Posts Tagged ‘US’

US manufacturers’ shift from China to benefit Indian technology outsourcing firms

March 28th, 2014

As more and more American manufacturing companies shift production to the United States and reduce their reliance on low-cost labour in China, Indian technology outsourcing companies are expecting a big boost in revenues from their manufacturing clients.Outsourcing25

The country’s top software providers, which work with the world’s largest manufacturing companies, believe these enterprises will spend more on building and maintaining new systems for technology and supply-chain as they move production to the US. “This is an extremely important opportunity as more manufa ing arrives in the United States,” said Sanjay Jalona, senior vice president and global head of manufacturing and engineering services at InfosysBSE -0.50 %, India’s No. 2 IT services provider.

A rising number of companies in the US have been rethinking production strategies and this would see them ramping up investments in technology, giving more work to software outsourcing companies such as Infosys, said Jalona, who counts Volkswagen AG’s US business as a client.

From Apple to General Electric, a growing number of US companies have been moving part or all of their production to the US for reasons including political pressure to bring jobs home. These companies also say they no longer see China as a cheap manufacturing hub due to wage inflation and rising real-estate costs.

A survey by The Boston Consulting Group in September last year found that 21 per cent of a sample of 200 executives were actively relocating manufacturing from China to the US, while 54per cent said they were planning to do this. Nearly half of the respondents cited rising costs and proximity to end consumers as the primary reason.

GE moved production of some of its washing machines from a factory in China to Kentucky last year, and Apple has been gradually expanding its manufacturing in the US after poor working conditions inside Chinese factories drew global attention. Others who have brought manufacturing to the US include homeappliance maker WhirlpoolBSE -1.49 %, mining equipment maker Caterpillar and auto-major Ford Motor.

Technology industry experts say moving production from China, where most of the IT work is outsourced to state-owned companies, to the US, where working with third-party software companies is a norm, may put pressure on Indian IT firms to hold down their prices. “There will pressure to price low manufacturif the support was being provided from a low-cost location,” said Ben Trowbridge, founder and chairman of Alsbridge, a Texas-based outsourcing advisory firm.

Aloke Palsikar, global manufacturing head at Tech MahindraBSE 0.59 % said two of his top manufacturing customers have started shifting some of their work to the US. “The opportunities for Indian IT companies will be in areas of shop floor automation, high-end robotics and new generation technologies such as 3D printing, which will take the manufacturing to an entirely different level,” Palsikar said. “Another set of opportunities would be in area of recreating the supply chain back to the US which has been hitherto China centric.


Infosys begins moving work out of US over immigration Bill fears

January 8th, 2014

Infosys has started moving onsite work in the US to India or near-shore destinations in a move to de-risk itself in case the dreaded immigration Bill becomes law.outsourcing39

Sources in the company confirmed to Business Line that some cost centres, such as general, administrative and sales-support functions, are beginning to be off-shored.

There is also a possibility that the level of off-shoring of services, such as application management, infrastructure management and business process outsourcing, will be increased. This strategy is also expected to lower dependence on the low-margin onsite business.

Most of the off-shoring is being carried out after consultations with clients, said sources.

Congress debate

The move assumes significance as US Congress is expected to take up the Bill for discussion soon. The Senate has already passed the Bill, which seeks to increase visa costs as well as salaries of H1-B visa holders, making it unviable for companies such as Infosys to carry on business in the US.

Over 65 per cent of the revenues of the domestic IT and ITeS industry comes from US clients. Infosys is the second-largest employer of H1-B visa professionals in the US.

IT industry lobby Nasscom has come down heavily on provisions in the Bill, stating that they amount to non-tariff barriers.

An analyst with Prabhudas Lilladher said the immigration Bill continues to be the source of uncertainty for offshore vendors, such as Infosys and TCS. The margins of Indian IT service vendors will get impacted if any version of the Bill increases visa costs or mandates more local hiring.

However, Vintha Khatwani of Kotak Securities said that while there is some unease over the proposed Bill, the impact will be limited.

