Outsourcing: Politics or Economics?

The issue of outsourcing has become a big issue in this campaign season. It has been a particularly hotly discussed subject in certain industries like textiles, furniture and appliances. I’ve fielded a lot of questions on the subject at my talks over the past six months.

I was initially alarmed when I began looking at various studies on the subject. Are we at an inflection point in manufacturing in the U. S.? Or was this just another wall of worry that capitalism climbs constantly?

Several weeks ago at the IEDC Annual Meeting I heard a great presentation on outsourcing by Dr. Ned Hill of the Cleveland State University. He started out researching the subject, thinking that it was a terrible trend for our country. However, his research shows that its negative impact on the U. S. economy is minimal. And, the positive contributions are tremendous. His power point presentation is at http://www.iedconline.org/annual_presentations/hill.ppt. Of particular note is p. 33 of the presentation which shows a 19% cost advantage for a manufacturing operation in Covington, KY compared to Shanghai, China.

Every other economic study that I’ve seen shows the same thing. I’m convinced that we will one day look back on this debate about outsourcing much like we look back today at a similar controversy in the 1960 election on the dangers of robotics to our workforce.