Posted on 09/08/2004 3:36:00 PM PDT by Destro
Posted on Sun, Aug. 22, 2004
Business books: 'Exporting America: Why Corporate Greed Is Shipping American Jobs Overseas'
"Exporting America: Why Corporate Greed Is Shipping American Jobs Overseas," by Lou Dobbs (Warner Business Books, 208 pages, $19.95)
Look out, Silicon Valley! Bangalore, India, is gaining on you. Some folks in India even believe that their country's version of Silicon Valley has already surpassed its California counterpart as a center for high-tech employment.
In his new book, "Exporting America," CNN's Lou Dobbs shows how strongly that belief is held in India with a headline from the Jan. 6, 2004, issue of The Times of India: "Silicon Valley Falls to Bangalore."
The story under that headline, Dobbs writes, bragged that Bangalore has 150,000 information-technology engineers compared with 130,000 in Silicon Valley. Dobbs believes that that story can't be written off as merely nationalistic exaggeration.
"India is only one of the many countries benefiting from the exporting of American jobs. But it has also been one of the most aggressive in pursuing professional-level jobs, from medical technicians to software programs. American companies have been all too happy to answer India's siren call of educated English-speakers willing to work at some of the world's lowest wages," Dobbs writes.
General Electric's Capital International Services, Dobbs points out, was one of the pioneers of outsourcing domestic operations to India. The company, Dobbs writes, employs 1,300 at its four centers in India and says it saves about $400million annually by not having Americans do those jobs.
"The people there write software; they review invoices and insurance claims; they do market analysis. CIS also offers its services to other American companies looking for outsourced resources," Dobbs writes.
Although India lags behind other Asian countries in manufacturing, it has a leg up, according to Dobbs, in the service sector and is a magnet for some of America's highest-paying jobs.
"There are programmers all over the world, but the Indian Institutes of Technology (known as IITs) are turning out thousands of these programmers a year. They are men and women who are well-educated, speak impeccable English, and are thrilled to make $10,000 a year," Dobbs writes.
GE, as Dobbs makes clear in abundant detail, is only one of many companies outsourcing high-tech and professional jobs to India and other parts of the world where wage expectations are lower. Among the others spotlighted by Dobbs for outsourcing jobs to India, the Philippines, Romania, Ireland, Poland and other countries are IBM, SAS Institute, Intel, Microsoft, Perot Systems, Apple, Computer Associates, Dell, Hewlett-Packard, Oracle and Sun Microsystems.
Early in the book Dobbs delivers a broadside against the general trend of shipping jobs offshore. He says it is undermining the American middle class, putting Americans out of work, forcing Americans to work harder and longer for less pay, devastating some communities and depriving governments at all levels of the tax revenue for upgrading public education and providing other essential goods and services.
Dobbs, whose views on shipping jobs offshore have been under continual attack by advocacy groups and consultants for multinational corporations, takes the view that corporations who send jobs offshore are firing their own customers, because American workers will eventually find themselves unable to purchase the goods and services being exported back to America by American companies.
"India can provide our software; China can provide our toys; Sri Lanka can make our clothes; Japan make our cars. But at some point we have to ask, what will we export? At what will Americans work? And for what kind of wages? No one I've asked in government, business or academia has been able to answer those questions," Dobbs writes.
- Cecil Johnson,
Knight Ridder Tribune
The intelligence distribution in our population follows a Gaussian distribution (bell-shaped curve.) The area under the left side of the bell (below-average intelligence) is substantial. Some children's intelligence can be raised by better education & environmental conditions, but there *are* a large number of below-average intelligence people in society, and they are becoming increasingly marginalized and unemployable.
So where do young people learn to do this kind of work? It sounds like a lot of the software and diagnostic systems are proprietary. Is there a "technician shortage" because the dealerships are essentially raiding each others' shops, without considering how they're going to create *new* technicians in the long run?
Excellent point.
To a certain degree, housing prices are also a reflection of the failure of the educational system. Palo Alto, CA's public schools are excellent, and many of their grads go on to the "best" CA state universities. But an average home price in Palo Alto is around $1,000,000.
Even in a relatively low-housing-cost city like St. Louis, decent school districts are going to add a 100-200% premium on the cost of a house.
This is mostly the result of failed experiments by the federal courts in the 1970s and 1980s with court-mandated desegregation. The result was that people moved farther & farther out (in order to be out of the reach of the court-mandated plans.) These new, expensive suburbs developed good schools, but their housing prices have inflated enormously.
