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Offshoring has simply become a reflex
July 6, 2014 9:18 AM   Subscribe

Your good American job has left the building. Your factory is extraordinarily productive. But workers in poorer countries can do your job for less, so you can't compete. Or maybe they can't, because of higher transportation costs and worse infrastructure. It doesn't matter, because offshoring is the thing to do.
posted by lukemeister (95 comments total) 52 users marked this as a favorite

 
The second link auto opens as a pdf. A warning for those who like to know in advance before they get Adobed.
posted by srboisvert at 9:34 AM on July 6 [1 favorite]


I was not expecting this to be about my hometown when I clicked on the link. It is very weird seeing an article interviewing people you know, and describing in detail the collapse of your hometown's economy, on Metafilter.
posted by Metafilter Username at 9:35 AM on July 6 [9 favorites]


Thanks for posting this. It was an absorbing read and mercifully free of cant. The story itself is so painful and so typical. My enduring mistrust of large corporations, let me show you it.
posted by GrammarMoses at 9:41 AM on July 6 [2 favorites]


Stockholm Syndrome, plain and simple. Civic leaders have groveled at the feet of big business for so long, they don't know any other way anymore. Kill the unions? OK. Pass right-to-work? Sure. Give us insane tax breaks and incentives? Absolutely. Hold us accountable for anyfuckingthing? Of course not.

How could the result be anything different?
posted by Benny Andajetz at 9:52 AM on July 6 [32 favorites]


It's kind of interesting because the workers and their union failed at understanding capitalism. They had something to offer in terms of expertise and insight into how to greatly increase and improve efficiency at that plant and they gave it away for free in order to try and keep unsecured jobs.

They should hired an MBA frontman and offered the knowledge up via consultancy.
posted by srboisvert at 9:58 AM on July 6 [2 favorites]


This is why there will never be a Mittelstand - clusters of highly successful and very specialized mid-size businesses in German-speaking countries - in the US despite it being one of the very few models of how to keep manufacturing/production jobs in developed countries.
posted by Foci for Analysis at 9:59 AM on July 6 [5 favorites]


The theme song for this thread.
posted by octothorpe at 10:00 AM on July 6 [5 favorites]


How could the result be anything different?

Thing is, we really haven't yet seen the ultimate "result". Despite all the empty platitudes from political and business leaders about "retraining for the future" and "information economy" the reality is that larger and larger chunks of citizens are being jettisoned and left to their own devices to find some sort of employment of any sort, usually low-pay, low-benefit, and often doomed to also be closed or moved.

Our leaders had better hope those decades and decades of training Americans to blame themselves (or "liberals") for their economic misfortunes really worked. So far, so good, I guess.
posted by Thorzdad at 10:01 AM on July 6 [8 favorites]


That first link is an outstanding bit of journalism. Thanks for posting.
posted by grounded at 10:07 AM on July 6 [5 favorites]


It doesn't matter how hard-working you are. It doesn't matter what sacrifices you make. It doesn't matter how "good" you think your boss is, or how much of yourself you remold to fit what they want you to be. This is the future. This is the race to the bottom.
posted by Pope Guilty at 10:10 AM on July 6 [19 favorites]


Here's a Sparta tidbit: there's an ongoing political scandal over the $42 a year county wheel tax implemented this year. Previously employees of the city and county governments were not offered insurance and when they were mandated under ACA to offer insurance to their employees it was heavily suggested in the community that:
A. This was unnecessary, as most of the office staff were women and could "get their husband's insurance", while the male road crews were "young and don't need insurance yet". (Verbatim quotes)
B. This was illegal, and it would be far better to pay the fine (in excess of the amount offering insurance would cost) than offer insurance, even if that meant paying a HIGHER tax to cover the fine.
posted by Metafilter Username at 10:11 AM on July 6 [4 favorites]


We'll never make any progress until we get past, in one breath, decrying the damage multinational corporations are doing to our workforce and, in the next breath, defending their " expertise and ingenuity " and right to behave the way they do.
posted by Benny Andajetz at 10:13 AM on July 6 [3 favorites]


I suspect that there's an additional dynamic in play here that's not well identified, which is that executives and middle management are constantly driven to show improvement, and if there's no obvious fat to be cut, the next thing to do is make an expensive systematic change, like offshoring manufacturing, and accompany it with a spreadsheet showing incredible (and likely fictitious) ROI far enough out that the decider has moved on and can blame those who followed for failing to realize the promised gains.

In our last big thread on IBM, what came out was a narrative of a decade of the company eating its own fat and starting on the muscle because of a constant drive to demonstrate performance for the shareholders. You can blame the stock market's emphasis on quarterly growth, but the more immediate culprit is an MBA culture of continual improvement that's not sufficiently aware of the difference between real and illusory gains.
posted by fatbird at 10:13 AM on July 6 [41 favorites]


It's kind of interesting because the workers and their union failed at understanding capitalism.

no, they understood the gospel of free market capitalism fine enough. it's just that the way multinationals like Phillips operate has little to do with that... it's called oligopoly capitalism. Phillips was never going to sell them the plant.

the article works hard to achieve an elegiacal tone, as if there was nothing to be done. but the problem is that the tactics of the labor left exist for a reason. you can see the failure of small town republicanism against an opponent like Phillips, but the people of Sparta have to much ideological discipline to act differently...
posted by ennui.bz at 10:22 AM on July 6 [2 favorites]


I have some expertise in industrial process control. It can be applied relatively equally to chemical manufacturing, where I have experience, and the oil and gas industry.

