A sobering NYT article on the off-shoring of technical work – and middle class careers – from the US to China.
It’s not about wages, not really:
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
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“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.
Note the distinction between education and training.
Profits vs Morals.
Guess what wins.
Profits vs national interest. Guess who loses?
They are offshore profits which Apple refuses to repatriate to confiscatory taxes. So most of Apple’s tens of billions of profit are parked overseas in places like China where I guess they are turned to making jobs for Chinese.
Apple wasn’t the only one to benefit from moving production to China. Every single iPhone owner has benefitted from reduced price and earlier availability of the superior design. The moral course of action is to persue maximum value for minimum investment. If we cannot compete efficiently we deserve to lose.
Yep, it’s absolutely worth it to outsource our gadgets to slave labor. That’s real competition, and if Americans can’t compete with slave labor, well, screw ‘em.
http://theeconomiccollapseblog.com/archives/poverty-in-america-a-special-report
Let ‘em eat Ipads, the non-competitive losers.
Sure, outsourcing is the cause of unemployment. That’s why NAFTA resulted in historic highs in unemployment. Oh wait, that’s not right.
Slave labor is easy to compete with, the wages are low but the quality sucks. Price is only one of many ways to compete. I have a couple of friends who run a handyman business. They charge significantly more than the competition, but they’re solidly booked. Why? Because they provide a quality product. The problem with the manufacturing sector isn’t that they cannot compete, it’s that they don’t want to compete. They would prefer the protection of crony capitalism to actually improving the wealth of humanity.
I still say it is immoral to harm a population solely for the benefit of a subset of that population.
absolutely agree.
If it is immoral to harm a population solely for the benefit of a subset of that population, then why have we entirely crushed our industrial base so that a handful of “investors” can make billions?
http://theeconomiccollapseblog.com/archives/if-you-are-a-blue-collar-worker-in-america-you-are-an-endangered-species
If you don’t understand who benefits from making American workers compete with low-wage or even slave labor, then I’m probably wasting my time confronting you with the results of these policies.
Let them eat I-pads!
Nobody has crushed our industrial base, just like nobody crushed the buggy-whip industry. They have simply failed to compete. It’s not just investors who benefit from reducing production costs, though in today’s economy anyone who owns mutual funds or is part of a pension plan probably counts as an investor. Consumers benefit from paying less for products, which frees up capital to produce or purchase goods and services.
The post-war economy spoiled us into thinking unskilled factory work was middle class. In actuality there is more similarity between a factory floor worker and a peasant working the fields than there is between that worker and a shopkeeper.
Yeah, and she deserved it because she was wearing a miniskirt.
Whatever, let them eat I-pads.
BTW, I would add that I think your handyman friends are worth emulating. But as chronic unemployment continues to climb and real wages continue to fall, they will have their work cut out for them just surviving. They may continue to work steadily and independently, but the return for their work will most likely steadily decrease in the years to come.
There was a school system that had a vo-tech track and a college track. Many black kids took the vo-tech track because they wanted jobs. Cue the outrage of professional lawyers and other BS artists on the left. Cue massive lawsuit and cries of “racism”. Now most schools shill college and the massive debt of student loans. No more mid-level job training.
The left & the media seem to think that mid-level jobs, technical jobs and factory work are for chumps and college is a golden ticket. The truth is that College has been dumbed down into the high school after high school. We have a shortage of techs. Hell many firms need diesel mechs and are turning to the military because many schools are cutting shop classes.
No such problem in China et al. Apple (darling of the left) goes where in can make a profit. It’s not a charity (ask anyone who worked under Steve Jobs!).
Skip, those who made this mess only have themselves to blame.
Jerry Pournelle has been hitting this for about a decade. The brutal truth is that 50-60% of the population is just not cut out for a college education. They will be more productive if they learn a trade. But that would not feed the Education Industry.
Chockblock, even with mid-level job training companies like Apple do NOT want to pay a living wage. It’s that simple. They’d rather have the American worker housed in a dormitory and working 6 12 hour shifts a week. That’s not middle class by any reasonable definition, nor is it something the country should aspire to. It won’t make for a sustainable, growing middle class and society.
Reading govno like this, though, makes me more determined to never buy Apple crap.