Lobbying Congress

Last year, a group of eight Indian IT companies, including Infosys, formed a lobby to influence US Congress to drop crucial clauses in the Bill. Infosys had also said that it is in discussions with clients for a contingency plan in case the immigration Bill becomes law. The company had said it was examining the option of off-shoring work in case the Bill became law.

In fact, it has started implementing the strategy even before US Congress has taken the Bill up for discussion.


Red Ten NYC Remains Dominant in US Market despite Surge in European Competition

December 31st, 2013

The rise of outsourced marketing competition in Europe has not impacted American-based firm Red Ten NYC due to their commitment to restricting their trade to American-based suppliers only. The New York-based firm trade solely with American suppliers and contractors, and managing director Tommy Smithbelieves this is one of the reasons why many American businesses choose to outsource their marketing duties to Red Ten NYC. “Our clients appreciate this about us. Outsourcing carries a certain reputation and for us to be able to proudly promote our commitment to being an American-based outsourcing firm who solely trade in the US is very appealing to many brands and has become a key marketing tool,” says managing director Tommy Smith.

world headphones

The “certain reputation” of outsourcing that Tommy Smith is referring to is predominately a negative one. In 2009, authors Srinivas Durvasula and Steven Lysonski published a report titled ‘How Offshore Outsourcing is Perceived: Why Do Some Consumers Feel More Threatened?’ ( The report discusses how multi-national firms in Europe and North America have experienced many difficulties in justifying their offshoring activities to the general public. The general consensus of the public is outsourcing causes “job losses and damage to domestic industries.” Managing director Tommy Smith strives to keep his clients and customers a business priority. By empathizing with their concerned view of outsourcing he ensures that, at Red Ten NYC, no outsourcing is carried out overseas. By maintaining this loyal relationship with his clients and customers, managing director Tommy Smith has led Red Ten NYC to be a ‘go-to-service’ for businesses looking to extend their marketing reach and improve sales figures.

Red Ten NYC is an outsourced sales and marketing firm based in New York. The firm specialize in direct marketing methods as this allows them to build loyal and trusting relationships with their customers. Red Ten NYC is a leading outsourcing solution for American businesses operating in the telecommunications, fundraising, home improvements, entertainment and financial services. Businesses have been known to recommend Red Ten NYC’s service for their local trading policy as well as for their guaranteed ROI, high customer retention rates and their cost-effective campaign management.


Premji asks PM to take up unfair US immigration bill with Obama

August 27th, 2013

As the fate of the H-1B visa program rests with the US Congress, Indian tech firms are losing sleep over proposed changes to the H-1B visa portion of the US immigration bill. Wipro Chairman Azim Premji asked Prime Minister Manmohan Singh on Sunday to seek the intervention of President Obama to remove provisions that are “discriminatory” towards Indian tech firms.Outsourcing22

The US Senate passed an immigration bill in June that would increase the yearly H-1B cap to 180,000 from 85,000 which is good, but there are several killer provisions in the bill that could hobble Indian outsourcing firms’ businesses in the US.

Unfortunately, a coalition of US high-tech companies and pro-labor Democrats have twisted the worthy goal of knocking down America’s barriers to technical foreign talent into blatant protectionism.

Azim Premji. ReutersAzim Premji. Reuters
“Provisions of the Senate bill that are discriminatory and target Indian companies are — outplacement bans and restrictions; attestation on recruitment of US workers; and higher wages to H-1B employees vs. American employees,” Premji said in a letter addressed to Singh.

“We want your support to seek White House intervention to eliminate the discriminatory provisions in both the Senate and House bills and to treat Indian IT service providers at par,” said Premji.

The Wipro chairman noted that fixing the H-1B flaw in the immigration bill was in the interest of increasing India-US trade by five times from the current level of US$100 billion.

Killer provisions for Indian companies

Firstly, a company with more than 15 percent of its workforce on H-1Bs will be restricted from placing H-1B workers at the offices of their clients, an approach used by nearly all Indian IT services groups.