When I was laid off from a pharmaceutical giant in 2010 after 11 years, I decided it was time to make a career move. I didn't go into the energy industry because, although it pays very well, I don't trust its cyclic nature, don't want to move to TX/OK/Louisiana and didn't want to have trouble looking at myself in the mirror every morning. I knew that I couldn't return to manufacturing because we're about 2/3 of the way through the bottom falling completely out. It would have been foolhardy, assuming I could even have found any equivalent work. I went back to school and learned some new skills.

I'm now I'm a ruby on rails web developer for a small company that provides (non-morally-conflicting) services for bigger companies. It's been hard to learn completely new skills in my early 40s. I have a terrible case of impostor syndrome. But at least I had options available to me. Most people in manufacturing don't any workable options.
posted by double block and bleed at 10:23 AM on July 6 [11 favorites]


I'm a ruby on rails web developer for a small company

What are you going to do 5 or 10 years from now, when Ruby On Rails may look like TurboPascal on a resume, and you're past 50? Oh shit, that's almost me.
posted by thelonius at 10:31 AM on July 6 [12 favorites]


I'm beginning to think manufacturing firms (and some other industries with practices that can be written down and reproduced) work like this

1) Find a firm that is doing something at a profit.
2) Squeeze it to make it more efficient, making them note everything they do into paper records with detailed notes
3) once all the instructions are in stone and any fool could follow them, close up said firm and pass over the written instructions to someone who can do it for 1/4 the cost

PROFIT over anything else!
posted by NiteMayr at 10:32 AM on July 6 [7 favorites]


From the small business section of the Houston Chronicle, of all places:
Karl Marx's famous concept of maximizing profit at the expense of everything else means many things, all tightly interrelated. It means, first, to reduce labor to a subsistence level. Second, it means increasing centralization of management and of capital resources. In other words, it requires firms to merge into conglomerates. Finally, it requires the exploitation of markets to the extent that the conglomerate uses the state to force open markets abroad. For Marx, this inevitably led to war among those countries being used by economic elites to take advantage of foreign markets. All of these variables must be in place for the full economic potential of the firm to develop, for better or worse.
posted by scody at 10:40 AM on July 6 [14 favorites]


How many MeFites work in a factory?
posted by KokuRyu at 10:45 AM on July 6 [1 favorite]


thelonius: "What are you going to do 5 or 10 years from now, when Ruby On Rails may look like TurboPascal on a resume, and you're past 50? Oh shit, that's almost me."

Most of my coworkers are in their 20s. Age discrimination is a real thing, but I don't think it's as bad here in the heartland as it is on the coasts. I'm not the only older worker walking away from the Midwest Manufacturing Implosion. We're a good source of hard workers who appreciate being employed and who won't move to Seattle on a whim.
posted by double block and bleed at 10:47 AM on July 6 [3 favorites]


KokuRyu. I work in a factory . We make cheese.
posted by Jalliah at 10:51 AM on July 6 [9 favorites]


scody, for the decision-makers at the megacorporations, all of those things are features, not bugs. War or peace, they get paid.

I recently noticed the first serious glimmer of fear among professionals (lawyers, in this case) when they started talking about e-discovery software. I wonder if they've started re-reading Niemöller:
First they came for the Socialists, and I did not speak out--
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out--
Because I was not a Trade Unionist... etc.
posted by GrammarMoses at 10:53 AM on July 6 [1 favorite]


How many MeFites work in a factory?

Kind of depends on how you define "factory" these days. A lot of dev shops are depressingly close to be being run like a factory. How those jobs keep from being off-shored is beyond me.
posted by Thorzdad at 10:54 AM on July 6


How many MeFites work in a factory?

I have worked in a factory, and at a factory. What's your point?

I don't think it's as bad here in the heartland as it is on the coasts

I can't speak directly to the midwest, but outside of Silicon Valley, age discrimination isn't as bad, as long as you're not pigeonholed by tech--in other words, keep expanding your portfolio of buzzwords you've worked with so that, if you have to interview, you can always say "I've had experience with X on Y project." Besides keeping up with buzzword bingo, it demonstrates the kind of flexibility that every hiring manager in IT wants because he has no idea what specifically needs, besides someone who won't shit the bed.
posted by fatbird at 10:54 AM on July 6 [4 favorites]


> What are you going to do 5 or 10 years from now, when Ruby On Rails may look like TurboPascal on a resume, and you're past 50? Oh shit, that's almost me.

Or in 2 to 5 years, when your contract web development company will be cutting back staff in a desperate campaign to stay alive because its competitors merely have sales offices in the US representing their code farms in China and India, and can match any proposal your company makes at 1/3 the price.
posted by at by at 10:54 AM on July 6 [7 favorites]


I didn't go into the energy industry because, although it pays very well, I don't trust its cyclic nature, don't want to move to TX/OK/Louisiana and didn't want to have trouble looking at myself in the mirror every morning.

