Steve, I was referring to the big picture and you have taken a few snapshots of some companies with unique features. First off, Boeing is not a good example because they are in an industry with few players. They have their fits and starts with Airbus even though Airbus's planes are built in countries with pretty heavy social costs themselves. In order to compete, Boeing outsources a huge percentage or their parts as shown in this quote from a BusinessWeek article. "For the first time, with the 787, Boeing is outsourcing more than 70% of the airframe and is giving all aircraft suppliers the responsibility for doing the detail engineering designs. The Japanese and Italians are designing and building the composite fuselage sections and the wings. The Russians are contributing key engineering talent -- particularly in the area of designing titanium aircraft parts." As for Deere and Cat, they do a huge amount of manufacturing overseas for competitive reasons. Paccar also outsources a lot of their parts. Hog is the owner of a pretty classy product from way back that is less susceptible to price pressures. People are willing to pay a premium for their products. I don't know anything about their internal business but I am willing to bet that they do a fair amount of outsourcing of parts. That's a no brainer because they would be fools not to.
As for the biotech industry it is a high tech industry that doesn't have legacy pension costs similar to the other unionized industries that you cite. It also has a high tech work force that is largely degreed scientists. The companies compete with their proprietary knowledge and I have pointed out in previous posts that we do fine in these areas.
When I refer to social costs, I would include pension costs, medical costs, environmental costs, legal costs (due to excessive litigation), unemployment comp, worker comp, etc. that our Federal, State and local governments levy. Emerging market countries do not have these costs and hence the unlevel playing field. |