I don’t know about your area, but in mine (Ohio) there is a healthy amount of interest in Vo-Tech, especially for auto mechanics and HVAC. I don’t see a lot of plumber training or apprenticing, though, which is surprising. You can’t outsource unplugging the crapper to a person in India.
On the flip side, a company that makes large screen TVs sold by Walmart, Costco, and other big box stores is opening a plant here in Southeast Michigan to assemble the units. They think that when all costs are taken into account they can assemble the large units in the US at a profit. They got a bit of help in that the current Michigan governor and legislature reformed the business tax last year to make the state competitive from a tax perspective. Remarkable idea – fix the taxes, don’t give a subsidy.
Agree with the comments on Vo-tech training, and how high school is now designed to feed the college money machine.
Slightly off that topic, but it’s a true hoot to see how far upper education has fallen, in this case the University of Michigan. It now costs about 15K/year in tuition, and this is a public university. The solution to the problem of high tuition at UofM is for the president of the university to send a letter to Prez O asking him to do something about high college tuition. What did the letter say, “Please make me stop spending so much money on palatial buildings and other wasteful stuff!!”?
This news as followed a few weeks later by an announcement by the UofM College of Education that they are starting a new program to help train K-12 teachers after graduation, because they are not prepared to teach in a classroom after graduation!!! “Hi folks, after sucking down $60K – $80K of other people’s money that was loaned to you, we find we still didn’t teach you how to do the job we supposedly trained you to do, so here’s another program for you to join.” Gimme a break. (Full disclosure – I went to this formerly great university.)
Sorry for the verbosity today – I had my second cup of coffee already and I guess it got to me.
George V.
Hell, even the uber robber baron Henry Ford realized his workers were consumers, too.
A point I was about to make, butch. Not to go all Luddite here, but what happens when GMs entire production line at any given factory consists of 2 guys–the one that runs the computers and the guy that repairs the robots? Outlandish example I know, but just where IS the money going to come from to buy GMs cars if replacement jobs for laid off auto workers pay only half as much?
VX, exactly.
You can’t build a healthy economy – or society, for that matter – based on selling each other plastic crap made someplace else and fast food.
Hank ran an apprentice school in the plant too. A tough one. Hank the Deuce kept it going. Later folk, not so much. Degrees earned without dirty hands or greasy work clothes, diversity for its own sake, and UAW nepotism took their toll.
It isn’t the pay scale so much as the weakening of training, knowledge of the lore of the craft and the plant, and sense of entitlement vice ethic of craftsmanship that kills plant maintenance, that kills efficiency, that kills morale, that drags down productivity and then…
You get the nineties.
Fortunately the new kid and his (lightning fast and accurate) hired gun have some sense. The new kid (not so new any more) has some sand. It isn’t having the family name, it’s the sense of duty yoked with ability, and keeping a governor on the ego.
As for the Navy…we shall see.
That’s like instantaneous gratification on steroids. House your employees, snap your fingers, feed them tea and a biscuit and POOF you have what you need in hours. I think it used to be that way back in the middle ages.
There is so much wrong with that picture.
There are cultural issues that contribute as well. I ride the train with people who rail against shopping at Dunkin Donuts or 7-11 because the stores are all owned and/or operated by Indians/Pakistanis/Arabs etc. All of the delis are owned by Asians. But ask them if they want their kids to grow up to do that and they uniformly say no. “I want my kid to go to college and be a doctor, lawyer, engineer, scientist, or anything they want as long as they go to college.” That’s also part of the problem. Start a small business that isn’t glamorous and won’t lead to an IPO, learn a trade like plumber or electrician? “Not my kid.”
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
O.K. So let’s say that we put this picture in an American frame. The 8,000 workers are at home. Using pagers, e-mails, phone calls, etc. the plant management contacts their workers and says “Hey, in about 12 hours we’re going to get thousands of glass screens in for the iPhones we’re making. Get some sleep and get ready to show up at the plant and hit it, because if we don’t get these things made we’re going to miss our ship dates and we might all be out of jobs next week.”
What happens? The unions, seeing some leverage, bring everything to a flying stop while they try to negotiate an extra holiday or extra pay over and above the contract, etc., etc. I’m not for worker dorms and “tea and a biscuit”, but our work force will go too far the other way.
