posted on August 19, 2003 02:18:02 PM new
Jobs have left before, but this time America's place in the global economy is at stake.
FORTUNE
Tuesday, August 12, 2003
By Geoffrey Colvin
The issue du jour is being framed as "jobs," which is a shame because that sounds like a movie we've seen before, and it isn't. Yes, American companies are firing U.S. workers in rising numbers while hiring more foreign workers, and unions are yelping about heartless bosses, and politicians are solemnizing—all that does sound familiar. But the surprising fact is that while CEOs are happy to be saving money by hiring good accountants for $6,000 a year in New Delhi, those CEOs are actually as worried about the trend as anybody, and they should be. The issue isn't just jobs but America's place in the global economy.
The difference this time, as we keep reading, is that the outflowing jobs are higher paying and have more intellectual content. That's a difference not just of degree but of kind. Until now, smart, educated people in the U.S. have thought up ways to create wealth and then paid others to do the labor, often in foreign countries. Americans design Dell's latest laptops; Malaysians build them. Americans design Nike shoes; Pakistanis make them.
The emigration of such factory jobs was Ross Perot's populist issue in 1992, but it lost its appeal above the middle of the organization chart. Our universities continued to produce the engineers, designers, and managers who fashioned the labor to be done. Their educations were the world's best, and these graduates remained pretty much ours because companies from the developing world couldn't outbid U.S. firms to hire them, or at least not many of them.
No more. Those developing countries, which obviously have always had people just as smart as ours, are now turning out people just as educated. They can design the work, too, and, because educational and living costs are a fraction of ours, companies in those countries can afford to hire those people. That is a profound change: Designing the work is the essence of business, management, competitiveness.
Example: An electrical engineer doesn't make things. He designs things that people in factories make. Used to be that the world's best electrical engineers graduated from U.S. universities and worked in the developed world earning $80,000 a year designing things to be made in factories that were probably overseas. But now an engineer from an Indian university is just as good as the U.S.-educated one, and he'll work in New Delhi—for an American or an Indian company—for $18,000 a year.
Multiply that example across many different jobs and then ask, Where does the U.S. company find its competitive advantage?
This is a case of the innovator's dilemma as described by Clayton Christensen, but on a national scale. The U.S. is the big, successful incumbent, the market leader that can't imagine it's in danger. The upstart competitors—not just India but also China, the Philippines, and others—at first seem unworthy of our concern. They want to manufacture shoes? Let 'em. Now they're making steel? Well, that's not the future. They've started writing software? Hey, they're welcome to it; a lot of code writing is pure drudgery.
You say they're designing CAT scanners? Uh-oh.
What makes anyone think that progression is suddenly going to stop? The next rungs on the ladder are product innovation, brand building, and overall management. We're looking at three billion people getting better by the day at the things that make us the world's leading economy.
What's our hope? The good news is that our system's agility and flexibility will help us out again. Our markets—labor, product, and capital—adjust to change more quickly than virtually any other country's, and that fact has been crucial to our prosperity. We move on from failure better than any other system, and that's critical too.
The bad news is that this time more than our markets need to adjust. So do our schools—and talking about agility and flexibility in the same sentence as our schools is a punch line, not a boast. We've been losing that race for a long time. For years, whenever I've talked to kids who've transferred to U.S. high schools from abroad, I've heard the same thing: School here is so much easier. Ask executives about U.S. business schools, and they'll usually tell you the curriculums are five years behind the times.
But isn't our university system still the world's best? Maybe. That's what they used to say about their steel at Bethlehem, right up until it wasn't. Then it was too late.
We don't have to lose out in this historic shift. But nothing says we're destined to win either. We've never seen this movie before.
Which is why it's a mistake to cast the latest outflow of U.S. jobs in the familiar terms of labor vs. management and the plight of the worker. It's that—but it's much more.
posted on August 20, 2003 02:58:18 PM new
In what direction, as a nation, do you believe would be best to begin to deal with these issue? I have no answers. I hear some say we should reverse NAFTA. Some say we need to change our visa and immigration laws...many say nothing. What I usually read are complaints about what we're doing...not suggestions to make corrections.
posted on August 20, 2003 03:05:44 PM new
ROSS PEROT! GOD ALMIGHTY WE SHOULD HAVE LISTENED! we blew it, we all had our chance to vote for this wise little man back in 92' but NOOOOOOO we were just too cool, laughing at Dana Garvy on Saturday NIgh Live impersonate him. WE BLEW IT! now the malaysians are making our NIKES! But see that keeps em busy so they don't turn into terrorists.
posted on August 20, 2003 05:53:52 PM new
What in the h-ll is wrong with Americans USA Americans that is. Wake up and smell the roses. Or you will be stuck by the thorns.
posted on August 20, 2003 06:17:23 PM new
I have asked this question and many times and no one seems to be able to answer it. What the hell does NAFTA have to do with Indonesia, India, Taiwan, or any other asian country. For all of you that #*!@ that NAFTA is the downfall of society, do you not know what NAFTA stands from or do you just need an refresher course in geography?
I'm sick to death of hearing people whine about jobs going into Asia and people cursing NAFTA.
Linda - As for your question regarding what do we do... We stop bitching about growth, we stop sitting on our laurels. This nation has spent too much time and effort talking about it's superiority while other other countries were putting their time and effort into proving theirs.
We have two choices, if we are going to attempt to enforce our will on the world then we need to be part of a world community. We need to re-evaluate where our real strengths lie and accept our weaknesses then build a plan on the realities of the world today as opposed to what we want it to be.
