Jacobson 1 Joel Jacobson English 102-901C November 5, 2012 Paper 1 Bringing Outsourced Jobs Back to America America has

been outsourcing jobs to foreign companies like China for decades. Since then, many issues have arisen regarding human rights in China and providing good jobs for American citizens. Corporations are using Chinese slave labor to keep their costs low. Exploitation of Chinese workers has been a huge issue for companies such as Apple, Nike, Adidas, etc. Many people have boycotted buying merchandise from companies that have questionable labor practices, but yet the abuses continue. Due to new and improved manufacturing techniques, quality management systems, and lean manufacturing, U.S. companies have become much more adept at keeping an eye on costs. Simultaneously, labor costs have risen in China. American companies should file a detailed plan to compare the costs of manufacturing in the United States versus the cost of outsourcing work to foreign countries. Bringing American manufacturing companies back to the United States will help alleviate the problem of human rights issues in overseas factories. The nonprofit FLA (Fair Labor Association) is in the planning stages to interview thousands of workers at the Foxconn plant, where the Apple iPad is made, regarding living and working conditions, along with inspecting worker dormitories. Greenpeace analyst Casey Harrell, a critic of Apple, says that this issue is an endemic of the U.S. electronics industry. He explains there seems to be genuine interest by Apple in wanting to do improvements. The FLA is putting enough pressure on these companies to attend to the human rights issues, or try and force them to move. At Change.org, more than 200,000 people have signed a petition urging Apple to improve working conditions (Martin). In the Congressional-Executive committee annual China report, it stated that workers at the Foxconn plant were exceeding the legal limit of hours worked per week and not getting the mandatory one day break per week. There were numerous health and safety violations, alienation from health and safety committees, barriers to insurance carriers, and not being compensated for overtime being worked. Foxconn and Apple agreed to elections of worker representatives without management interference, reducing overtime to the legal limit by July of 2013. Other

Jacobson 2 issues that the two parties agreed upon was improved recordkeeping of accidents, fair pay for workers overtime, and exploration of options for providing unemployment insurance to migrant workers. A large part of this effort is driven by the AFCTU, the All Federation of China Trade Unions. In 2006, the AFCTU took advantage of Chinese labor laws and unionized some WalMart store branches. Shortly after, however, the Chinese union federation fell back upon its topdown and management dominated style of setting up union branches. The AFCTU has not provided sufficient support for the union branches at Wal-Mart stores where they challenged Wal-Mart management to try and obtain better working conditions. (66) The issues addressed in the above paragraph will undoubtedly drive costs higher for Apple. Over the past two years, small U.S. manufacturers (excluding Apple, Nike, and Adidas), have been bringing jobs back to the U.S. According to experts, U.S. manufacturing has steadily become more competitive, and trying to coordinate with businesses overseas has become inconvenient. LightSaver Technologies co-founder Jerry Anderson told Bloomberg Businessweek they are moving their manufacturing work from China to California and that outsourcing had become a hassle even with the 30% cheaper costs. He goes on to say "Factor in shipping and all the other B.S. that you have to endure. It's a question of, 'How do I value my time at three in the morning when I have to talk to China?'" Tom Fogliani is the chief executive officer of the San Diego Company Outsource Manufacturing who is working with LightSaver. Echoing Jerry Andersons position, Fogliani exclaims a decade ago you just went to China. You didnt even look locally. Now people are trying to come back. Everyone knows theyre miserable (Lieber and Rocks) Fanuc Robotics America, a Japanese based company is starting an initiative to keep manufacturing jobs from going overseas. Save your Factory is an effort that is being designed to promote American companies. By automating key production processes as much as they can, an equal amount, if not more, money can be saved by not moving operations to low-wage countries. Rick Schneider, president and CEO of Fanuc Robotics America, says: "A lot of times people are simply implementing a CEO's order to move a facility to China, rather than looking for the most cost-effective solution." Schneider wants two companies with comparative cost data and case studies which may help lead them to consider keeping their plant in America (Whitfield 26).