BTW – have you read the stories recently about companies (Apple is one) that have tens of billions of dollars in cash overseas that they’re going to leave there and use to invest in plants, production, etc. because Uncle Sam will take 1/3 of it if they try to bring it into the U.S. to spend here?
RE: your last para, Ron. It’s called “Killing the Golden Goose.”
The other aspect of this issue is eventually, there will be no consumers for the new ” whizz-bangety” toys as no one has the extra $$$$. Example in point, the average age of a car driven in the US is 10.8 years, a new high as less can afford the cost of a new car due to lower wages, inflation and increased prices for the base line model.
Like the frog in the slowly warming pot of water, we won’t make a change until it is too late.
Bastards.
OWS types won’t consider taking those “dead end jobs”. They want to start at the top rather than work their way up.
As for college — there is EDUCATIION and there is “EDUCATION”.
And this is an interesting article…
http://www.washingtonpost.com/business/economy/new-study-shows-architecture-arts-degrees-yield-highest-unemployment/2012/01/03/gIQAwpaXZP_story.html?tid=sm_twitter_washingtonpost
I was gonna send this to you. But somehow I knew (being a bit of an Apple fanboi meself) that you’d find it.
American workers are skilled but not nearly as plentiful. Unfortunately, we are also not willing to work 6 days a week. 12 hours a day. And live in a dorm attached to a factory so we can be awakened for this or that. And all that has got some legal barriers there too (40hr work week, ot, etc).
The article really does say a lot about what were up against. I couldn’t cut it in Calculus for Engineers back in the day so ended up making it in Journalism for awhile (that was fun). Then film making (also fun). Before having a pretty good career in sales. But the world is different now and I think I would have enjoyed the engineering a lot more. Wish mom and dad hand found a way to make me do more math cause school certainly didnt (proving your point). My wife and I put the kids in a charter school thats more math and science intensive and with more help and more pushing Im hoping they end up in a technical field The wife being an RN BSN now moving up the management ladder we have a first hand example of why a strong technical background is important.
The next 20 to 30 years are going to be quite interesting. All of this really leaves the blue collar guy trapped in the breech. HS doesn’t prepare him and he cant afford or get into college. Starbucks is gonna be his only option.
I seem to remember a generally-recognized concept that, in any head-to-head competition, victory generally goes to those who preserve the initiative and a willingness to act… being willing and able to “go there.”
Re-read the story, and all our comments, with that idea in mind. It got me wondering: Which side of the issue is demonstrating initiative and a willingness to act?
Barracks living, tea and a biscuit when rousted out of the rack at midnight for a 12-hour exercize dictated by those far above… sounds awfully familiar to me from me jarhaid days… excepting that we weren’t offered the tea and biscuit. Yet we did it willingly out of a sense of duty and commitment to an ideal.
In China (and in the majority of the world), you work or you and your family literally starve to death. That bald fact tends to create a willingness to ‘go there’ that is almost completely lacking from the American ethos of today, where even in the worst economic times in most of a century it is (currently) virtually impossible to actually starve to death, absent the influence of undiagnosed metal illness, severe medical disorder, or being lost in the wilderness.
(The only semi-current statistic I could dredge up on short notice was that a total of 120 people died from “lack of food” in the US in all of 2004… A death rate of 0.00004%)
I’m not saying that this is a good thing if you’re Chinese (seeing as ‘choice’ isn’t high up the list there), or completely a bad thing if you’re American (I like my creature comforts as much as the next man), but it’s undeniable that the work ethic seen today in the US bears little resemblance to that which was still common when I was a child.
Which work ethic was originally evolved out of a necessity (work, or starve) that many wrongly believe no longer exists and can never recur in this country.
Wow, I’m starting to depress myself, here.
Sarge, I concur with your observations. Here’s what I think is the question to answer, based on those observations: is the current system set up to improve the Chinese situation, or to weaken our American situation? For either answer, who benefits?
I read this accounting yesterday – another step in the secular canonization of Steve Jobs (as we have observed with Al Gore, the Kennedys, and just beginning with Barack Obama – who saved our country from bankruptcy, by making the hard choices).
So the New York Times is telling me that the best prototype this company cound produce had a plastic screen, and it took the president of this company to change the course of product development? I’m sure glad Steve was leading them all!! Why didn’t he fire the entire materials evaluation team for such a cosmic screw-up before they exited development Phase-2? (We all used touch screens on Aydin monitors back in the 80s. Perhaps the design team should have been comprised of some more senior engineers.
