Outsourcing Jobs, Who Does it Really Help?

Due to our current economic environment (which I’ll get into in another rant) I’ve been thinking a lot lately about ways that we could potentially resolve some of the issues we’re all going through.  One of the issues that came to mind was outsourcing and it’s pros and cons.

Being a small business owner myself, I can certainly see the benefits.  I sold aftermarket automotive parts and at one point I wanted to sell my own brand.  First I shopped here in the US, calling around to numerous (15-20) parts manufacturers getting quotes and samples at great personal expense.  I then did the same for a number of overseas manufacturers.  Being a very small business and almost totally funded out of pocket, cost for quality was a huge concern.  I refused to put my name on junk, but at the same time, I had to be able to sell something that I could make money on.  I settled on two different companies – one state side, and one from Taiwan.  I purchased a small run from both companies (5 pieces each).  The US company costing me around 850/set, and the Taiwanese company costing me about 450/set.  Unfortunately as it pertains to customer service, I chose the WRONG US based company.  It took 8 months to receive the product that I paid for on day 1.  I paid more in credit card interest carrying fees than I could ever make in profit (the average selling price for these parts being around 950).  The Taiwanese company not only had the order done on time (2-3 weeks), but had the product on my door step in Nevada within their originally quoted timeframe.

After finally receiving both runs from both companies and examining the quality, I was relatively impressed.  Both were of equal quality in construction and materials.  I was very pleased.  For me, the shorter timeframe and better customer service for an equal quality product from Taiwan made more sense.  The price point made it so I could make a decent profit and afford to expand a bit. Who did this benefit?  Me, clearly.  It made it possible for a small business to stay afloat.  If I could have purchased a quality product from an American manufacturer and still made any profit, I would have absolutely done so.

Let’s look at this on a larger scale.  Take a large auto manufacturer for instance.  This auto manufacturer employs thousands of Americans, keeping them employed and paying them money that they can and will reinvest in the US economy. What happens if/when they outsource manufacturing to another country, essentially cutting their costs in half?  Do they lower the price on their cars?  Does they reinvest that money locally and hire more people, creating more jobs?  Unfortunately history shows us that the answer to both those questions is no.  They lay off the American workers, and pocket the increased profits.  This is an unfortunate example of the rich getting richer.

Don’t get me wrong, I’m not some sort of hippy that believes everything should be made locally or that we should all live in tree houses and hug everyone, but I don’t believe in laying off hundreds or thousands, only to buy myself another vacation property, or a couple new exotic cars.

Unfortunately, there is little room for ethics in today’s money driven world.

I believe that the only way to solve this is to tax outsourced labor depending on the size of the business.  If outsourcing is the only way for a small company to stay in business and continue to employ the 1-10 people that they currently employ, then I feel that it should be taxed very little if at all.  If a large company wants to outsource and replace 10,000 American workers, then I believe they should be taxed to the point that they essentially pay for the welfare checks that the US government will then have to cut those 10,000 people until they find a job.

I’m sure there are issues with this plan, but I’m just one guy.  I’d hope that a government full of people who’s job it is to think of ideas like this could come up with something better – something that could keep jobs in the US, or at least tax those who outsource enough to cover the added financial stress put on our government by their actions.

Who knows.. these are just the ramblings of someone who’s sick of seeing campaign advertisements from two dudes trying to prove themselves the shiniest of two turds.