Offshore manufacturing: Lies, damn lies and statistics
Posted Jun 14th 2007 4:45PM by Brian White
Filed under: Products and services, Industry, Competitive strategy
bloggingstocks.com
It's been a high sign of contention in the recent decade when global companies decide to outsource labor to countries outside the U.S. Yes, employees feel cheated by the companies they poured heart and soul into for going the "cheap" route. But then it's a global village out there, right?
But outsourcing took hold in the manufacturing arena long before service-type positions ever started going overseas. The iPod, that new laptop, the electric razor and even that wristwatch you wear -- chances are it was all made in China. Official statistics show that America's economic output has grown at a solid 3.3% annual rate since 2003. During the same time, imports from low-cost countries (like China and India) have skyrocketed. Interestingly, manufacturing at domestic facilities here in the U.S. has grown as well. What is the offshoring of manufacturing doing then as a result? Sounds like the manufacturing economy is doing just fine here in the U.S.
There's a saying: There are "lies, damn lies, and statistics." That saying is coming into play here. Clearly statistics are painting a rosier picture of U.S. manufacturing. Alas, the "import price" information published monthly by the Bureau of Labor Statistics does not take into account the cost cuts and product innovations (two extremely important measurements) that are made overseas by global companies. Well, that little exclusion is a billion-dollar problem (many billions). Not only is DP and productivity calculated with data that does not contain all the data (to coin a phrase), measures like inflation value of products and other measurements are a little out of step as well. Think "Made in China" is not hurting the U.S. economy? Think again. |