And on the decision to build in China – what is “Fit to Print” but the Times won’t is that there are no labor unions and environmental controls in China, and Jobs took advantage of that. You can hire and fire thousands of workers at will, becaused they are stored up like cordwood, mostly eager to do ANYTHING. Several colleagues have worked at Foxconn, and they all mention that conditions are abhorrent, and they are afraid to talk about it for fear of reprisals from the mother ship. These products are produced by forced labor – worker ants.
Here are two links to ponder: http://www.pcmag.com/article2/0,2817,2399186,00.asp; http://www.pcmag.com/article2/0,2817,2399149,00.asp
I used to be an advocate of free trade.
I’m now an advocate of free trade – among peer states. I’ve no qualms about setting American workers against their rivals in Japan or Europe, who face a rougly equal amount of environmental and paperwork overhead. And the larger market allows small companies to thrive in specialized markets, benefiting everyone.
But trade with non-peers should be restricted. It profits a few wealthy businessmen…while driving workers in the poor countries into sweatshops, and workers in the wealthier countries onto welfares. A bad bargain all around.
Ah where to start? Let’s start with China, the dormitories and all that. Since a high percentage of commenters on this blog had service careers of some length in the military, I assume that you’ve all been overseas and spent some time on the ground in Third World Countries. So you have to ask yourself, “How are you going to keep them down on the farm, once they’ve seen Shanghai?”
The rural backwoods of all those Third World countries are littered with folks barely able to scratch out a subsistence level existence. So when factory employment is (potentially) available in the big city, young ‘uns go and try to find work and cash there. You find a job, need a place to live and the factory owner puts you up in a dormitory. You do what you’re told, and at the end of a year or so, you may have cash enough to go home for a period of time.
You could see the same thing in the dormitories or worker housing for young women who worked in textile mills in New England in the 1890-1910 period.
I’ll avoid passing judgment on that situation. It is what it is, and it’s a stage that industrial economies pass through–or at least may pass through. If you asked the individual worker whether he or she liked the situation or not, you’d get a range of answers. If you asked the worker whether they’d rather be in the dormitory or carrying night soil to the rice fields back home, I’d expect you might get a different answer.
But as for training and our educational system. Some industries still do train their workers here in the USA. Atlantic Richfield–now BP had a several weeks long introductory training courses for new hires in its oil refineries. All new hires went through the course before they were actually allowed to work in the refinery. The company paid them their full salary during the training period. The equipment is expensive; and while the refining industry has an enviable safety record vis a vis other industries, when things go wrong, they can get nasty in a big hurry. So you train your employees because no one else is going to do it for you.
I take night classes in machining at the local community college. I’m doing it for fun and to make small metal bits for my model airplanes. My classes use older manually controlled lathes and mills. In the next classroom/workshop over students are working on CNC lathes and mills–and in the classroom/workshop beyond that people are being taught how to weld. Many of the students there are tattooed, long haired ear ringed and mustachioed–not quite presentable for your white collar world shuffling papers. One of the welding instructors is a woman about 5′ 6″ tall who, along with her tatts, looks tough enough to go 8 rounds with a good welterweight boxer–and she’d whip him.
So the community college is trying–but night classes in machining, or programming a CNC machine, or welding are no substitute for a good apprenticeship program. A few of these kids will develop enough skill to get a decent blue collar job—but meanwhile the places that do need those skills are holding on to an aging workforce and not hiring.
I understand that–it might take two or three years on the job for one of these community college trainees to come up to the ability level of the alte kockers now on the factory/machine shop line. But failure to have apprenticeship and training programs is the equivalent of eating your seed corn for today’s lunch. It means you’re going to be hungry tomorrow.
And as long as I’m up and running and ranting–about a month ago the Los Angeles Times had a “tragic story” about a 27 year old woman. She’d gotten a degree in “ethical farming” or “environmental conservation” from UC Berkeley.
She was dumbfounded when she graduated to discover that (a) no farmer wanted to hire her to manage his farm; and (b) there were no jobs available in the enviromental conservation field.
