Not only must we fight to end disastrous unfettered free trade agreements with China, Mexico, and other low wage countries, we must fight to fundamentally rewrite our trade agreements so that American products, not jobs, are our number one export.
Bernie Sanders – Politician
Many companies have this business model: develop their brand; design product (s); outsource manufacturing; test products; and sell products. Up to the 80 to 90% of the manufacturing dollar and work is sent to suppliers.
The logic for outsourcing and offshoring goes like this. The company is in the business of making widgets so why should it spend time running its own fiber optic cable, IT department, or training organization. The company wants to spend its time on things that will make a real difference to the bottom line, add value, and leverage its core competencies.
A few years ago, every company considered outsourcing non-core and even core activities. The key question was: ‘Should the company outsource to China or some country in Asia because of cost competitiveness and high quality’. This applied to widgets and professional services. Even high value-added services, such as architectural, medical and other professional services was procured offshore. Companies would go to extremes. One virtual computer company hired contractors to design and build all its computers, answer repair questions, invoice bills, and ship products. The only thing it did was sell its products and maintain its remaining core competency – its brand.
A few years ago, it was source offshore, especially to China. Now, we’re seeing protectionism, tariffs, domestic sourcing, insourcing (core expansion), new competitive rules, and new business models. The ‘make or buy’ and off-shoring decision is now changing in many companies and even countries. Every country in the world is asking the ‘make or buy’ question. We have ‘Made in China’, ‘Made in India’, and ‘Made in Great Britain’. Why? It’s all about local work and jobs.
Work Lesson Earned: Globalization, outsourcing, and off shoring are realities. The questions and concessions asked of workers and suppliers are incredible and tough. Do you know your company’s ‘make or buy’ philosophy?