Secondly, the proposed legislation suggests that from 2016 any company with more than half of its staff on such work permits will be forbidden from applying for more visas, effectively creating a cap on temporary immigrant staff.

Thirdly, seeking to prevent undercutting American salaries, the bill would require H-1B workers be paid more than under current law, and impose steep fees of $10,000 per visa on big companies with more than half of their staff on H-1B visas.

The H1-B and L-1 Visa portion of the immigration bill is designed in a way that makes it more difficult and costly for Indian IT firms to bring in workers on temporary visas, while easing restrictions on US firms using those resources by increasing the annual cap on work visas.

Companies such as Infosys, Wipro, Cognizant and Tata Consultancy Services have set up large US offices with American employees to be closer to clients, but there is always an offshore angle. They rely heavily on H-1B visas to allow Indian staff to fly to the US when they are needed for face-to-face consultations and to work on projects in the US as part of their “global service delivery” model.

Indian companies naturally need some portion of their staff on-site in the US to understand the systems and specifications of their American clients, which is why they are heavy H-1B users. US companies often contractually require Indian tech firms to place employees on site to troubleshoot. The outplacement restriction deals a body blow to this whole business model.

US tech companies Microsoft and Accenture support these H-1B restrictions for the simple reason that in a world of finite visas, fewer visas for Indian companies means more for itself.

“Both companies have been expanding their IT operations in India and are directly competing with Indian companies for American “offshore” business. IBM now generates about a third of its revenues in India where it employs over 100,000 people. The visa restrictions are simply an effort to cripple their foreign competitors and capture their offshore market share, something that won’t save a single American job,” said Business Insider, a US technology and business website.

IBM now generates about a third of its revenues in India where it employs over 100,000 people. But because IBM and Accenture have a large American workforce, they will be able to hire even more H-1Bs than the Indian companies without running afoul of the new visa regime, notes the US news site.

Lobbying push moves to the House

The US-India Business Council and Nasscom, which represents India’s technology sector, which clocks in $100 billion in annual revenue, are spearheading a lobbying push to get lawmakers in the House to kill complicated and restrictive provisions for H-1B and L-1 visas. They are explaining to lawmakers that the bill creates more H-1B visas, but then makes it harder to use with all the new government rules.

House Speaker John Boehner said earlier in the day that his chamber will not simply take up whatever the Senate passes. India’s effort now will be to replace the Senate provisions with a much cleaner H-1B bill proposed by Republican Congressman Darrell Issa that has already passed House Judiciary Committee. House Republicans have delayed consideration of immigration bills until September.

India raised concerns about the immigration bill with Secretary of State John Kerry when he was in New Delhi saying the issue of short-term work visas shouldn’t be mixed up with immigration.

The proposed reforms could force Indian IT companies to hire thousands of new American employees or make acquisitions to ramp up American staff.

“Over the short term, the legislation would likely have a negative impact on Indian-heritage IT companies and give a competitive edge to US firms,” said Sid Pai, Partner and President, ISG Asia Pacific. “Over the long term, however, the provisions could encourage Indian firms to expand their US presence. Specifically, to avoid the provisions of the bill, Indian companies may step up local hiring and focus on acquisitions of US-based companies.”

Premji pointed out that contrary to misconception, “Indian IT companies in US in the past five years have created American jobs of at least 35,000 and today support 280,000 jobs in the U.S. Three out of these four jobs are held by Americans. Contrary to this, a leading American services company in the last six years has reduced 36,000 American workers.”

The Times of India reported that Wipro had spent $240,000 till July this year on lobbying in the US, compared to $210,000 it spent in the whole of 2012.

Indian companies are steadily creating more jobs in America and have paid more than 15 billion in taxes to the US treasury, according to Nasscom.


Infosys abuses visas to discriminate against US staff

August 6th, 2013

A class-action lawsuit filed against IT outsourcing firm Infosys claims that the company is systematically abusing the visa system and actively discriminates against hiring US workers for staff position.Outsourcing18

The lawsuit, filed in US District Court in Eastern Wisconsin by VMware specialist Brenda Koehler, claims that up to 90 per cent of US staff at Infosys are not local hires, according to a former Infosys employee. These staff are either brought in under the H1-B visa program or work illegally under B-1 business visas, the suit claims.