We need more people like you in the energy industry, I push every day to make what we do better and safer. The consumption isn't going away anytime soon, so the footprint needs to be reduced. Also, there are plenty of decent locations to work in oil and gas, Calgary being one of them.

What Phillips did to this factory was poor business and morally awful. I think a lot of it can be put at the feet of the stock market's insistence on quarterly increases and the attendant MBA culture instead of understanding the business properly. I think there's a good case to be made for benign private ownership that doesn't care if the profits dip for a quarter.
posted by arcticseal at 10:55 AM on July 6


scody, for the decision-makers at the megacorporations, all of those things are features, not bugs. War or peace, they get paid.

Oh, of course. They profit; that's all that matters to them.
posted by scody at 10:55 AM on July 6 [2 favorites]


I've worked in a few factories, furniture, dog food, (do warehouses count?), shipping plants and so on. Some of them were good jobs, some were crappy. They all paid minimum wage (although the shipping one was minimum wage plus X time 25 cents for each quarter you stayed on)

A couple of them are still in business, one was bought out and closed...

I expect only jobs that can only be done from a certain location are really immune from offshoring.
posted by NiteMayr at 10:56 AM on July 6 [1 favorite]


I suspect that there's an additional dynamic in play here that's not well identified, which is that executives and middle management are constantly driven to show improvement, and if there's no obvious fat to be cut, the next thing to do is make an expensive systematic change, like offshoring manufacturing, and accompany it with a spreadsheet showing incredible (and likely fictitious) ROI far enough out that the decider has moved on and can blame those who followed for failing to realize the promised gains.

At my wife's previous university a portion of staff raises was determined based on whether they had 'innovated'. The result was predictably that everybody 'innovated' all the time resulting in chaos as nobody could ever be sure from year to year what the procedures were and how things worked. Nor were people ever rewarded for the incremental kind of improvements that are more likely to actually help.

There is an increasingly strong pressure for "seen to be doing something" that seems to have overtaken the pressure to actually do things well.

You don't need to be in a factory to experience this.
posted by srboisvert at 10:58 AM on July 6 [20 favorites]


Jobs that can't be outsourced: nursing, construction, auto repair...
posted by GrammarMoses at 11:00 AM on July 6


There are lots of jobs that can't be outsourced. There aren't any that can survive not having paying customers.
posted by double block and bleed at 11:02 AM on July 6 [28 favorites]


Some jobs can't be outsourced, but demand for them can diminish to the level of marginal sustainability.

For example, plumbing can't be outsourced, but if there aren't enough new houses being built because nobody can afford new houses, and existing homeowners opt to DIY because they can't afford plumbers, then plumbing risks being not much of a career.
posted by at by at 11:03 AM on July 6 [6 favorites]


The thing that amazes me is that the legions of corporate beancounters and managers can quantify today's costs and profits down to a gnat's ass, and yet completely miss the fact that destroying the biggest consumer market on the planet doesn't bode well for their corporations or their progeny.
posted by Benny Andajetz at 11:04 AM on July 6 [33 favorites]


completely miss the fact that destroying the biggest consumer market on the planet doesn't bode well for their corporations or their progeny.

But it's not being destroyed this quarter, and that's all the bean counters (up to the CEO level) are judged on now.
posted by thelonius at 11:11 AM on July 6 [27 favorites]


"I don't know how the pie got eaten, I only took a single bite."
posted by Pope Guilty at 11:15 AM on July 6 [2 favorites]


I have worked in a factory, and at a factory. What's your point?

There's often a lot of handwringing about what are, for all intents and purposes, abstract concepts to most MeFites, who would never aspire to working on the line in a factory, or at Walmart for that matter. That's my point, fatbird.
posted by KokuRyu at 11:15 AM on July 6


I wish more executives had come up through manufacturing, rather than through accounting.

In my experience with technical offshoring, a company will experience several things:

1. Your manufacturing partner is lying about their capability. They will magically blame you for this.
2. You products will be stolen. Not 2% of them. Entire manufacturing lots will vanish. You will not be compensated.
3. Your IP will be stolen, copied, and sold cheap.
4. You will not "open the China/India/Brazil market" by manufacturing there. The stolen and copied stuff is handling that demand.
5. Your manufacturing equipment is in that country forever. It's never leaving.
6. Your competitors are manufacturing in the same building. They will have direct access to your processes (and you to theirs, if you talk to the right people).

Somehow, none of this shows up in the projections.
posted by underflow at 11:16 AM on July 6 [81 favorites]


Or in 2 to 5 years, when your contract web development company will be cutting back staff in a desperate campaign to stay alive because its competitors merely have sales offices in the US representing their code farms in China and India, and can match any proposal your company makes at 1/3 the price.