Another reason for the great inflation in housing prices is that people decided that real estate was a good place to plop their money left over after the dot-bomb.
The point is, of course, that even with two professional salaries, in some parts of the US it's very expensive to buy a house in a good school district.
I think you are right on.
Well for starters a plethora of colleges (like Cerritos College, here in SoCal) are featuring special classes wholly funded by the automobile manufacturers, who are actively trying to recruit new future techs.(in my case it is called C.A.P.(Chrysler Apprenticeship Program)
At the end of the course the future tech gets a fully loaded Snap-On tool box customized for the type of work he/she chooses to do, at half price courtesy of the sponsor. Sadly, the classrooms are for the most part empty, due to lack of students.
Not to many young people are overly enthused to becoming an automobile technician as I noted lately (I am one of the dealer designated shop teacher). It is a very demanding job in all aspect's. Not every one can deal with it, granted. To me it looks like almost everyone is taking the easy road out.
As Jay Leno once lamented the true automotive craftsmanship is dying out, due to lack of interest and desire. I do subscribe to that point of view, because it is dead on!
BTW, you are damn right the dealers are raiding each other for techs...the pool is shrinking and are no replacements in sight.
The official name of India is Republic of India.
In 1999, 371,669,282 people voted out of a total electorate of 619,559,944. - source
This is a turnout of 60%. Turnout in the US 2000 presidential election was only 51.3%.
If they are not intelligent and have no vision, what is it that they do that produces ROI? I am genuinely curious about this.
Many of them are intelligent, but that isn't really the value proposition (though I personally won't hire anyone who doesn't make it past my idiot filter).
The value that an experienced CEO brings to the table, above all else, is broad credibility and access to people that matter. It may sound trivial, but who you know can make or break a startup company. Most industries are fairly close knit communities, and having someone leading your company who knows everyone at the top of the other companies in your industry and who is trusted by those other leaders is worth an immense amount. Most small companies die for lack of traction, and having the right connections can give you all the traction you need. Having a killer idea PLUS access to everyone that matters in your industry is a guaranteed winner. Either one by themselves aren't worth a whole lot.
As an example, I am heavily invested in one very slick telecom startup that has been around for almost three years now. We recently hired a CEO who is personally tight with the executives of half the major telecoms in Europe and North America. His wife is a top executive at one of our biggest competitors in the world. Now, I will grant that he is extremely competent ignoring all his connections, but his connections are what make him a ridiculously valuable asset. The startup is extremely slick technology-wise, but the fact that the management team has inside connections with almost everyone that matters in the business makes it a sure thing. Now in that venture we got the CEO pretty cheap all things considered and it was a 10-bagger for me personally without him. With him, we get another 10-bagger on top of that almost without any additional effort simply because the major players in the industry want to talk to us in no small part because they know the CEO. I'll tell you what: what we are paying the CEO is a hell of a lot less than the value returned to the core equity holders by hiring them.
I've built quite a number of companies at this point, and I can tell you that these guys are often worth the money spent to the chief investors in a company. It is the investors that have to pay the salaries of these guys, so there must be a reason why they okay these hires -- the investors are looking to make a profit. When I first got into this game, I was skeptical. But now that I have quite a bit of experience, I very much understand the value proposition. Business is about making money, and if a CEO can bring 10x his salary in return for the business value, that is a damn good deal. It doesn't matter what that salary actually is. People who don't deliver get fired, and those that deliver return to investors will get paid whatever they ask for as long as they continue to deliver.
I'm a little more anal about the qualifications of a CEO than most -- I'm looking for a CEO right now -- but I can do the math that shows that the price paid is generally worth it.
[Bombast about CEOs and personal fortunes deleted]
[Asbestos suit DONNED. Sarcasm torpedo ARMED. FIRE!]
Yep, that's for that one startup.
Tell me again the additional value Carly Fiorina
has brought to H-P, or Scott MacNealy to Sun, lately?
Oh yes, why has Microsoft stock been more or less flat for
five years despite a, what was it, five-fold increase in
revenue? And why did Microsoft decide to invest heavily
in outsourcing to India as of last summer, when they
had approximately $60 billion in cash and basically
NO DEBT?
Investing that $60 billion in US treasuries --the guaranteed 'risk-free' rate of return, and THEN paying
taxes, you have the money to pay for HOW MANY US programmers instead of third-worlders? And that without
touching EITHER the principal OR the cash flow from
continuing operations.