“Infosys has reached this grossly disproportionate workforce by directly discriminating against individuals who are not of South Asian decent in hiring, by abusing the H-1B visa process to bring workers of South Asian descent into the country rather than hiring qualified individuals already in the United States, and by abusing the B-1 visa system to bring workers of South Asian descent into the United States to perform work not allowed by their visa status rather than hiring individuals already in the United States to perform the work,” it states.

The lawsuit claims that Koehler, who holds both a BA and MA in computer science and is an experienced network specialist, applied for a job with the firm. During the interview, which was rescheduled at the last minute, her interviewer falsely claimed that she had no experience in key areas such as Microsoft’s Active Directory, and the job was given to an engineer from Bangladesh.

This kind of practice, along with claims from other former staff, is indicative of a deeply discriminatory culture within the Indian-owned company, the lawsuit claims. One ex–staff member, Jay Palmer, who brought a failed legal action against the firm, claims he was repeatedly called a “stupid American” and saw staff writing “No Americans/Christians” on a board during a meeting.

Palmer also claimed that Infosys was hiring staff in Asia to come to the US on B-1 visas, which are designed to let foreign nationals enter the country for conferences and meetings. He claimed the company would ask staff to falsify letters of invitation to events in order to get enter into the US.

The lawsuit asks for an injunction against Infosys hiring more staff until claims of discrimination are worked out and for the company to be ordered to find a “valid” way of hiring US workers.

“Infosys is an equal opportunities employer, and we categorically deny Ms. Koehler claims,” Infosys spokeswoman Danielle D’Angelo told El Reg.

“We look forward to addressing this matter in court and not in public venues where facts can be mixed with rumor and speculation,” she said.


For BPOs, a shocker of a call from US

August 5th, 2013

In a rude jolt to Indian business process management companies (BPM or BPO), a bipartisan group of six US lawmakers on Friday introduced a legislation in the Congress to tighten the rules for American companies that outsource call centres overseas.

The US Call Center and Consumer Protection Act of 2013 requires overseas call centre employees to disclose their location to US consumers and gives customers the right to be transferred to a US-based call centre upon request. In addition, the US Department of Labor would track firms that move call centre jobs overseas and bar them from receiving federal loans and grants.

Outsourcing8For India, home to the world’s largest BPO industry, employing some two million people and contributing roughly 2% to the country’s gross domestic product, this is a serious setback. Outsourcing from the US accounts for roughly 60% of the revenues of the Indian IT-BPO industry. What’s worse, the blow comes just as the industry is bracing for the US Immigration Bill, whose controversial ‘outplacement clause’ restricts employing Indian labour in the US, calls for setting up additional delivery centres in the US and hiring more nationals to man them at double the salaries paid to Indians.

Experts agree that the development bodes ill for India. “This clearly shows that the US is trying to shut down both onshoring and offshoring to create more jobs in the US,” said Pradeep Udhas, head of IT-BPO at KPMG.

He, however, thinks India may not be affected as much since 50% of the US call centres that require outsourcing may continue to do so regardless of the Bill.

Halo fading
According to Nasscom, in the last five years, India has lost about 10% BPO market share to other countries, most of it in the voice contract segment.

Nasscom pegs the Indian IT services industry at $50 billion and the BPM or BPO industry at around $20 billion during 2012-13. Engineering services are an additional $10 billion or so.

The annual average growth of IT-ITeS services in India was 10.9% last fiscal, from 30% five years ago. Compare this with 69% in the Philippines, 28% in Sri Lanka, 59% in Ukraine, 27% in the Russian Federation, 37% in Argentina and 35% in Costa Rica.


