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Multinational outsourcing policies in real time |
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Written by Stumo
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Tuesday, 27 October 2009 |
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One of CPA's manufacturing company members sent this email today. I know that many multinationals have directed their procurement people to buy from "low cost" countries. GM, the auto company now bailed out by the taxpayer, is one of them. Its a fad and a directive, not necessarily based upon cost.
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[Email text from CPA manufacturing member]
We just got out of a meeting with a large multi-national customer. They have just been mandated by upper corporate management to purchase a significantly higher amount (in percentage of spend) in "low cost" countries, which the US is not.
The message to [our company] was:
1. They consider us an important / critical strategic supplier (although they are trying not to purchase from us).
2. If we want to do more business with them, we should consider buying high labor content from a low cost country (like Mexico) and re-selling to them, as long as we have a paper trail to show what and where we are spending the money. In other words, reduce our employee base in the US and outsource to make sure they are reducing cost.
3. In the meantime, they are spending more time and money developing a Mexican supplier, this is done by sending people down there and training the workers.
They also commented how the parent company publicly announced the plan for more outsourcing in order to improve its image (stock price) on Wall Street. So long as Wall Street encourages this type of behavior, we can and should expect it to continue.
I will say that the guys we met with do not like the decision, the choices to them are clear...if they want to keep their jobs.
Not sure where that leaves the US worker but it certainly improves the lives of those in Mexico or elsewhere...perhaps someday they too will have workers compensation, health insurance, retirement, entitlements, etc. And I think we will still be paying for it!
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HOW ABOUT SOME FREE TRADE? LET US BE FREE TO TRADE WITHOUT OTHERS TAKING UNFAIR CUTS WITHOUT ADDED BENIFITS.