Hi,
Here is the link to the article by Andy Group, co-founder of Intel Corp. which I mentioned in the class yesterday:
http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html
Please comment.
Regards,
Sandeep
My favorite line in the article is "abandoning today’s “commodity” manufacturing can lock you out of tomorrow’s emerging industry."
ReplyDeleteIt's absolutely true. If we give up on the things that everyone needs but don't necessarily concentrate on, we will lose out on the innovation. Example: 3D TV's. I wonder how many of those are being manufactured and sold here? Probably close to none.
However, I don't agree with his point on "taxing every product made with offshore labor." The price on almost every electronic we buy (which are already usually pretty expensive) would drastically increase as companies tried to keep up with their dues. The American consumer would be hurt, not helped. I do feel he has many other great points and has clarified what outsourcing jobs can do to a country in a way I've never read before.
One of the strongest lines in this article is of course the concluding sentence, "we change on our own, or change will continue to be forced upon us." It seems to be that us Americans have peaked in the eyes of global economies, look at our own economy for instance. All our jobs our outsourced to other countries, yet we are the best country of course. It seems that Americans have forgotten our pride and let the greed take over for a while. We need our nationalist pride yet again.
ReplyDeleteAnother line I kept going back to was "If the result is a trade war, treat it like other wars -- fight to win." Isn't that what us Americans do? And usually we don't know when to quit either, take Veitnam for example, so why don't we enter 'the war'? We need a trade war. I disagree completely with Korinkoj1 and think that "taxing every product made with offshore labor." is the way to go. It would increase prices at first, but businesses aren't stupid, they'd realize that they would need to find a cheaper why to produce their goods, like bringing jobs back to America, or the consumer will find someone else to buy from.
In Andy Grove's article, he disagreed with Alan S. Blinder's point on the offshore production. I agree with Alan S. Blinder in a way that it is a success in the sense that moving production offshore benefits the company by reducing the cost effectively, which will be able to generate more profits for the company and at the same time offering cheaper deals for the consumers.
ReplyDeleteHowever, I could see the point that Andy Grove is saying. By moving the production offshore, the employment is cut off drastically in the U.S. On a national scale, it is not worth the action as the consumers are also the workers. Without an employment, consumers will not be able to contribute to the market cycle since there will be a limited of income.
Alan S. Blinder's statement also made me wonder if there is a sense of pride in his sentence which might influence people. U.S. in this sense is the shooter that fires the first shoot to let the race begin. Without this first shoot, runners will not start running. Such sense of accomplishment sometimes fulfill one's desire or self-esteem.
Though I do agree and enjoy the point that Andy Grove has made about scaling. Andy is very persuasive in stating that "job creation must be the No. 1 objective of state economic policy." Without employment, there will be no consumers.
Back to the race metaphor, even if U.S. is the first one who fires the shoot and starts the race, if U.S. herself is not in the race and completely drops out once the shoot is fired. Then indeed she will lose what she has started and built for. It is completely true that "we lose our hold on new technologies" as Andy Grove has mentioned. In order to be on the top of the race, one should not only initialize but as well as keep up the technology for its sustainability in further development.
Andy Grove concluded with a very statement saying that "if we want to remain a leading economy, we change on our own, or change will continue to be forced upon us." This statement not only applies to economy, but as well as politics.
It is a very interesting article, providing a ton of first hand experience and startling figures (such as the Foxconn stats). I feel that Andy Grove is pretty accurate all around, but his point about the innovation gap that is associated with outsourcing is probably the most poignant.
ReplyDeleteIt is a very accurate remark that we do lose a very important step in the process of technological advancement when we remove all forms of manufacturing from our shores. There is no way that we can compete with overseas manufacturing simply because of the disparity in human resources; however, to completely write off the necessity of local businesses and local manufacturing is a terrible mistake.
As Andy Grove said, as technology advances for a few decades overseas, we lose sight of the innovations that are coming. Essentially by pushing production overseas we are profiting in the short run, but we are locking ourselves out of the future of the technology we just created.
With no business experience myself I'd feel foolish pointing out a solution, but it seems quite apparent that there needs to be something done to keep manufacturing in the USA simply to stay in the future technological market.
This entire article seems like it is just emphasizing what we already know is happening, but actually putting it to scale, using explicit examples to describe the consequences we may have as Americans if we do not adapt and stop shipping our manufacturing and innovations overseas. In addition, he provides seemingly simple solutions that will help us begin to get back on track and start "scaling up" again. One point that is simultaneously scary and revolutionary is that in this point in time, technology advances so fast that we don't have time to see how things go, we need to make big decisions that involve big risks in order to truly capitalize on newer technologies. For example, he says how he was "afraid to ask the Intel directors for authorization to spend billions of dollars for factories to make a product that didn’t exist at the time for a market we couldn’t size."
ReplyDeleteAs scary as it seems, I suppose as engineers in this rapidly evolving world we will have to use as much information and judgment as we can to make decisions that we will undoubtedly have to make, regarding things that we will never be able to completely predict their outcomes.
Outsourcing is necessary. Plain and simple. We simply do not have the time, resources, or manpower in our own country to meet the needs of everyone here. It's not possible. That's why outsourcing is one of the most attractive options for companies that can utilize the strategy. It's cheaper for them to hire workers in India or China who'll work for a 10th of the price of an American. What you lose with outsourced jobs, however, is quality and attention to detail. But how important are those to the average consumer? Well, take a look at the TV business. It's doing just fine, and how many are made in this country? None. And it's just going to get better. With new technologies such as 3D TV's that don't require glasses (they exist, but they're limited in use right now), and TV's with OLED screens, the demand for TV's in the next 5-10 years will grow at a staggering rate. Everyone always wants the latest and greatest when it comes to technology. And who can blame them?