Offshoring from Sea to Shining Sea

July 30th, 2013

The year 1979 may very well have been the year when the middle-class in America had first began it’s long decent into oblivion.  According to a U.S. Bureau of Labor Statistics report, manufacturing in the U.S. peaked in 1979 when we had over 19.6 million manufacturing jobs in a labor force of 104.6 million. In 1979 manufacturing was 21.6% of all jobs. Now manufacturing is only 9,9% of jobs in America. Today we have 155.8 million in the labor force with 11.8 million workers unemployed. That’s because manufacturing has left our shores, and it has been on a downward trend ever since — with no end in sight. Outsourcing1

The year 1979 was also when mergers among the labor organizations began increasing — when the total number of union members had peaked at over 22 million. This is also the year when the U.S. broke off formal diplomatic relations with Taiwan and established full diplomatic relations with China. There is no coincidence here. All roads lead to China.

Lewis Franklin Powell Jr. wrote his famous “manifesto” on August 23, 1971 just before he was nominated by President Nixon to sit on U.S. Supreme Court. Less than two years later on March 29, 1973 Master Sgt. Max Beilke was officially designated the last American combat soldier to leave Vietnam. Soon afterwards major U.S. companies initially responded to “heightened competition” from Japanese and European multinational corporations by opening factories abroad during the 1970s (which may have involved using the Laogai labor camps in China). The American multinationals manufactured goods that were formerly produced by comparatively well paid, often unionized, factory workers in the U.S.

According to one technical publication, A Brief History of Outsourcing, the current stage in the evolution of outsourcing is in the development of “strategic partnerships”, which was first pioneered by Eastman Kodak with their decision to outsource their information technology systems in 1989.

Kodak was quickly followed by dozens of major corporations, whose managers had determined that it was not necessary to own the technology to get access to the information they needed. All throughout the 1990s the offshoring of jobs had escalated — mostly tech, call service centers and manufacturing — by companies such as Microsoft, Apple, Hewlett-Packard, IBM and Dell. (During the last presidential campaign, Bain Capital was often mentioned.)

In 1999 Bill Clinton signed the controversial trade agreement with the People’s Republic of China. The trade agreement was the result of more than a decade of negotiations, and lowered many trade barriers between the two countries.

It’s unclear how many jobs were offshored between 1979 and 2001, but data shows there were 398,887 private manufacturing establishments of all sizes in the United States during the first quarter of 2001, and by the end of 2010, the number had declined to 342,647 — a loss of 56,190 factories. So the onslaught has continued for the past 35 years.

And as Robert Oak at the Economic Populist pointed out, according to a study by the Economic Policy Institute, over the last decade (from 2001 to 2011) the United States has lost 2.7 million jobs to China alone (and this is a conservative estimate). The China PNTR trade agreement was signed by President Clinton on October 10th, 2000 and China entered the WTO in 2001. Since then our massive trade deficit has skyrocketed, stunting our economic growth and costing America millions of jobs.

And that doesn’t even include the multiplier effect (when one job generates another job that is dependent on that job). A study by University of Illinois at Chicago concluded that one manufacturing job in the Windy City leads to 2 more. And on a national scale, the multiplier for a manufacturing job is 4.6 — higher because of a larger geographic scope for supply chains and induced spending. So those 2.7 million jobs lost to China over just those ten years alone could theoretically equate to 4 or 6 million more.

Robert Oak goes on to note:

“Of the people who lost their jobs through offshore outsourcing, plant closures, business failures and layoffs during 2009-2011, by January 2012 only 56% of them had gotten another job. These are people who held the job they lost for three years or longer, and there were a whopping 6.12 million of those people in this category.

In an updated BEA summary on sales, investment and employment by Multinational Corporations for 2011, we have a 0.1% increase in hiring for jobs in the United States while MNCs increased their hiring abroad by 4.4%.

From 1989 to 2011, U.S. MNCs decreased their employment in the United States by 3.3 million workers while expanding employment abroad by 6.5 million employees.  The share of employment by MNCs in the United States went from 79% of their total employees in 1989 to 66.3% by 2011.  Multinational corporations are clearly doing their hiring abroad.”