Isn't it strange that many of the same people in this country that complain about people that sit back and ask for hand outs and the same ones that resent the efforts of "third world" countries when they start putting forth organized efforts to build their economy and to stop reling on the worlds handouts?
Our only other option is to hide our head in the sands. Reverse our foreign trade agreements and become an island unto ourseles. the advantage is that we probably will not piss of extremeist groups and will fall below the radar of terrorism. The disadvatage is that one day we are going to have to rejoin the world, and we are going to be way behind the game.
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Men Are Like Grapes. If You Stomp on Them and Keep Them in the Dark Long Enough, They Might Turn Into Something That You Would Take to Dinner
[ edited by Fenix03 on Aug 20, 2003 06:21 PM ]
posted on August 20, 2003 07:34:13 PM new
My solution would be to impose HEAVY Tarrifs on imports to this country for a period of 10 years.
We need to not be part of the "Global" community right now, we need to close the doors and concentrate on US.
If we continue to allow cheap foreign goods into this country, we will be in a deep depression within the next 5 years. Wages have dropped across the board, rents and prices have not dropped and in somethings have risen.
posted on August 20, 2003 07:44:57 PM newI'm sick to death of hearing people whine about jobs going into Asia and people cursing NAFTA.
LOL Some people do it because it always get the same reaction from you.
I think all of us here know what the initials NAFTA stand for.
We need to re-evaluate where our real strengths lie and accept our weaknesses then build a plan on the realities of the world today as opposed to what we want it to be.
I would rather we acknowledge our weaknesses and work to change them into strengths, rather than to just accept them as they are. If we really want change we could change. I just don't think many people think about it in the everyday lives.
I asked a stanch Republican friend of mine his opinion on this question after reading several of Reamond's threads on the subject. Because I do believe it is an important subject we need some discussion about and answers to. I have never seen any on this board other than to close our trade off....as you said, shut ourselves off from the rest of the world. But that has consequences of it's own. I don't know where I stand on this issue.
My friend's answer, basically, was the US will continue to be the 'new innovator' of goods. The developers of ideas.....**IF** we start requiring our high schools and colleges to seek higher achievement levels, rather than the 'dumbing down' we've seen in the last couple of decades. He believes we will continue to set the pace in space programs-projects, military projects, medical devices.
I see a growing population [baby boomers] that are going to be consuming more drugs...needing more medical care...newer diagnostic machines....so I'd bet we'll continue to see an increase in those areas....and we can't ship those jobs out of the country.
posted on August 20, 2003 07:54:49 PM new
So Twelve - what happens when those countries decide to impose the same large tariffs on our exports. The are a large number of US businesses that depend on international sales. What happens to the US based support staffs of companies that can no longer stay in business if their only choice is that of high tariffs or high wages? How many businesses and jobs are you willing to sacrifice and how much are you willing to pay your electronics considering that none of them are currently manufactured in the US?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
Men Are Like Grapes. If You Stomp on Them and Keep Them in the Dark Long Enough, They Might Turn Into Something That You Would Take to Dinner
[ edited by Fenix03 on Aug 20, 2003 07:55 PM ]
posted on August 20, 2003 08:09:22 PM new
::I would rather we acknowledge our weaknesses and work to change them into strengths, rather than to just accept them as they are. ::
I think there are some weaknesses that can be changed and some that must simply be accepted. The country is not going to excel in the labor aspects of maniufacturing. That is an area where economics are going to win out and the economic reality is that it can be accomplished overseas for much less. The high cost of living and highwage standards of this country are an undeniable weakness when it comes to a business model. Considering that there are other countries that can accomplish the same tasks at a lower cost and that the exportation of that labor aids in improving the economies of those areas then why should that reality be ignored?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
Men Are Like Grapes. If You Stomp on Them and Keep Them in the Dark Long Enough, They Might Turn Into Something That You Would Take to Dinner
posted on August 20, 2003 08:34:59 PM new
Actually there are quite a few electronics still manufactured in this country, those businesses would just have to be innovative and creative and start doing things here at living wages for their employees...
We can could do it, but we have too many people depending on other countries... time to stop.
If they impose tarrifs, so be it... but I doubt many countries would refuse our produce... we supply too much to the world... we could make it up there.
posted on August 20, 2003 08:52:33 PM new
::Actually there are quite a few electronics still manufactured in this country, those businesses would just have to be innovative and creative and start doing things here at living wages for their employees... ::
Of course you realize that once multiply the manifacturing costs of any item by 10, you make it less affordable. Final sales cost must then be raised to absorb higher manufacturing cost. Spread those price hikes across the board and suddenly a living wge is no longer a living wage because consumer costs have risen. It's now the economic equivalent of chasing your tail.
::If they impose tarrifs, so be it... but I doubt many countries would refuse our produce... we supply too much to the world... we could make it up there.::
You know, call me kooky but I don't see see Prof proping up Adobe, or Iowa farmer Joe proping up Ford after Mexico raises importation levels to such a standard that residents decide to stick with locally produced Toyotas. Produce is a small percentage of our exports.
Why are you so opposed to the US accepting the realities of business today? Why do you have no problem dictating how the rest of the world will live and then turn around and say they have no right being a factor in our economy?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
Men Are Like Grapes. If You Stomp on Them and Keep Them in the Dark Long Enough, They Might Turn Into Something That You Would Take to Dinner