Get work saving the projects that companies paid other development companies that were a 1/3 of the local price but they got about 1/5 of what they actually wanted and their workflow is even worse because of it.
posted by juiceCake at 11:17 AM on July 6 [7 favorites]


There's often a lot of handwringing about what are, for all intents and purposes, abstract concepts to most MeFites, who would never aspire to working on the line in a factory, or at Walmart for that matter. That's my point, fatbird.

Explain why being majority white collar means MeFites should stop caring about blue collar work. Go go go go go.
posted by Pope Guilty at 11:19 AM on July 6 [21 favorites]


The ending on the first link...
I remembered a conversation I’d had with Herd Sullivan, the White County executive and a leader of the local chamber of commerce, in which I’d asked him about the future of American manufacturing.

“I don’t know what to tell you on that one, whether things ever get back to the same as they were or not,” he (Dwayne Pendergraph) said, and then paused for a while. “Probably not. Probably not. This country maybe got a little more advanced over the world as far as income and there probably is a point where things will get a little more equalized, maybe. I don’t know.” Even with his enormous frame, he seemed depleted.
This is a man who was downsized from several jobs, so he's probably in a position to speak from experience, and he's saying that the American standard of living got too high. The blind mole rat forces of global capitalism are going to equalize things by forcing income down to be more competitive with places like Mexico, and there's nothing anybody can do about it except try to adapt. That's so freaking sad... Surely, that's not how economics are supposed to work.
posted by Kevin Street at 11:20 AM on July 6 [2 favorites]


The thing that amazes me is that the legions of corporate beancounters and managers can quantify today's costs and profits down to a gnat's ass, and yet completely miss the fact that destroying the biggest consumer market on the planet doesn't bode well for their corporations or their progeny.

Doesn't amaze me at all. It's bog standard tragedy of the commons. Sure it'll all go to hell, but why should I sacrifice to rescue it - let someone else do it, and since no one will, I'll just exploit and exploit until the very last second before collapse. It's the exact same mentality as extracting non-renewable resources until the last drop, fishing out of the oceans until you have nothing left, and exactly how the dodo bird died out having been hunted to extinction - what do you imagine the hunters were thinking when confronted by the very last few dodos? Bag the bastards because if I don't do it, the next guy will anyway. A great human tradition that is as old as the hills and the mammoths and great game that was hunted into oblivion thousands of years ago.

Meanwhile, the obscene CEO compensation rather than being a net good for the companies, are actually the very poison that's killing them. If you are making $50 million, or $100 million, or $200 million a year, all you need is one year or two to be set for life in pharaoh style - you will walk away as the company collapses into bankruptcy, but who cares, you're set. Note wall street - if I can place bets that I know will destroy my company three years down the road (say real estate derivatives), but I get a $200 million bonus this year by placing those insane bets that show huge illusory profits this year, I'll take my millions and retire, let the company burn.

And so, we are committing suicide as a country, by rewarding all the wrong behaviors and destroying social cohesion and solidarity. Got mine, fuck you.
posted by VikingSword at 11:21 AM on July 6 [51 favorites]


The loss of the American middle class is an acceptable casualty if it secures the final victory over unions, workers' rights, and environmental regulations. There will still be a consumer market afterwards; its constituents will just be spread thinly over the entire globe, and therefore politically impotent.
posted by Iridic at 11:24 AM on July 6 [12 favorites]


Re bean counters: it's akin to the thrift paradox. What's rational for any one actor may be harmful in the aggregate.
posted by jpe at 11:26 AM on July 6 [3 favorites]


Doug Henwood did an interview with Esther Kaplan (mp3 podcast), the writer of "Losing Sparta: The Bitter Truth Behind the Gospel of Productivity" [the first link of this post] earlier this week on his radio show/podcast "Behind the News."

(and I recommend Doug's weekly show in general)
posted by Auden at 11:30 AM on July 6 [3 favorites]


If you are making $50 million, or $100 million, or $200 million a year, all you need is one year or two to be set for life in pharaoh style.

And only a week that yearly salary to be set for life at all.
posted by juiceCake at 11:32 AM on July 6 [2 favorites]


More recent articles seem to suggest that the alternative view is gaining traction.
posted by BWA at 11:38 AM on July 6


There's often a lot of handwringing about what are, for all intents and purposes, abstract concepts to most MeFites, who would never aspire to working on the line in a factory, or at Walmart for that matter. That's my point, fatbird.


That is not a point. It's a presumption.
posted by srboisvert at 11:43 AM on July 6 [5 favorites]


Benny Andajetz: "biggest consumer market on the planet doesn't bode well for their corporations or their progeny."

Presumably at the same time they're depressing wages in one country, they're raising them in another.
posted by pwnguin at 11:45 AM on July 6 [1 favorite]


Yeah, but once you've eliminated unions and regulation, you can come back into the original country and set up jobs for less than they now make in China or Mexico. The net effect is to slightly raise wages in developing countries and drastically lower them in developed ones, with the multinationals moving to wherever they can get the best deal.
posted by Kevin Street at 11:51 AM on July 6 [7 favorites]


> Get work saving the projects that companies paid other development companies that were a 1/3 of the local price but they got about 1/5 of what they actually wanted and their workflow is even worse because of it.