“During the recent great recession since 2007, many observers wrote the American Manufacturing Obituary, claiming that American could no longer be regarded to be a world leader because of intense competition from low-cost competitors. Trade liberalization has increased the economic interdependence among nations. Multinational corporations in the U.S. have established operations in developing counties where labor is cheaper. One consequence of this increased globalization of manufacturing industry has been movement of  jobs and production from the U.S. to Low Labor Cost (LLC) countries (which are often less developed countries) for higher corporate profits. This practice is called offshoring, and is a direct consequence of Monopoly Capitalism, where the prime motive is corporate profits without consideration of job losses for people in the home regions. Globalization works to the detriment of American workers and reinforces unfair labor competition because of lower wages and inadequate working conditions existing in developing nations.”

And this is not because Americans lack skills. This has been the “public relations” spin put out by corporate America in defense of their corporate strategy. Alan Blinder, a professor of economics and public affairs at Princeton and a former vice chairman of the Federal Reserve Board, has stated that:

“Contrary to conventional wisdom, the more offshorable occupations are not low-end jobs, whether measured by wages or by education. The correlation between skill and offshorability is almost zero.”

His conclusion supports the research of a December 17, 2012 Congressional report on offshoring. Alan Blinder was quoted on page 10 as saying a moderate estimate of 25.6% of all U.S. jobs are most susceptible to offshoring — and his more aggressive estimate totals almost 40 million, or 29.0% of all U.S. jobs.

A Washington Post article notes that many people believe that Boeing’s troubles with its 787 Dreamliner jets is because of outsourcing. Critics have long charged that Boeing was far too reliant on offshore suppliers for the 787′s production. More than 30 percent of the jetliner’s components came from overseas.

In his recently published book, After the Music Stopped, Alan Blinder gives the U.S. the post-recession’s macroeconomic performance a failing grade:

Total jobs losses were just under 8.8 million, over a period during which we should have added about 3.1 million more, creating a cumulative job deficit of about 12 million by February 2010. Then the job deficit rose even higher in 2010-11 as job creation fell short of the 125,000/month required to keep up with population growth. By August 2012 total employment was only back to April 2005 levels — for a zero net growth over a period exceeding seven years. In an average month during 1948-2007, less than 13% of the unemployed were jobless for over 6 months; by April 2010, it was over 45% — and is only slightly less today.

And, despite the cost of labor rising in some Asian nations, there are many others (Nike, etc) whose low wages continue to draw U.S. jobs, such as Vietnam. Many American fast food operators (Starbucks, KFC, etc) have also opened businesses there. McDonalds’s also has plans to open soon in Ho Chi Minh City (formerly called Saigon, the city Sgt. Max Beilke vacated.)

From Nike’s website: “When we look at our overall impact on the world, the needs of nearly one million workers in Nike’s contract supply chain overshadows any other group.” And Nike is but one of many examples (albeit, a very classic example) of globalization. It’s a pity that those one million workers in Nike’s supply chain are in Asia, not America.

On May 12, 1998 Nike’s CEO Phil Knight gave a speech at the National Press Club where he spoke of Nike’s reasons for moving factories out of the United States and into mainly third world countries in Asia. “During the 1990s, all our experiences have caused us to really believe in the benefits of international trade. The uplifting of impoverished people, the better values for consumers in industrialized nations, and most of all, the increased understandings between peoples of different cultures.”

That seems to be the morality and mindset of a typical globalist, someone who advocates a policy of placing the interests of the entire world above those of individual nations. As one major American hedge fund manager had privately admitted:

“The U.S.-based CEO of one of the world’s largest  hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter.

His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.”

But then again, are they really so concerned about lifting the poor out of poverty in third world nations, or is it just a simple matter of plain old fashion greed, and they are just using these humanitarian excuses (as a public relations matter) as a cause for their actions?

Since the 1990′s many major U.S. companies have been criticized for offshoring jobs. Businesses in the manufacturing, tech and apparel industries, such as Apple and Nike (to name just a very few) have often been targeted for using cheap labor in very unsafe and slave-like working conditions abroad.