How about focusing on the same topic (large, established
US multinationals hiring third-world workers to profit
from supposed 'wage arbitrage') as the people posting
questions? </g>
Hey man, don't get me started. That is why I don't invest in these companies. I have zero faith in their leadership. Sun sat on their ass and HP utterly wasted their assets.
I've been doing the Silicon Valley thing for quite a while now and I can separate the sheep from the goats. Yes, there are herds of VC and execs that are nigh worthless, but in the long run those guys lose their shirts and/or go to prison. I've done this more than once, and have gotten pretty good at it. Every account comes due eventually, and the really good guys always win.
You wrote:
"Hey man, don't get me started. That is why I don't invest in these companies. I have zero faith in their leadership. Sun sat on their ass and HP utterly wasted their assets. "
Fair enough. I pressed your buttons, and you
didn't flame me, even if you didn't answer
_all_ of the questions.
So how _do_ you feel about offshoring of technical
work to the third world?
Do you
a) enthusiastically support, for short-term gain?
b) think 'it depends' on the maturity of co. and
experience of managers to keep on top of it?
c) you've been burned and have said 'never again'?
Or some mixture?
Perspiring minds want to know.
But for now, I'm going to bed!
"Peace on Earth, Good Will toward men with whom HE is pleased."
Thank you for telling me about these programs. Here in St. Louis there is a private college (tuition about $15,000 a year) that teaches automobile technology as a 2-year associates' degree, but I'm not sure how much industry-specific stuff the students learn.
What's a shame is that high schools *used* to teach this stuff. Now vocational education is looked on as something shameful, for the mentally challenged. Everyone is supposed to go to college & then become a lawyer. I don't know who is supposed to fix or build anything.
The Wall Street Journal had a front-page article recently about Swiss-style machinists (very precision work requiring sophisticated equipment and good computer/math knowledge.) We had been relying on imports from Switzerland & Germany, but apparently those are drying up. Young people won't enter the field because in the US they study engineering instead. We have a real class problem with the skilled trades that we haven't *ever* properly addressed.
I don't know about "most Americans," but I know that our local school district offers *more* than the full complement of college-prep courses required to get into a good engineering school, including advanced physics, advanced chemistry, and differential equations. Obviously there are kids taking these classes, because from what I observe they fill up fast and have multiple sections.
If kids aren't going into engineering *now* (i.e. since the dot-bomb), it's because they do not want to incur large amounts of debt to study something that might result in unemployment due to outsourcing and/or competition with foreign workers (H-1bs.)
We give huge amounts of money to lower-income students in the form of Pell grants. Some of that money should go to engineering / science / technology students of the middle classes, to those who would go into debt otherwise, because a critical mass of technically trained people is a *national security issue.*
I do not know how things are going in St. Louis but paying 15G's/Year for a tuition in automotive technology is close to ridicules. The students at Cerritos College do not pay a penny, everything, is paid by the automobile manufacturer, because like I said they are eager to recruit new qualified technicians. I think you guys in Missouri are taken to the cleaners in regards to this issue. It should be free of charge to everyone, at least here in Social it is that way. As i said the car manufacturers are footing the bill.
I do not know about automotive issues in Missouri, but here in California the automobile state of USofA, we are in dire straits finding new techs. In California if you do not have a car, you can not find a decent job, period! There fore routine maintenance/repairs are a requirement and we are rapidly running out of qualified techs.
As I reiterated, the pools of qualified technicians is shrinking gradually with no end in sight. No body want to take this line of work, perhaps because it is, as I mentioned very demanding.(it requires commons sense (one has to make a decision what pattern to chose in order to make the operation profitability. Did I mentioned that automotive techs are paid on commission ONLY?), an eye of measure, (picking the right socket/tool by looking at the bolt/nut) and the techs also have to price the job.
When I hear those whiners, lamenting about the loss of jobs, due to outsourcing, it begs to ask...don't you think that your line of work is overly represented and begnine?
Obviously the field is getting saturated, demand for corporate profitability is required by the share holders. Service positions like I have mentioned are going to the dogs, because nobody wants to do it. It looks like, hands on professions are a thing of the past.
100G's+ a year, slick suits, fancy talk, and all the doodaah's is the norm of the day. Craftsmanship, pride in making things happened, get down and dirty, sweat and tears and have your baby win the race...or just be honest and fix this guy's car, who just pulled in you dealership.
It is so much to talk about...do not get me started!
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