Thursday, December 4, 2014
TWIF Flattener #6 - Offshoring
Use one of the current events sources linked at http://svhs-hwc-spring2015.blogspot.com/2014/12/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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"The Human Toll of Offshoring"
ReplyDeletehttp://www.nytimes.com/2014/09/02/opinion/joe-nocera-the-human-toll-of-offshoring.html
This article is about a nonfiction story by Beth Macy titled "Factory Man” — “How One Furniture Maker Battled Offshoring, Stayed Local, and Helped Save an American Town." In this story, a man who owns a furniture company has to fight against the temptation of offshoring with China while companies all around him were doing it. He instead charges the Chinese manufacturers for selling their furniture products for prices below the cost of manufacturing them. The government then put tariffs on Chinese furniture, and due to the Byrd Amendment, some of the money from the Chinese went directly to the man's company. He used this money to expand his company and created more jobs for people around his area, which some have said saved the town. This article agrees that offshoring is a flattener because of how one man and his furniture company from a small town in America fought against a furniture company from a country all the way across the world.
"Innocence abroad"
ReplyDeletehttp://www.economist.com/blogs/freeexchange/2014/03/offshoring
This article proves wrong Friedman's point that companies are using off-shoring to just get lower costs. As stated in this article companies are using places like Canada and Western Europe to off-shore to. These places cost as much or more to produce in than the United States. They are going through places like these because they have been trading through these places for many years. This is also because it is the largest trading route with the United States so there is a sort of bond. This is why Friedman's point is proven wrong.
"Eight ways China is changing your world"
ReplyDeletehttp://www.bbc.com/news/world-asia-19797989
Friedman stated that China was a place of cheap labor that was used by other companies for offshoring their factories, and other buildings in order to produce the exact product that they want, but a cheaper cost. He also said that China cannot dominate the United States, because China relies on it; including that the United States was the biggest manufacturer. However, this article does not agree with Friedman for our time period. It states that China is, in fact, moving farther up the ladder to success. The very first paragraph of the article even states how China holds one million ($US) millionaires, and acknowledges the fact that they are a great success story for building up the country economically. The most unsettling part is that the United States is in debt to China, while when Friedman wrote "The World is Flat" China was simply known for the cheap labor. Even though China is yet to "dominate" it still has increased its success economically, while being the country known for hosting other country's businesses, because of the cheap work.
http://news.bbc.co.uk/2/hi/business/4225604.stm
ReplyDeleteOffshoring 'has not hit UK jobs'
This article involves areas in the United Kingdom that has high employment rates in call centres. Although this improves the economy by providing many people with jobs, the buildings in which these call centers are located are becoming very crowded, so the companies have to relocated some of the employees. So far, the trend has been moving the companies to low-cost countries. Specifically, offshoring has been happening in South East England, Wales and Northern Ireland. These areas have found an increase in job efficiency and job growth. Additionally, it has been predicted that over the next five years, the amount of offshoring that will occur within these areas will increase by approximately twenty-five percent.
As Overseas Costs Rise More U.S. Companies are 'Reshoring'
ReplyDeletehttp://www.npr.org/blogs/parallels/2014/01/22/265080779/as-overseas-costs-rise-more-u-s-companies-are-reshoring
Friedman relates his 6th flattener to an African Proverb, saying that everyone, the prey and the predator, must outrun the others. The prey will be eaten if they are too slow, while the predators will starve if they are too slow. Friedman says that China is the predator because almost all countries wanted to send manufacturing work to China. However, this article states that as of now, it is much cheaper to manufacture goods closer to where they will eventually be sold. 'Reshoring' is the process of bringing offshore manufacturing back to the original country that owns the company. This brings much more individual jobs to the United States. This article disputes Friedman's point.