That's not actually a sustainable business model, because few clients are willing to pay more to fix a botched project that the initial contract cost. Which, to take the clients' view for a moment, makes sense for two reasons:

1. They are set up to believe that more than half the project, which cost $X, is salvageable.
2. They only budgeted $X + 15% for estimated overage, and their own chain of command already has them on the carpet for the project suddenly costing $X * 115%. A realistic price of $X*600% is a dealbreaker.

So if your company's payroll and margins are based on, say, $500,000-$3M contracts, and all of a sudden you're only able to pull $150,000-200,000 contracts for nearly the same sales/support effort per contract, your net margins plummet. You're going to take those contracts in lieu of no work at all, but you can only afford to do it through layoffs and launching offshoring offices of your own.
posted by at by at 11:57 AM on July 6 [3 favorites]


That's not actually a sustainable business model

Didn't argue that it was. I know of no company that codes for the web that only does one type of coding and one type of project for the web. That is, however, my assumption. I could be wrong.

It has, however, become, increasingly, part of the work we do, with clients having spent thousands of dollars and getting disasters as a result. None of the clients whose projects we salvaged will be going that route again for their next Internet projects. In a diverse company, some programmers could be on salvage projects full time.
posted by juiceCake at 12:06 PM on July 6 [1 favorite]


It's difficult to analyze the durability of offshoring software/website development because we're still fumbling with understanding the reasonable development costs of software and (large-scale) websites generally. I worked at RSA Security when they offshored many of their software products to HCL India, and it worked for them--but the cost savings were almost negligible at the end of the day because HCL India, being competent, has raised its rates to the point where it's still cheaper, but not a lot, and much of the smaller savings are consumed by the increased management overhead needed to make offshoring work. Even then, horror stories abound about offshoring development going terribly wrong (c.f., Quark); I fixed a few sites myself where a small site owner had thrown thousands down a hole and received nothing.

This says much less about expected costs and quality in offshoring than it does about the faulty expectations in North America and Europe about the costs of software development in general--you can't expect to reliably offshore and save money if you can't plausibly estimate the cost to produce it locally, and as any tech message board shows, we still don't really know ourselves, let alone the non-technical executives trying to make cost-based decisions on our estimates.
posted by fatbird at 12:08 PM on July 6 [2 favorites]


If closing the plant was a bad business move, what is stopping someone else from filling the vacuum with a new lighting factory in Sparta? There is more money chasing investment ideas now than ever before.
posted by MattD at 12:09 PM on July 6


It may have been a good idea for local people to buy the existing company, with its physical assets and already trained workers, but it's not going to be as good an idea to build a new plant and bring in new machines. And a lot (maybe even most) of those workers were near retirement age, and will probably never work in the industry again, so you have to train new workers as well.

The competitive advantage Sparta had was that all the development money necessary to build a large lighting fixture plant had already been invested long ago, but that advantage has now been lost.
posted by Kevin Street at 12:17 PM on July 6 [1 favorite]


If closing the plant was a bad business move, what is stopping someone else from filling the vacuum with a new lighting factory in Sparta? There is more money chasing investment ideas now than ever before.


The point, I thought, was that closing the plant could look like a "good" business move if you squinted at it from a certain investment angle, but that it was a dreadful move for about billion economic & social reasons for anyone who thought about the longer term?
posted by Jody Tresidder at 12:18 PM on July 6 [3 favorites]


Kevin Street: "The competitive advantage Sparta had was that all the development money necessary to build a large lighting fixture plant had already been invested long ago, but that advantage has now been lost."

The article mentions another competitive advantage the factory had was selling union made goods into a unionized construction industry. Presumably this has changed.
posted by pwnguin at 12:46 PM on July 6


For years I have been saying to my ,now 60/80 year old peers, that we are living in "the best of all possible worlds."

Now that their progeny are saddled with school debt and sucky earning prospects we are finally in agreement.

The U.S. and some European countries have managed to live high off the hog for some time. But them days are most certainly ending.
posted by notreally at 12:47 PM on July 6 [2 favorites]


If closing the plant was a bad business move, what is stopping someone else from filling the vacuum with a new lighting factory in Sparta?

Well, the thing is, if you're opening a new factory, you're not just going to look at places that previously had lighting factories, you're going to look everywhere. The competitive advantages were existing infrastructure and training/experience, both of which have had years to decay.

It's like - why not open more auto plants in Detroit? Because that central set of infrastructure, resources, training, and experience has long since left, and if you're starting from scratch you might as well do it anywhere, and a quick race to the lowest bid later and you've got places offering you decades of tax breaks for your investment - when it doesn't make sense to take that investment, offshore anyway, and bail before the long term problems manifest themselves.
posted by Metafilter Username at 12:54 PM on July 6


> In my experience with technical offshoring, a company will experience several things: ...

"Fellowes, American Stationery Giant, Brought to Its Knees in China"

(I can't vouch for that particular web-site's credibility, but the story seems well-attested.)
posted by benito.strauss at 1:08 PM on July 6 [6 favorites]


Get work saving the projects that companies paid other development companies that were a 1/3 of the local price but they got about 1/5 of what they actually wanted and their workflow is even worse because of it.