In their book, Producing Prosperity, Harvard Business School professors Gary Pisano and Willy Shih writes:

“For years–even decades–in response to intensifying global competition, companies decided to outsource their manufacturing operations in order to reduce costs. But we are now seeing the alarming long-term effect of those choices. In many cases, once manufacturing capabilities go away, so does much of the ability to also innovate and compete. Manufacturing, it turns out, really matters in an innovation-driven economy. Companies must reinvest in new product and process development in the US industrial sector. Only by reviving this ‘industrial commons’ can the world’s largest economy build the expertise and manufacturing muscle to regain competitive advantage.”

Edward Alden at the Council of Foreign Relations writes:

“They [Gary Pisano and Willy Shih] demolish the comforting story that many economists have offered to dismiss concerns over the shrinking role of manufacturing in the U.S. economy. The conventional argument goes like this: It makes more economic sense to locate the actual production of goods in lower-wage countries, while the United States maintains the skilled parts of the supply chain (R&D, branding, marketing, etc.)

The classic example here is Apple: most of the value of an iPhone or iPad comes from the design, software, branding and retailing, not from the assembly. Therefore, U.S.-headquartered Apple can become the most valuable company in the world, even while making virtually nothing in the United States.”

The World Trade Organization cites a report from 2000 by the U.S. Department of Labor (Displaced Workers Survey) that used data from 1975 to 1995. It found that rates of job losses were particularly high in sectors with high levels of imports and sectors with high import growth.

The Bureau of Statistics Displaced Workers Summary from August 24, 2012 reports there were a total of 12.9 million displaced workers from 2009 to 2011. The prior survey, which covered 2007 to 2009, numbered 15.4 million. The previous survey reflected the steep decline in jobs associated with the Great Recession that began in December 2007 and officially ended in June 2009. According to the Center on Budget and Policy Priorities, 8.7 million net jobs were actually lost during the last recession.

Prior to the last recession, there appeared to be enough job growth to compensate for most of the lost jobs due to offshoring, although, many Americans were forced into taking lower paying jobs (such as in the retail and fast food industries) and most often without any benefits (such as healthcare and pension plans). And many times they only found part-time or temporary positions, which set them on a never-ending course of “job hopping”.

But since the recession, long-term unemployment has been a huge drag on the economy — and according to the Bureau of Labor Statistics, with 11.8 million unemployed Americans, and 8.2 million working part-time, and another 7 million working multiple jobs to make ends meets, all those millions of offshored jobs are looking even more appetizing.

Since the Great Recession major attention has again returned to the subject of offshoring (some are now saying “reshoring”) — and in conjunction to the Occupy Wall Street movement, an ever increasing focus has also been on wealth inequality, income disparity, corporate greed, CEO pay, stagnate wages and the minimum wage. And then it all comes back again full circle — back to offshoring for cheap labor.

Meanwhile, corporate cash is once again at a record high. According to a report by the research firm Audit Analytics, large U.S. companies have boosted their offshore earnings by 15 percent last year — to a record $1.9 trillion, while avoiding hefty tax bills by keeping their profits abroad (rather than invest in American workers). Their overseas earnings stockpile has climbed by 70 percent over the past five years, but most American workers aren’t sharing in the corporate booty. Millions are either under- or unemployed. Now 50% of the work force who are working take home $27,000 a year or less. And instead of seeing a pay increase, they saw the biggest drop in hourly pay on record. It seems workers haven’t been reaping the same rewards as their employers — when “worker productivity” once meant something to the workers too. The Heritage Foundation thinks workers must be more productive.

No…Nike is NOT an American Icon, but it is a typical a job creator…overseas.

Wall Street Journal (June 27, 2013) Nike’s profits are up again — their fourth-quarter profits jumped 22%. Nike also expects overall profits for fiscal 2014 to rise in the low double-digits as sales are expected to climb, helped as Nike gears up for the 2014 World Cup in Brazil. Margins are expected to strengthen throughout the year, helped by higher selling prices. Demand for athletic gear in the U.S. has also been strong in recent years, and Nike’s sales have been bolstered by apparel tied to a contract with the National Football League.

