Tuesday, June 4, 2013
TWIF Flattener 6 - Offshoring
Use one of the current events sources linked at http://svhs-hwc-fall2013.blogspot.com/2013/06/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.co.uk/news/world-asia-23327462
ReplyDeleteSouth Korea's Posco scraps India steel project after delays
In this BBC article, Posco, the Korean based steel company’s decision to cancel the plan of building a plant in the Indian state of Karnataka are analyzed. The article commences by stating that the Indian company cancelled plans due to protesting local farmers and politicians. The plant was set to produce six million metric tons of steel with iron ore that would have been mined locally. Since the plant will not be constructed, the government of India repaid Posco with ten million dollars for the already purchased the land. Afterwards, the steel company released a statement which said that they would still consider building a plant in India if the business conditions were right. The company Posco also owns a large steel plant in Orissa which receives fierce opposition. In all, the article supports and refutes Friedman’s arguments. To begin, this supports Friedman’s claim that the world will not be truly flat until political beliefs are set aside. In the book, Friedman mentions how some Chinese companies face financial hardship due to the current political system. The book also says the some companies give the Indian government brides in order to get phone line. The steel company’s removal due to political opposition reinforces Friedman’s argument since the company would have been built if it were not for politicians and protest. The South Korean company’s withdrawal of the Karnataka plant also directly refutes Friedman’s claim that companies relocate anywhere to financially benefit themselves. The book uses examples of companies moving to India and hiring Indian workers that work for the fraction of a price of American workers. As Friedman states, the wages in India are very low. If Friedman’s theory was correct, the factory would be being built right now. Instead, the company was removed due to the resistance of the people who lived there. This proves that offshoring is not just about saving money. Offshoring also needs the support of the people who live in that area. All in all, the articles supports the theory that political opposition hinders offshoring; however, it refutes the idea that offshoring is done solely for financial purposes.
The problem: Big business doesn't care about American well-being
ReplyDeletehttp://www.csmonitor.com/Business/Robert-Reich/2012/0719/The-problem-Big-business-doesn-t-care-about-American-well-being
In this article posted by the Christian Science Monitor, it explains how some large companies are caring less about America as a country and more about how to make their product as perfect as they can possibly make it. The large example used in this article is Apple, a company that is now so big as to have several factories in other countries, a prime example of offshoring. Apple has many workers employed in the United States, but many more employed in other countries around the world. Additionally, the money that is paid for an iPhone is split and sent all around the world; more than 33% of an iPhone ends up in Japan, because of the components that are produced there. 17% percent goes to Germany, whose precision manufacturers receive more money than American ones, because German workers are more highly skilled. 13% percent goes to South Korea, and the United States of America only receives 6% of what is paid for an iPhone. This is occurring because more American children are neglecting their studies in math and science, and many American universities are having a difficult time keeping up with other universities. As a result of this, the price for colleges goes up, and more children cannot afford to pay for college. In contrast, China is investing heavily in their universities so that their children can surpass Americans. This supports Diamond’s arguments about offshoring, because Apple became a global company to increase profits. However, now that Chinese children are much more educated and driven than American children, more of Apple’s profits are going to China than to America, serving as a huge loss to the American economic and educational community.
Wind Farms Take Root Out at Sea
ReplyDeletehttp://www.nytimes.com/2013/08/22/business/energy-environment/wind-farms-take-root-out-at-sea.html?ref=global&_r=0
This article from the New York Times website by Stanley Reed explains the work of onshore and offshore wind farms. Wind farms like these in Bremen, Germany have begun to branch off their farms into different parts of the world including oceans and seas. Wind farms benefit from being offshore because much more air movement is generated through the ocean and sea breezes. Another reason why wind farms are being built offshore is because of the price. To purchase acreage in the sea is much less costly than that on land. So, these wind farm companies are able to buy more land for less and set up even more wind mills for their business. Just like the companies that Friedman describes in his book, The World is Flat, these wind farms are trying to produce more of their product for less money even if it means relocating the spot of manufacturing. All in all, this article supports Friedman's argument of the world being flat by relating to the fact that large businesses are producing their merchandise in other parts of the world so that they can reap the benefits.
Plans for rebirth of Ardersier yard
ReplyDeletehttp://www.bbc.co.uk/news/uk-scotland-scotland-business-22424941
In this article from BBC in talks about how the Port of Ardersier is trying to return to construct for the offshore wind industry. They say that if the planning application was approved by the Highland Council it could become a "super-hub for offshore wind. They will attempt to create up 339 turbines across 3 offshore wind farms. This company would work specifically on making parts to create wind. This article relates to the flattener in Friedmans book about offshoring. He talks about manufacturing being moved across the world to be made for cheaper, which is what the Port of Ardersier is attempting to do with wind. He He talks about how everything now-a-days says "made in china" on it because of the massive amount of American manufacturing that exists in China. The same could be said about this offshore wind production, some of the products could be being sent right to America.