ReplyDeleteNow, I'm not saying outsourcing is better than hiring locally. I'm saying that I don't think it's as bad as Andy Grove thinks it is. He talks with such a sensationalist tone, but the reality is that there'll always be a balance between the number of outsourced and local jobs. When a company starts to outsource too much, the quality of their products falls. So they must start hiring locally where they can have more control over how their products and services are built and offered.
I will say, however, that if there really is a danger in outsourcing too much, that taxing goods made in another country is the best thing to do. It creates incentive for Americans to buy American-made products. This will, in turn, give incentive for companies to start hiring locally and build more products in-house (so to speak).
This is an interesting article since there was many information that I did not know. I think that if they tax offshore products, either way people are still going to buy. As each day goes technology keeps growing and people tend to buy the latest products such as phones, computers and so on.
ReplyDeleteIf the United States wants to scale up again they have to improve their technology and make products that people want to purchase. They have to take risks just like Andy Group. The company gave him the approval of spending billions of dollars for factories. If companies are willing to take the risk we can start having good things in the market.
This article contained so much first hand experiences and information regarding a controversial topic. I've never read or talked about jobs or industries overseas, so a lot of it was new and interesting. I would have to say I agree with most of what Mr. Grove had to say and would really just like to add that I believe whatever we do we should focus on doing it in our own country. I realize how dependent we are on countries like China for so many reasons. However, I think that we should start moving in the direction of making a more self-sufficient country. I feel that being a self-sufficient country would allow the United States to be a better place. The more reliant we are on other countries, the more vulnerable we are. In addition, I believe that this will give the US a chance to focus on the problems in our country first, instead of being the world police.
ReplyDeleteAndy Grove raises a valid point; the US economy could be in serious trouble if the current job trend in technology continues. Unfortunately, he fails to recognize and address the real problems that lie at the root of this dilemma.
ReplyDeleteThe American job market cannot compete with foreign markets because of how workers are expected to be treated and paid. Chinese workers will simply work for less, in horrible conditions, and the factories they work in do not need to follow the stringent environmental regulations. Even if a tax was put on offshore goods, the amount of harm this would do to American consumers would outpace and gains in technology jobs, even over the long term. Technology is already expensive as it is.
Manufacturing in the US has been non-existent for much longer than Grove acknowledges. Going into the tech boom, the American manufacturing scene for industrial products was already on the decline. The US relied on its educated work force to drive the economy and design the goods that would be produced elsewhere.
The obvious solutions to this problem would be to pay factory workers less but that, unless the US is facing serious long term economic problems, will never happen.
I agree with some of Andy Grove's argument. The outsourcing of jobs to other countries is crippling the American economy. However, with that being said, companies are able to create more profits because of the cheaper labor costs in other countries. It is kind of like a situation where you gain a little by losing a little. What we as engineers can do about this is to learn to adapt to our environments. If your job sends to to another country then you must be able to adapt and speak their language. That is why be bilingual or even trilingual is to your benefit.But to stop the outsourcing then we must, as engineers, learn the business world and how it operates to get a better understanding of this and implement our own decisions.Once we become engineering leaders, we can lead a new movement into the right direction.
ReplyDeleteHe makes a good point, but nothing is going to change. The people who are in charge stand to profit from off shore production - even if it's greedy and short sited. Decay will continue until we ourselves are a country of cheap labor.
ReplyDeleteThe whole idea of backing the start-up businesses is to get them out of the hole faster. Many new businesses die because it is hard to become well known unless you begin with a great deal of money already. Thus, making a profit in the first couple years is difficult, but backing from the government for small businesses in order to purchase capitol equipment can offer much greater benefits and opportunities for them to stay afloat in their early stages. Once they get on their feet and start earning profit, they can begin creating new jobs whereas in older businesses it takes much more to help them survive and often the money is not used to actually save the business.
ReplyDeleteI agree with most everything said here and ultimately it seems as if the only way to bring jobs back over here is to pay employees as little as China does or hit the mass shipments with giant taxes. Neither of these are really even logical options however and despite our efforts, I don't believe we will ever have the majority of our workers back here in America ever again.
I think his observations are valid, and until we stop encouraging companies to offshore production and customer service we will see more and more of our jobs being lost to low-wage shops in foreign countries.
ReplyDeleteWe need outsourcing as a means of producing goods, but we should first encourage companies through tax benefits and other means to keep as much as their work as possible in the United States.
I feel it is definitely important that we try to keep as much manufacturing here as possible. I think that it fuels more inovation. Even though it is cheaper for a company to outsource the work overseas, it will help the economy here if we don't outsource. By keeping labor and manufacturing here and boosting out economy, more people would be able to but the products that would help out everyone in the end.
ReplyDeleteI agree with most of Andy Groove's points. US economy is suffering because of the cheap labor in Asian countries, which is out of comparison. The rates of unemployment is still 9.7% even though economists claim that the recession stopped in the third quarter of 2009. The one of the most important ways to keep employment in the US is to keep corporations in here;that is, to reduce taxes for the ''evil corporations". That way Asian cheap production would be less tempted.
ReplyDelete