I was going to make a smart remark about how often this is what i do in freelance IT support with small businesses. But the biggest problem here is despite the fact that they got completely hosed, and you have to both clean up the mess and come up with a solution... they still don't want to pay much more than that 1/3rd, and will balk/hem/haw at paying a remotely decent price unless they're completely fucked.

And even then, if they agreed to it, they'll try and chisel you down when it comes time to actually pay.

Nothing i've heard talking to people about this sort of stuff on a larger scale has made it sound like it gets any better as this scales up to big corporate bilge pump projects, it just seems like there's more layers of abstraction between the people doing the mop up and rebuild and the people arguing over how much money changes hands.

It still ends up being a game of begging for scraps.

On preview, at by basically said the same things.
posted by emptythought at 1:21 PM on July 6 [1 favorite]


There's often a lot of handwringing about what are, for all intents and purposes, abstract concepts to most MeFites, who would never aspire to working on the line in a factory, or at Walmart for that matter.

that the common person is rapidly becoming both underemployed and broke in this country isn't exactly an abstract concept

and seeing as i've worked in a factory for the past 15 years, i'll let you know if i feel mefites are wringing their hands cluelessly or vicariously or whatever it is you're worried about
posted by pyramid termite at 1:38 PM on July 6 [11 favorites]


Benito.strauss, Mr. Fellowes' congressional testimony here (about 2/3 of the way down) agrees with the article you posted, in case someone wants a more primary source.
posted by TedW at 1:40 PM on July 6 [2 favorites]


The reason that it would be hard for a small company to utilize the space that Philips left behind (and the reason Philips was a good catch in the first place) is that Philips has the wherewithal, the market share, and the economies of scale that most other companies don't. And the other companies competing in Philips' weight class are playing the same game Philips is.
posted by Benny Andajetz at 1:51 PM on July 6 [1 favorite]


And you can bet your last dollar Philips couldn't legally pull this kinda shit back home.
posted by Benny Andajetz at 1:57 PM on July 6 [3 favorites]


Would the troubles of Fellowes et al. disappear or fade if the production work was brought back to the US? They'd have to pay higher wages, but maybe that expense is less than what they lose by being in China.
posted by GrammarMoses at 1:58 PM on July 6


This is literally everything wrong with the US in one handy article. I'd say more but right now I'm so fucking angry I can't type.
posted by tommasz at 2:16 PM on July 6 [5 favorites]


The only relatively-simple means I can think of to force companies and -- most particularly -- their executives to work for longer term goals is deferred bonuses. Bonuses are only released to executives after 3, 5, 10, or more years of continued corporate stability.

In conjunction with that, a revision of the law that permits stockholders to sue even profitable companies if they can provide evidence that the company *could* be making even more profit would be in order.

And finally, tax companies on the profit they report to their shareholders, not the "losses" they report to the IRS.
posted by chimaera at 2:49 PM on July 6


The best solution (or maybe the best mitigation strategy) is to make workers partial owners of the company they work in. Right now the interests of stockholders and workers are radically different.
posted by Kevin Street at 2:57 PM on July 6 [2 favorites]


There was a fad for that back in the '80s and '90s, as I recall. Employee stock option plans were rolled out to win the loyalty of the workers. Then Enron yada yada yada, and owning the company turned out to be a new way for employees to get the shaft.
posted by GrammarMoses at 3:05 PM on July 6 [1 favorite]


arcticseal: "We need more people like you in the energy industry, I push every day to make what we do better and safer. The consumption isn't going away anytime soon, so the footprint needs to be reduced. Also, there are plenty of decent locations to work in oil and gas, Calgary being one of them."

Not everyone is me. One of my former coworkers (and a good friend) is in your business now. He makes about 3 times what I do. He also lives out of a suitcase, which I could not tolerate for any wage. He tries to fight the good fight in small subversive ways. He's mostly enjoying what he's doing and I'm mostly enjoying what I'm doing. We were both lucky. We both found niches that offer some refuge. A process operator I used to work with who was one of the best in the business is now a part-time bartender making a fraction of her former salary. She's one of many.

As much as I would enjoy living in Calgary, uprooting my family and moving to another country just isn't in the cards for me. It certainly isn't in the cards for the average recently unemployed factory worker.
posted by double block and bleed at 3:09 PM on July 6


There was a fad for that back in the '80s and '90s, as I recall. Employee stock option plans were rolled out to win the loyalty of the workers. Then Enron yada yada yada, and owning the company turned out to be a new way for employees to get the shaft.