So she now makes do by making goat cheese and pot holders (now there’s a perfecta parlay for you) and selling them at local flea markets and craft fairs. Naturally she doesn’t net enough to pay off her student loans. Hubby is a police science major at Cal State Sonoma and is about to graduate–at which point they’ll have to start paying his student loans. Maybe her husband can get a job with a police department–and maybe the patrolman’s salary will be enough to keep them in water, a crust of bread, and a roof over their head—and possibly actually pay down some of that student loan. And maybe I can leap over the Empire State Building from a standing start. Maybe.
I like your observations. But I’m not so sure these Chinese are like the young women in the New England textile mills because of a quibble–by the 1890-1910 period, women in mills and sweatshops were there because they had no choice. The period you are thinking of is earlier, in the 1840-1860 period, and mill owners publicly complained about the turnover. So how did they craft a solution? By inventing a system to insure that most Massachusettsans lost their ability to think and act independently–public schools. Dig into John Taylor Gatto’s Underground History of American Education if you’re interested in more details. As for the Chinese, I’m not certain there’s any pattern of working in the factories, making enough money to go home and start something. At least not at Foxconn, although maybe elsewhere.
Well YOUR Representatives in Congress can put a stop to it ASAP. All they have to do is slap a 200% tariff on iPads coming from China. The price goes up.
… and they get tossed out in the very next election, because the peepul, they wants their iPads cheap. I mean, how else can they afford one on their welfare income? Especially after dealing out $200+ for Air Jordans?
As the saying goes.. WE got the government THEY deserved. Not sure how we can resolve that in a Republic.
Mostly by not expecting, nor letting, the Government to get involved in solving things beyond its authority and/or competency, I’d think.
Another problem in the US (and to a degree Europe) is attitude. It’s impossible in the US (and Europe) to do what they did in China, rebuild an entire production line and have it up and running in a few hours.
“Environmental impact studies”, “union councils”, “liability assessments”, etc. etc. mean what could technically be done in a day will take weeks or more likely months in the west.
J.T. it’s impossible here in Canada as well for the same reasons and others.
This is really becoming a factor also:
http://www2.macleans.ca/2011/08/25/why-your-teenager-cant-use-a-hammer/
I see it in my field (Heavy Construction) already.
An article that I think helps explain the point I was trying to make.
And a letter rebutting the idiot mandarin quoted by the NYT.
This article definitely opens the whole discussion of how business is done in the high tech world. Here’s my angle of the discussion.
1. Thanks to the end of the Cold War, our world has become a bigger trading bazar. Meaning, you have engineers in CA design what the consumers want, the Chinese being the most efficient in manufacturing and the internet ordering systems to tell the shippers where the product needs to go all over the world. It was amazing to track via the internet the manufacturing and shipping to my office this computer I’m writing on. I was able to see when it was built, which airport in China it went to, which sort center it went through and receive it to the minute I expected it from Fed Ex.
2. My answer to why these kind of products cannot be built in the U.S.? I don’t think it’s as much as the number of workers, or even the pay scale (just look at right to work states and the number of non domestic car manufacturing in the U.S.) but it’s this country’s desire to not be and ecological disaster China has become. Here in California laws like CEQA and AB32 wouldn’t even allow the plastics, parts and energy consumption to occur for the manufacturing of these products. Then you toss in stupid local/city laws that require the rain-runoff water from your building’s roof to meet drinking water standards. So it’s easier for a company like Apple to build cubicles for their engineers than products in CA.
As Jack Donnigy from the TV show 30 Rock Said: “GE, bringing good things to people and bad things to China’s rivers”.
3. For a company like Apple to “Share its Wealth”, especially with it’s shareholders, it needs to unlock its tied up currency from this country’s corporate tax structure. Otherwise it’s stuck overseas and used for more world trade rather than bringing it home. I think there’s a debate between what dividends could mean to the domestic economy versus a company like Apple using it for overseas manufacturing.
“Note the distinction between education and training.”
I’ve lost track.
Are we going to be educating kids in Kali about the contributions of the LGBT community in order to close the performance gap between us and the rest of the world?
Or are we going to be training kids in Kali about the contributions of the LGBT community in order to close the performance gap between us and the rest of the world?
I think my confusion stems from the idea that an inadequacy in learning about math or science may have more to do with a possible performance gap than the question of whether or not Tom Cruise is gay.