Posted on 12/01/2004 5:51:48 AM PST by OESY
...Insourcing is what happens when foreign-headquartered multinationals operate subsidiaries in the U.S. These companies contribute both to U.S. economic growth and living standards....
Insourcing provided jobs for more than 5.4 million U.S. workers in 2002, or nearly 5% of total private-sector employment. These are good-paying jobs, too. Payroll came to more than $307 billion -- or 6% of all private-sector compensation. The average annual compensation at such companies was a tad over $56,000, or some 31% more than the average annual private U.S. compensation.
The internal operations of insourcing companies also contribute to research and development and to capital investment... and... insourcing companies accounted for 20% of U.S. goods exports.
Insourcing companies also purchase a high and rising share of their intermediate inputs from domestic suppliers -- in 2002, nearly 80 cents of every dollar, or $1.3 trillion. Just as important, these companies share technology and other knowledge with these U.S. suppliers to improve quality and reliability.
[T]he vitality of U.S. insourcing has depended upon several strengths -- talented workers across many occupations, deep capital markets and a culture that supports innovation and risk-taking.
...There's no guarantee that the world's best companies will continue to invest as much in the U.S. They now have plenty of other choices... China, ...India, ...European Union....
Total flows of Foreign Direct Investment capital into the U.S. have collapsed since 2000 -- from a peak of $314 billion in 2000 to $29.8 billion in 2003....
It's too early to say whether the attractiveness of the U.S. for business and capital is diminishing. But it's not too early to do what is necessary to maintain our status. That means pressing for more accountability in public schools, and trying to broaden the appeal of science and math....
(Excerpt) Read more at online.wsj.com ...
EXCELLENT article! Thanks for posting it.
Very interesting article.
Sarbanes-Oxley isn't going to do much to attract more insourcing.
Skewed numbers. It only takes a few making millions to offset the hundreds making peanuts.
Yesterday I read that Congress just snuck into a continuing resolution bill (or some such) a rider increasing the H1-B cap on foreign Masters' or PhD's by some 20k. How much demand is there for PhD's in the US anyway? So if your job will be taken by some third-worlder at 1/2 to 1/3 your wages, why try to go into science / math/ computer science / engineering anyway? Full Disclosure: I have friends with PhD's from the #1 school in the US in their field who have been outsourced to foreigners before the age of 35...in honor of Jack Welch, I called it "getting JACKed off".
Interesting that in your citation, you omitted the sentence that discusses how many jobs were created and how much of the private sector they respresent.
Insourcing provided jobs for more than 5.4 million U.S. workers in 2002, or nearly 5% of total private-sector employment. These are good-paying jobs, too. Payroll came to more than $307 billion -- or 6% of all private-sector compensation. The average annual compensation at such companies was a tad over $56,000, or some 31% more than the average annual private U.S. compensation.Bottom line is that insourcing represents 5% of total private sector employment and 6% of private sector wage compensation. If these foreign firms were interested in paying millions to a few managers while paying peanuts to the "hundreds" of employees, they could accomplish that much easier in other countries. FDI in the US is a good thing. FDI by US firms in other countries is also a good thing because it enables them to be more profitable and to create wealth and create jobs in other areas here.
There is a little more to it than that, and all the policies from Washington won't change a thing.
The number of American workers who take personal pride in the quality of their work apart from the compensation they receive is diminishing. I am fortunate to manage a team of people who treat everything they do as if they had to sign it for all the world to see. That is not common.
More common is a mentality of griping about what the company doesn't give you while giving the company as little as possible.
Contrast that with an entire nation of people who are greatful to have a job and will work tirelessly to accomplish it to the best of their ability. We were like that once. Can we be again?
BTW: Don't tell the ACLU, but the name for this was the Protestant Work Ethic.
Shalom.
Go ahead, flame away. But the headquarters is in Calgary where they listen to Country&Western music and ride horses like they were in Texas. It's Eastern Canada that can go to h@ll.
Every silver lining has a cloud.
Glad to hear it. I went to Toronto once for a business trip and the supplier personnel I was working with took me to dinner at a "Texas-style" steakhouse. As we were walking across the parking lot from the car to the entrance of the restaurant, the aroma of the steaks cooking was everywhere in the air. I told the Canadians "That smells like Mesquite-smoked steak they are cooking," and explained to them that we use mesquite wood to smoke our steaks and that it creates a unique aroma and taste. They laughed and said that there was no way I could tell by the smell what kind of wood they were using to smoke the meat. Once inside, as we read the menu we found that the restaurant uses mesquite wood, imported exclusively from Texas, to smoke all their meat. They didn't question anything else I said after that.
The lesson is, you must get on the management track if you want to stay long-term with any company, sad but true.
The lesson is, you must get on the management track if you want to stay long-term with any company, sad but true.
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True you can't hang out in middle management much past your middle 40's these days.
But that's a different issue than the HI-B vs US PHD problem. Over the years there has crept in a gross de emphasis on science and math in american education that has dovetailed with the growing importation of foreign nationals to do the high value science and math work. Who is to say that science and math have been de emphasized in the USA in order facilitate the entry of phd foreign nationals.
On the face of it...that's what it looks like.
A smart view and a sharp analysis. I wonder how long the cake was in the oven before the UN saw success.
The one kernel of ugly truth in the Red State stereotype is that learning, especially in math and the sciences, is not highly prized in middle America. Sadly, the "beer and NASCAR" caricature really is true when it comes to educational achievement. Our side values football, not calculus - and that's why our economy is rotting away.
Because suffering the blood sweat & tears required to obtain an EE or PhD for eventual personal gain cannot compare to the satisfaction of knowing it is preparing you for making a positive contribution to your employer's PE ratio. /s
I can't agree. But I can agree that the entitlement mentality is hurting states of all colors.
Shalom.
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