That's because the Enron stock options were seen as a way for top earning employees to strip-mine their own company. They'd do things to raise short term profits so Wall Street would value Enron shares more highly, and then the employees would cash out. I'm thinking of a more socialist kind of system where employees own the largest single stake in a company (51% or whatever), and the shares are meant to be a way of ensuring the company always acts in the best interests of the workers. Individual shares might not go up in value much.
posted by Kevin Street at 3:14 PM on July 6


Ah, so the workers would own the means of production? In today's political climate, eh? In any event, I think that giving the group of workers majority ownership is tricky. It would only work if the 51% could be counted on to vote as a bloc. Otherwise each worker has, say, .25% of the voting stock and, based on my observations, very few will actually vote...let alone join forces to make decisions that would steer the company in a coherent way. Meanwhile, the owner(s) who hold 49% or less of the stock will in practice end up deciding the company's moves, meaning that when they screw up, the value of the majority's ownership stake will plunge.
posted by GrammarMoses at 3:32 PM on July 6


The cost of housing, along with the shortage of affordable housing in Calgary, is something to seriously consider when dreams of moving out west take hold. Moving out to Calgary is not an instant solution to a problem. Even 20 years ago, when my family moved from Edmonton, it was tough.
posted by Calzephyr at 3:45 PM on July 6


Combined, this research hints at a radical idea: that offshoring has simply become a reflex.

It is not a radical idea. It is an obvious idea. It has been obvious.

Corporate management is just as subject to fads, fashion, and bias as anything else is. Perhaps more so. I hardly think anyone who's taken a clear-eyed look at the culture of most big companies would argue.
posted by Western Infidels at 4:01 PM on July 6 [2 favorites]


I am pretty sure that if ALL businesses were 100% worker owned, and you legally had to sell your shares back to the company when you left, the world would be a much better place.
posted by Steely-eyed Missile Man at 4:28 PM on July 6 [2 favorites]


if ALL businesses were 100% worker owned, and you legally had to sell your shares back to the company when you left, the world would be a much better place.
--posted by SteelyDreamy-Eyed Missile Man

Wouldn't it just.
posted by GrammarMoses at 5:24 PM on July 6


How exactly does capital investment work in that world?
posted by Justinian at 5:53 PM on July 6


Offshoring is just part of a continual evolution of the economy. A long time ago, it took 50% of society to produce enough food for us, now it's down to maybe 2%. Those 48% unemployed food gatherers and farmers now do other, better things. It was reported in the media that our factory line workers were earning $35 per hour, and the work was being off-shored to a country with wages of roughly $1 per hour, that conveniently signed a free trade agreement with us. It didn't matter if our factories were benchmarked to be the most productive in the world if the wage disparity is 35:1. So our outfit is reinventing itself as an R&D shop which designs the product that is then made offshore with those $1 per hour wages. Can the R&D shop be outsourced also? No doubt, as engineers and scientists in India and China work for 1/5th our wages. But without the continual destruction of jobs, we cannot progress towards new and better ones. Sometimes the road is bumpy and there is local regression.

And the whole point of financial forecasting and strategy is that you make the move while you're still in the black, not after you've tried to make it work for a decade and collectively lost several billion dollars.

Small individual profit centres earning money isn't part of global MNC strategy: fragmented business units lead to large management overheads that simply does not scale (you can't throw money at the problem and hire 4x the managers and leaders and expect things to be fine). The more fragmented the business, the worse the decision-making tends to be.
posted by xdvesper at 6:54 PM on July 6 [1 favorite]


How exactly does capital investment work in that world?

That's why worker ownership shouldn't be 100%. And in addition to investment the market can provide a valuable corrective force if hard decisions and downsizing really have to be made. (Or if executives are leading the company in the wrong direction and need some sort of reality check.) Like with this Phillips plant, if they refused to make the transition into making LED lighting because it would cost workers jobs, the stock price would plunge as investors sold off the 49% that's publicly owned. The key would be to set up checks and balances so different interests are represented.

Voting rights might be managed through the unions, with workers granting their proxy to the union representative. Although that sort of thing would have to be totally transparent, because it would be easy for the corporation to just buy off union leaders and run things as they liked if no one was watching.

One problem, though, is that this sort of thing wouldn't scale very far. If each plant is owned by a separate company like the original Thomas Industries, then it makes sense. But worker ownership of the sprawling Phillips multinational would probably become an endless civil war, with the workers from different plants and industries set against each other.
posted by Kevin Street at 6:55 PM on July 6 [1 favorite]


How exactly does capital investment work in that world?

However it works with 100% employee-owned businesses now. They exist and work (my girlfriend used to work for one), so I would guess it's not as impossible as you are suggesting.
posted by Steely-eyed Missile Man at 7:46 PM on July 6 [1 favorite]


Inshoring is the new offshoring

Get ready for Obama's "new immigration bill", which has quietly inserted a provision to more than double current H1-B quotas AND let the spouses of H1-B's immediately seek work in the American market - effectively increasing the iH1-B quotas by far more than double.

I can predict many "marriages of convenience" - i.e. tech worker marrying tech worker - in India and China to take advantage of the new law that Mark Zuckerberg and his tech cronies are lobbying for, via his PAC, FWD.US. Zuckerberg and his tech pals (John Chambers, the Google twins; Larry Ellison, Bill Gates, etc are leeches and blatant liars on this issue, in spite of all their glowing, hagiographic press to the contrary - with talk about importing the "best and brightest" workers to America. The best and brightest? Baloney! How about the cheapest? That's what this is all about. Funny thing that it isn't well known in America that in India, for instance, outside of the Indian Institute of Technology, the graduates regularly pad their resumes, and don't have the skill sets they claim to have. Best and brightest?