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Even larger companies such as General Electric, NCR, and Caterpillar, are bringing home some production to the U.S. from China. One of the reasons for moving the jobs back are because of wages rising sharply in China, while in the U.S. they have stayed flat or fallen altogether. Long delivery times and poor quality are also some reasons for bringing jobs back. Some other drawbacks are tying up valuable capital in large overseas shipments. Some engineers are just tired of midnight phone calls and multiple annual trips to China. Many companies that have gone to China to take advantage of cheap labor are telling industry research groups such as the Manufacturers Alliance/Mapi, that after looking at costs and not just wages, its actually not worth it. Because of the long lead times of getting product from China, companies need to keep more inventories on hand which increases costs. More money tied up in inventory is less money that is being used to generate revenue. Diagnostic Devices, which makes blood-glucose testing strips and monitors for diabetics, has to ship about 20% more product than it needs due to month long trips required to ship product from China. If the product is defective, then it takes five months of deliberations with contactors and shipment of raw materials back to Asia, then wait for new samples, according to Chief Operating Officer Rick Admani Abulhaj (Davidson). Robots are replacing workers around the world in both manufacturing and distribution. Already, many companies are using robots to make consumer devices. Robots dominate the factory floor at a Philips assembly line in Drachten, Germany. This approach is gaining ground even at Foxconn, Apples iPhone manufacturer. Its plan is to install more than a million robots within years to supplement its work force in China. Terry Gou, chairman of Foxconn, spoke about the one million employees worldwide by telling the Xinhua news agency: As human beings are also animals, to manage one million animals gives me a headache. Mr. Gou did not give an indication of how many workers would be laid off or when. (Markhoff) As for short-term costs, China is still attractive. In the U.S., manufacturing workers were paid an average of $19.18 per hour at the end of 2011, as compared to $2.18 per hour in China. Over the long run, however, building manufacturing roots in the U.S. may prove more valuable to small businesses. Wages in China grew 11 to 14 times more quickly than U.S. wages did between December 2010 and December 2011 (Lieber and Rocks). There may be a few American companies that will not agree to file a detailed plan to compare costs of manufacturing in the United States versus the cost of outsourcing the work to foreign countries. They may like things just the way they are. An example might be Ford, who

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started construction of a manufacturing plant in China in 2009. This is a three-way joint effort between Ford, Chongqing-based Chana Auto Co., and Mazda Motor Corp. of Japan. After such a large investment for Ford of $490 million, it is highly unlikely that Ford would halt production on this venture and bring production back to the U.S. China is a huge market for Ford which is why the plant is being built in the first place (Economy). Other companies, such as those in the garment industry, are in a different position. Because the garment industry relies so much on hands on manufacturing, not much can be done to automate it; few companies in that industry would want to pull out of China. If the bottom line for a company is better in China, chances are good they will continue to do business there. Costs to move back to the U.S. may be too high versus having the entire infrastructure in place in China. Some people say that if it werent for outsourcing, the lifestyle that many people enjoy in China today, even with the some of the abuses, is still much better than the poverty they came from. The benefits of the work, they some say, far exceed the negative aspects of working in the factories. Families remember the poverty when Mao was in power. China has seen their living standards rise dramatically in the last few years. It is this combination of the fear of the past, and the opportunities of the present, which has created a population motivated to work hard (Hays). Technology in American manufacturing companies is steadily improving. Costs of labor in China have increased in the last few years. American needs jobs now, and that is the way our economy will grow as well. Exploitation of Chinese workers is intolerable, and not enough has been done to fix the issue. Bringing jobs back to America will take care of two major issues: human rights and jobs.

Jacobson 5 Works Cited Commission on China Annual Report 2012. Congressional Executive Committee on China. 112th Congress, 10 Oct. 2012. Web. 18 Oct. 2012. Davidson, Paul. "Some manufacturing heads back to USA." USA Today n.d.: MasterFILE Premier. Web. 20 Oct. 2012. "Economy." Beijing Review 52.40 (2009): 21. Academic Search Complete. Web. 22 Oct. 2012. Hays, Jeff. Labor in China: Working conditions, wages, and stress. Facts and Details. (2012). Web, 20 Oct. 2012. Lieber, Nick and David Rocks. Small U.S. Manufacturers Give Up on 'Made in China. Bloomberg Businessweek (2012). Web, 17 Oct. 2012. Markoff, John. Skilled Work, Without the Worker. New York Times 18 Aug. 2012, U.S. ed: Web Martin, Scott. USA, TODAY. "Inspections begin at Apple factory." USA Today n.d.: MasterFILE Premier. Web. 17 Oct. 2012. Whitfield, Kermit E. "Japanese Robots Save U.S. Jobs?." Automotive Design & Production 116.11 (2004): 26. MasterFILE Premier. Web. 19 Oct. 2012.