Wednesday, June 4, 2014
TWIF Flattener #6 - Offshoring
Use one of the current events sources linked at http://svhs-hwc-fall2014.blogspot.com/2014/06/approved-sources-for-twif-current.html to find a recent news article that relates to, supports, or refutes Friedman's assertion that offshoring was a "flattener." Your comment should include the title of the news article, a link to the article, and a summary of the article including an explanation of how the article relates to this point. Don't forget to check your rubric for evaluation criteria!
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http://www.bbc.com/news/uk-politics-26819053
ReplyDeleteReshoring: Bringing Jobs Back to UK from Abroad
This news story describes a new trend called “reshoring,” which is the process of bringing manufacturing back from the East Asia to the home country of the business. For example, Bathrooms.com is trying to move at least a tenth of its manufacture back to the UK from China. This will allow the company to provide faster for their clients, and it will cut out the cost of transporting the materials from China to the UK. The company can also now produce in more controlled quantities, because it doesn’t have to order in bulk. This refutes the point made my Friedman that companies need too utilize offshoring to keep their costs down and to keep a successful business. The story reports that labor in China is not as cheap as it was years ago, so the value of offshoring has decreased. So, while offshoring was absolutely necessary according to Friedman, the company Bathrooms.com has managed to reshore and continue to be successful.
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ReplyDelete“Harley-Davidson, a U.S. Icon, Highlights Offshoring's Perils”
From Reuters: http://in.reuters.com/article/2014/07/22/harleydavidson-results-offshoring-idINKBN0FR28120140722
This article, written by James Kelleher, describes Harley Davidson’s recent debut of ‘The Street,’ a new motorcycle model made with many foreign parts. Besides the usual manufacturing plant in Missouri, the production of some of these motorcycles was offshored to India to save money. However, the new product was unsuccessful due to foreign parts that were not shipped in time. The article also highlights other disadvantages of offshoring: higher costs in inventory, shipping, and foreign wages; problems in management, supply chain risk, and product quality; and surprising, harmful delays. These factors have led to a rising trend in reshoring. The article further details that Harley Davidson in particular decided to start offshoring much later than other companies did, at a time when many companies were instead moving back to American production. The fact that Harley Davidson still experienced similar negative consequences of offshoring leads me to infer that reshoring did not result from companies having been offshored for too long; instead, it is likely a result of changing economic conditions.
This article relates to Friedman’s argument about the sixth flattener, offshoring. While Friedman discusses the advantages of offshoring, such as better foreign exports to America and increased corporate profit that can be invested to improve domestic branches, Kelleher’s article focuses on the disadvantages. Another difference between the two pieces is that Friedman predicts an overwhelming rise in offshoring while Kelleher proves the opposite. For example, Friedman quotes, “‘If you are sitting in the U. S. and don’t figure out how to get into China, in ten or fifteen years from now you will not be a global leader’” (page 148). However, the article proves this prediction wrong by citing the recent trend in reshoring. I believe that Friedman’s oversight occurred because he was so excited about the short-term advantages of offshoring that he forgot to analyze the significant difficulties of operating a branch in a foreign country. These difficulties eventually prompted companies to reshore back to America. To analyze, I think that companies could overcome these difficulties and be more successful in offshoring if they combined their use of offshoring with Friedman’s seventh flattener, integrating innovative global supply chains. In conclusion, the article taught me a new perspective on offshoring and helped me realize that due to foreign management and expense problems, offshoring is becoming a smaller flattener than Friedman expected.
ReplyDeletehttp://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/12/study-offshoring-creates-as-many-u-s-jobs-as-it-kills/
Offshoring creates as many U.S. jobs as it kills, study says
Author: Suzy Khimm
In this article, Author Suzy Khimm states that offshoring may not be as bad as it seems. According to her studies offshore employment actually produces more US jobs per offshore. This study agrees with Friedman’s statement that off shoring is a necessity to running a strong business. Khimm states that "companies with global exposure fared better than companies with lagging exposure in terms of native employment growth" which overall strengthens Friedman’s statements about offshoring.