This, in the face of study after study showing no shortage of STEM talent in America, our POTUS and tech and other manufacturing "leaders" continue to shove these lies down our thrats. Try getting a tech interview in Silicon Valley without having to run the gauntlet through an Indian recruiter. The whole system has been distorted to favor imported workers.

Corrupt Indian business and political leaders love this because they don't have to improve infrastructure at home; they just ship workers off to America and other places. There was a big noise made n India when the US was putting pressure on decreasing H1-B quotas a few years ago - to the point where corrupt Indian legislators were making anti-American noise.

Add to this corrupt American corporate leaders and their legislative pawns - all the way to POTUS, and we have a situation where the labor market is up for sale, and "screw the American worker".
posted by Vibrissae at 7:58 PM on July 6


How exactly does capital investment work in that world?

Borrowing: bank loans and corporate bonds.
posted by ormon nekas at 8:38 PM on July 6


And when the employees default on the loan who takes control of the company given that they must be employee owned?
posted by Justinian at 8:55 PM on July 6


so I would guess it's not as impossible as you are suggesting

I wasn't suggesting that employee owned companies are impossible (they obviously aren't), I was suggesting that requiring that all companies be employee owned radically limits the amount of capital investment which is possible.
posted by Justinian at 8:57 PM on July 6


I was going to make a smart remark about how often this is what i do in freelance IT support with small businesses. But the biggest problem here is despite the fact that they got completely hosed, and you have to both clean up the mess and come up with a solution... they still don't want to pay much more than that 1/3rd, and will balk/hem/haw at paying a remotely decent price unless they're completely fucked.

Of course. This is no different to companies who do not go off shore either. We don't work with those people.

I am not, nor have ever suggested that this is some sort of magical cure/alternative, just an emerging opportunity from time to time.
posted by juiceCake at 9:21 PM on July 6


And when the employees default on the loan who takes control of the company given that they must be employee owned?

You're right, I wrote that without considering the hypothetical where only employee ownership is allowed.

Actually though, I don't see what difference the employee ownership requirement would make. Either the company is liquidated and the assets sold off, or the creditors agree to renegotiate the debt (probably in exchange for temporary oversight over management), or the company files for bankruptcy protection.

So why do you think capital investment would not work in this system? Because the returns would be less attractive?
posted by ormon nekas at 9:49 PM on July 6 [1 favorite]


(I mean, why do you think the amount of capital investment would be radically limited)
posted by ormon nekas at 9:50 PM on July 6


There's often a lot of handwringing about what are, for all intents and purposes, abstract concepts to most MeFites, who would never aspire to working on the line in a factory, or at Walmart for that matter.

Even if "most MeFites" don't, there are plenty of us who have worked recently or are working currently at low-level factory or retail jobs. (Hi! I have put in a lot of time standing in front of a conveyor belt.) If it's abstract to you, it's not abstract to everyone here. Also, what, we have to work in the field to have opinions on how a really large sector of the economy should operate? Nonsense. This affects us all.
posted by asperity at 11:05 PM on July 6 [1 favorite]


There's often a lot of handwringing about what are, for all intents and purposes, abstract concepts to most MeFites, who would never aspire to working on the line in a factory

You did notice that thousands of factories are being closed in the U.S. -- which is where the majority of MeFites lives -- in order to ship those jobs overseas in the first place, right? If factory jobs are increasingly abstract, it's because they're increasingly non-existent here.
posted by scody at 10:40 AM on July 7 [1 favorite]


Oh, these jobs will come back. Once the right wing completes its plan of devaluing labor and gutting environmental legislation they'll be able to pay pennies to manufacture stuff here as well and save on shipping costs. So don't worry, your children's children -- or, who knows, maybe even your children! -- will be able to work 15 hour shifts with no breaks for a couple bucks and America will once again be titans of industrial productivity.
posted by Legomancer at 11:24 AM on July 7


So White County voted overwhelming for Romney? Seems like from an electorate standpoint this is what they wanted right? The ability for corporations and corporate raiders to have all the say and the employee to have few protections?
posted by Carillon at 12:18 PM on July 7 [1 favorite]


For years I have been saying to my ,now 60/80 year old peers, that we are living in "the best of all possible worlds."

I wish you'd talk to my 77 year old father. He's convinced that people don't have jobs because they're just lazy, inferior people. Never mind that the small town he lives in went from having nursery (tree-growing) jobs, manufacturing jobs and an urban center within commuting distance (+ cheap gas) with tons of manufacturing jobs to, basically, nothing but a small hospital with a few nurse's aide jobs and a healthy underground meth-producing economy.

ps: I worked inside a factory (in the print shop). It's off-shore now.
posted by vitabellosi at 12:39 PM on July 7 [3 favorites]


Just got another "fix our web application because we went offshore to have it developed and it has never worked properly" opportunity.
posted by juiceCake at 5:45 AM on July 9


And another this afternoon...
posted by juiceCake at 1:44 PM on July 9


Update on Philips in the Economist. link
posted by Spumante at 2:59 AM on July 11


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