Trawling for business
ReplyDeletehttp://www.economist.com/news/finance-and-economics/21584019-gambia-looks-join-beleaguered-club-trawling-business
This Article from The Economist explains that Gambia, the smallest country in Africa, with a population of only 1.8m is trying to boost it's economy by being an offshore centre. This article corresponds with Friendman's sixth flattener, offshoring. Gambia is trying to save money and earn money by having products made in Gambia and shipped over to Gamia. Gambia is said to have several hundred companies on their registry but needs several thousand to be called a success in being an offshore centre. TheCityUK helps out countries like Gambia, London, Moscow, Dubai and more become an offshore success.
On the turn: India is no longer the automatic choice for IT services and back-office work
ReplyDeletehttp://www.economist.com/news/special-report/21569571-india-no-longer-automatic-choice-it-services-and-back-office-work-turn?zid=292&ah=165a5788fdb0726c01b1374d8e1ea285
This article from The Economist shows how countries have fallen into the shoddy labor trap of offshoring jobs. The article explains how many companies such as General Electric have offshored jobs to India because it was cheaper at the time. The article also states that at the time when many business offshored jobs to India there was an 80 percent savings on labor which agrees with Friedman’s arguments. Now businesses are only saving 30-40 percent of what they previously did. The article points out that a lot of these companies looked the other way when it came to the poor craftsmanship of what they were receiving from the offshored jobs. But, now the companies are saving less and receiving the same poor quality and are forced to pull the jobs back out of India. This directly refutes Freidman’s argument that there will be many offshored jobs in India and in China because of the drive from these foreign workers. Finally, as the price of the offshored work goes up and the quality stays low this article reports that some of the first people to offshore jobs like General Electric are pulling there IT and engineering jobs out of India. This again refutes Freidman’s arguments as most of the article does.
Made in the USA: Can China save America's middle class?
ReplyDeletehttp://www.bbc.co.uk/news/business-23087135
Chinese manufacturing giant, Lenovo, is moving jobs back to the United States. It recently celebrated its opening of a North Carolina factory. Motorola and Apple also made plans to move manufacturing plants back to the United States. Currently, jobs in the United States are at and all time low whereas Asia currently holds most of the cards. Alan Krueger, chairman for Obama’s Council of Economic Advisors, believes that the current economy is turning into a “winner takes all” economy where parts of the world basically control most manufacturing. However, despite the low production costs in Asia, some companies like Lenovo are moving facilities back into the United States. Lenovo is doing this because of rising costs in Asia and falling costs in the United States. Although Asia still presents lower production costs, Lenovo decided to bring some of its manufacturing into the United States to get products to customers faster and more efficiently. However, despite the fact that jobs are moving back into the United States, parts to build Lenovo’s computers are still built in China. Rather than “Made in America,” Lenovo should advertise “Assembled in America.” Therefore, only a minor amount of jobs are moving back to the United States while most of companies are still based in Asia. Even though Lenovo is moving jobs back to the United States, jobs are not the same. People do not receive benefits like healthcare or pensions or make enough money for house down-payments or education. According to Friedman, jobs are moving over to China because of cheap production costs and benefits for companies. Many Chinese workers do not even receive any benefits and make little amounts of money. In addition, factory condition requirements and laws are not demanding or expensive. Therefore, Freidman argues that those are the reasons that companies moved manufacturing to China. However, the article that I found refutes this because Lenovo, Motorola, and Apple are moving manufacturing back into the United States to help consumers. Therefore, although parts are still made in China, this shows that jobs are coming back to America and that this is just the beginning for the middle class in America. Although jobs will be different, they will surely return to the United States, effectively proving Freidman wrong. Freidman assumed that jobs would stay in China because of low cost, but with costs rising, companies are moving back to the United States where people are willing to create high quality products cheaply for consumers.
The story so far: Offshoring has brought huge economic benefits, but at a heavy political price
ReplyDeletehttp://www.economist.com/news/special-report/21569574-offshoring-has-brought-huge-economic-benefits-heavy-political-price-story-so
This article talks about offshoring, the process in which a company manufactures products in a different country for cheap labor. It provides other benefits as well, such as jobs for people in the countries used for offshoring, and lower prices for Westerners. Unfortunately, offshoring also cuts the amount of jobs available to Westerners. This article relates to Friedman's sixth flattener, offshoring. He states that companies use offshoring to save money, due to the cheap labor available in other countries, such as China. This article discusses the offshoring the Friedman described.
Not Really Made in China (or the United States)
ReplyDeletehttp://economix.blogs.nytimes.com/2013/08/19/not-really-made-in-china-or-the-united-states/?_r=0
In this article, it talks about how the apple Iphones are not really "made in china". The phone are put together there but not truly mage there. The parts are brought from in and off shore. Very little is made in the USA. All the parts are transported to China and made off shore of America where Apple HQ centers lie. The article also speaks about how to classify if it is off-shoring or outsourcing. In my option it is both but it really depends on the persons view point. Each place that creates a part of a phone would be out sourcing, but the putting of the phone together is offshoring. So by doing this apple creates a bigger profit, because they are saving money to create their newest, hot selling devices.