“Nike’s grand strategy for reaping in huge profits every year is really quite simple: just don’t pay workers. That’s how they sell a shoe for $180 that only costs just $5 to manufacture.”

The people who are laboring to make that $180 pair of shoes, and other Nike gear and apparel, are mostly young women, ages 16-24 (Although, in Pakistan, children were once sewing Nike soccer balls for $0.60 a day.) In Vietnam the average worker is paid about $0.20 an hour, or $1.60 a day. (While the cost of eating is reportedly $2.10 a day).

And workers in Vietnam are forced to work 65 hours a week. Not only are they forced into overtime without compensation, the 65 hour work week is in clear violation of Vietnamese labor laws. In the Sam Yang factory in Vietnam there is only one doctor who works two hours a day to service 6,000 workers.

Employees in Vietnam have stated that verbal abuse and sexual harassment are frequent and that corporal punishment is often used. Supervisors have been reported to frequently grab the women’s breasts and buttocks.

Nike has reportedly responded to many of these allegations by widely publishing their Code of Conduct in the factories — but in Vietnam, few workers have even heard of such a code, nor ever learned what provisions were within it.

As of 2013 (from Nike’s interactive map) Nike has 777 factories in 43 Countries employing 1,009,496 workers. Just in Vietnam alone Nike has 71 factories with 311,548 workers, mostly female, with an average age of 30. (For a complete list of Nike’s factories and employees, download the PDF from Nike’s website or the Excel version.)

As with many other major corporations, the Vanguard Group is the largest institutional investor of Nike — followed by many other banks and private equity firms.

Although Nike argues that they enter a country only when it is ready to make shoes, and then leaves when it has developed past this point, the data suggest a different story. Nike’s movement directly correlates with a increased standard of living and increased union bargaining power. When the pressure for wage increase is put on, just like with most other American-based multi-national manufactures, Nike moves on.

This corporate strategy allows for the cheapest labor costs and bargains with the worst governments. The result? Companies like Nike can keep manipulating their stocks, dodging corporate taxes and making shoes for only $1.60 a day — just so that Nike’s CEO can earn $96,000 a day. Heaven forbid if American workers ever made Nike shoes, or else Nike’s CEO might only earn a measly $10,000 a day (unless Nike raised the price on their cow leather and rubber shoes to $500 a pair.)

And Nike is just but ONE of many U.S. corporations that operate like this. That’s how they can afford to pay their CEOs too much. Here’s a list of the top paid CEOs from Forbes and what they earn in just ONE year — many of them on the back of cheap and exploited foreign labor, at the expense of the American worker.

In a letter from Rep. Mark Pocan and others to Rep. Sander Levin expressing concern about the TPP and Fast Track Authority.

“As the economy continues to recover from the greatest financial crisis since the Great Depression , we can all agree that we cannot afford to have American production and American jobs sent offshore because of unfair trade agreements that undermine our economic growth. When jobs and production factories are offshored, American wages are lost, American-made products decline, and our international interests are compromised.”
In his economic speech at Knox College, President Obama acknowledged the role of unfair trade in stagnant wages and growing inequality:

“In the period after World War II, a growing middle class was the engine of our prosperity…But over time that engine began to stall, and a lot of folks here saw it…Global competition sends a lot of jobs overseas. It became harder for unions to fight for the middle class…And so what happened was that the link between higher productivity and people’s wages and salaries was broken…So the income of the top 1percent nearly quadrupled from 1979 to 2007, but the typical family’s incomes barely budged.”

So then WHY is Obama planning on extending “free trade” with the TPP trade agreement? Last year’s congressional study on offshoring says 29% of U.S. jobs are prone to outsourcing — and then we can also add in all the new guestworker and H-1B visas with the new immigration bill, flooding an already over-saturated labor market — then on top of that, we can also add over 4 million long-termed unemployed (and the 99ers) that we already have, and there will be plenty of shoe-shine jobs available for a nickel a shine.

Bring jobs back to America and pay workers a “living wage”…no excuses, Just Do It!


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