Outsourcing back in play as favorite political attack football
Outsourcing has become a hot political football lately as the overall rhetoric builds in this presidential election year. The latest round of shots this time comes from President Obama who has released ads in Iowa, Ohio and Virginia that say presidential challenger Mitt Romney would be the “outsourcer-in-chief” should he be elected.
According to a Washington Post article the ads stem from a story it wrote June 21 that said: “[d]uring the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories.”
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That same article also states:” The Washington Post examination of securities filings shows the extent of Bain’s investment in firms that specialized in helping other companies move or expand operations overseas. While Bain was not the largest player in the outsourcing field, the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.”
The Washington Post goes on to say: “While economists debate whether the massive outsourcing of American jobs over the last generation was inevitable, Romney in recent months has lamented the toll it’s taken on the U.S. economy. He has repeatedly pledged he would protect American employment by getting tough on China.”
The Associated Press also reported that Obama in a speech yesterday said: “Gov. Romney’s commitment to outsourcing is not just part of his record, it’s part of his overall economic vision that he and Republicans in Congress want to implement if they win this election.”
Romney’s camp of course debunks such notions.
Such observations should come as no surprise of course as the White House has spent a lot of time trying to convince the industry that the growing trend is that US companies are indeed keeping more jobs here rather than sending them abroad.
At the White House’s “Insourcing American Jobs Forum” held in January by President Obama, the president highlighted proposals to encourage further job creation at home with a number of tax incentives to invest in US employment as well as to eliminate tax breaks for those companies who move jobs overseas – a long touted but never passed proposal.
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During the forum, the White House released a report, “Investing in America: Building an Economy That Lasts” that pointed out a number of insourcing trends:
- § In recent months, large manufacturers like Ford and Caterpillar have announced large investments in U.S. facilities. In years past, these sorts of expansions have been aimed at facilities in Mexico, China, or Japan.
- § After watching costs rise in its Chinese factories, Master Lock began bringing production back to Milwaukee-the same place where the company was founded in 1921.
- § Service firms ranging from customer support centers to software developers to engineers are deciding to invest in the US for their operations. Even foreign-domiciled firms are making the decision to take advantage of American productivity and innovation.
- § Siemens spends nearly $50 million each year training its U.S. workforce, and ThyssenKrupp spent nearly $5 billion on its new steel and stainless steel manufacturing and processing plant in Alabama. Investments from companies like these reached $228 billion in 2010, an increase from $153 billion in 2009.
- § Labor costs are lower in places like China, but in many cases, costs in those countries are going up. At the same time, American workers, who have always been more productive than those in other countries, are becoming even more efficient. In the first quarter of 2009 alone, productivity rose nearly 13%.
- § As economies in other nations grow, there’s more demand for U.S. engineers, software developers, researchers, and consultants. At the same time, a range of barriers that once made it hard to market those services across borders have come down. As a result, the United States is poised to expand its trade surplus in services to $146 billion in 2010. Since 2003, that surplus has nearly tripled.
- § The manufacturing sector is recovering faster than the rest of the economy. Through the course of the past two years, the economy has added 334,000 manufacturing job, and that’s the strongest two-year period of manufacturing growth since the 1990s.
Each of those facts is evidence of a growing trend of insourcing, the White House concluded.
Stay tuned there’s sure to be more.
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