In recent years overseas manufacturing has become a topic of debate. In the age of globalization many Unites States based companies have decided to relocate their manufacturing to other countries. According to the U.S Census Bureau we have imported over $364,943.90 (in millions) from China alone in the year 2010. The controversy has even played a part in the upcoming presidential election. A June 2011 republican debate that aired on CNN even asked candidates how they intended to bring manufacturing back to the United States. When looking at face value, relocating jobs overseas seems to be “un-American”; yet there have been many myths and misconceptions behind this controversial issue.
Global trade has entered a new stage after World War II. Countries sell their goods, labor, and raw materials across the global market. Through the removal of tariff barriers the United States has become the strongest economic power. The North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) has allowed U.S based companies to start offshoring. “Offshoring is the act in which companies move production to another country, producing the same goods, the same way, but at lower costs and taxes.”
One argument made against moving production to other countries is that it takes away jobs from Americans. However, a survey done by the Bureau of Labor Statistics shows this isn’t the case. The survey shows that most layoffs were mostly for domestic reasons; the largest being contract completion which accounted for twenty-five percent of layoffs. Furthermore the survey illustrates that only four percent of jobs are lost in the United States as a direct result of outsourcing. It is true that some jobs are lost as result of outsourcing. However, most people are unaware that American companies tend to create new jobs specific for overseas workers. These are jobs that companies would deem as too costly if they were to be done domestically and there for never considered. Research shows that many start up companies cannot afford to produce goods domestically and therefore move production overseas to gain financial stability. Once they gained this stability they begin to expand and create new jobs here in America. If we put a stop to overseas production, this will consequently result in a loss of jobs. People who argue the issue neglect to see what jobs are being created because of overseas production.
I work for a company that produces in China as well as other countries. My primary function at the company is dealing with customs and duty charges. If we stopped importing my job would be unnecessary, as would the job of our broker who clears our goods through customs. Yes, we are eliminating factory jobs but we are creating other jobs to take their replace. The argument has been made that “America was built on manufacturing” but as Americans, don’t we pride ourselves on the ability grow with the times? Yes, our country was built on manufacturing because that is all we knew. The idea of trading with other countries was unheard of. In the last decade we’ve experienced inventions like the cell phone and E-mail. Work isn’t a 9 to 5 job anymore; we can do business at any place at any time. The argument of America being built on manufacturing has no validity.
When Thomas Edison revolutionized the world with the invention of the light bulb people didn’t ridicule him and say “we’ve always read by candle light, so that is what we are going to continue to do.” Instead, they adapted to the times and embraced the change. Now that we have the means to do business with other countries why limit ourselves, in an age of globalization and a global economy we must embrace the change and seize all new opportunities. People who are opposed to offshoring claim that it is “un-American” and “unpatriotic” to relocate manufacturing overseas. They say that we should be worried about the livelihood and job security of other Americans instead of giving their jobs to overseas workers. To that argument my answer is, what is more American than capitalism? The biggest reason American based companies decide to offshore is because it is cheap.
The recent economic decline has been partially blamed on offshore manufacturing. Last December President Obama said that he intends to “create and sell products all over the world that are stamped with three simple words: ‘Made in America.” This seems like a great plan but there is one major flaw to this strategy. If American based companies decided to produce their goods domestically this means higher costs for consumers. Because it is so cheap to produce overseas, companies then sell their goods for lower prices. In the year 2008 manufacturing employees in China were paid on average $1.36 an hour (in US dollars), because of this companies are able to sell their goods at lower costs. On the other hand, the federal minimum wage in the United States is 7.25 an hour. Consequently, if the goods cost more to produce then they would have to sell at higher prices to make the same profit. Therefore producing goods overseas would result in a lower cost to the company, which leads to lower cost to the consumer and will ultimately stimulate economic growth.