's letter responding to his concerns "bland" and
"double-talk," and was not satisfied with a phone conversation he had
with a company representative either. He has not yet decided whether to
follow through on his threat to pull the 401(k), and said it depends on
what ING does with outsourcing and whether it engages in "an honest
dialogue" on the issue.
Tedesco said he realizes that losing his firm's small 401(k), with
several million dollars of assets, would mean little to ING, which has
administered the plan for a year. However, he said, "the whole point is
to set the stage for other people to look at" the issue.
Margolis wouldn't comment directly on Tedesco's threat but said ING
uses outsourcing because "our goal is to provide innovative products,
excellent service and competitive pricing. We'll be in the best
position to grow our business if we do that."
The Hartford, calling its foreign outsourcing "minimal," said Tuesday,
"We believe our customers recognize that the competitive landscape
requires businesses everywhere to continuously improve operational
efficiencies."
Tedesco, however, says the issue "is not going to go away," and
companies are going to have to deal with the backlash against
outsourcing. "The total disregard for workers and people for short-term
profits stuns me."
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