Corporate inversion - moving the head office for tax purposes
ReplyDeletettp://www.theguardian.com/business/2014/jul/14/corporate-inversion-movinghead-office-tax-purposes
This article explains the benefits and the cons about offshoring the corporate headquarters of companies for tax benefits. Since the United states has the highest corporate tax rate, businesses move their headquarters, to other countries with lower tax rates. Paying the lower tax rate allows the companies to make higher profits, which can be passed on to thier shareholders. The companies can still keep their manufacturing factories and sales in the original location. All the money made outside the US can be spent outside the US without spending US taxes. This allows a company to be more profitable or reduce expenses with a lower tax rate. However, the negative effect it that money has to stay outside the US, because once you bring it into to US it gets taxed. The article uses a company called Shire as a good example, to pay less in taxes. Shire first met with resistance to the UK, but laws had changed to allow offshoring.
"Exporting jobs : Offshoring is the way to go"
ReplyDeletehttp://www.nytimes.com/2004/02/07/opinion/07iht-edfarrell_ed3_.html?module=Search&mabReward=relbias%3Ar%2C%7B%222%22%3A%22RI%3A15%22%7D
The 6th flattener is offshoring. Offshoring is when a company takes one if its factory that is operating in Canton. Ohio, and move the whole company off shore to another country. Offshoring provides the same products but the labor is cheaper. Not only is labor cheaper, but also lower taxes, subsidized energy, and lower health care cost are all benefits. Friedman goes on to talk about December 11th 2001 when China formally joined the World Trade Organization. After China formally joined, the whole world took offshoring to another level. Companies started shifting and producing products in foreign land. Friedman later goes on to say that offshoring could be considered beneficial for American employees as well. The article written by Diana Farrell supports that statement. "United States receives 78 percent of the new economic value created by offshoring, versus the 22 percent that goes to the lower wage countries where these services are relocated." Farrell argument regarding offshoring fully supports Friedman's argument.
Offshoring creates as many U.S. jobs as it kills, study says
ReplyDeletehttp://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/12/study-offshoring-creates-as-many-u-s-jobs-as-it-kills/
Friedman's sixth flattener is offshoring, this is when a company bases an entire factory operation in a different country. This is done so that they can pay the citizens of this country that work at this factory lower wages, and it is done to receive lower corporate taxing. A common argument in the U.S. that offshoring is not good is that it reduces the amount of jobs for Americans. In this article it shows that offshoring creates plenty of jobs in America as well. A study was done and it found that offshoring increases productivity and reduces costs which can get companies to expand their domestic hiring. This expansion of domestic hiring is enough to offset the amount of jobs lost to offshoring. The researchers found that for every 1% increase to offshore jobs there is 1.72% increase in U.S. employment of U.S. citizens. This supports Friedman's argument that offshoring is flattening the world by allowing opportunities for jobs in other countries to be possible, while still maintaining the amount of jobs in the home country.
Friedman's sixth flattener is called offshoring. When a company does offshoring, they base an entire factory in a different country. The people that are employed in this factory are paid much less than people in companies in the United States. Many complain that outsourcing is not good, because it eliminates job opportunity, but it also saves the company so much money. In the article "A strategy for investing offshore cash that beats inversion." it outlines the way companies use this as a strategy to invest more money into different branches of their company by skimping on labor. Therefore, the companies that still maintain this type of corporation, have more time to invest to advance their company, and at the same time, are preventing jobs from people in the United States for the reduced labor prices in other countries. http://www.washingtonpost.com/business/allan-sloan-a-strategy-for-investing-offshore-cash-that-beats-inversion/2014/10/24/8c5e20ec-5aea-11e4-b812-38518ae74c67_story.html
ReplyDeleteOut to Sea, out of Mind
ReplyDeletehttp://america.aljazeera.com/opinions/2014/1/out-to-sea-out-ofmind.html
Friedman's sixth flattener is offshoring. Offshoring is when a company moves a factory to another country for cheaper labor, taxes, and overall cost. He also talks about how offshoring is letting many other countries gain wealth. The article I found adds to that. The article gives details on how offshoring can be damaging to the world. The article says how the power may be put on one person or country and how the power may become unbalanced just like Friedman said.
"How Offshore Tax Havens Save Companies Billions"
ReplyDeletehttp://www.npr.org/2011/03/17/134619750/how-offshore-tax-havens-save-companies-billions
Offshoring is Friedman's sixth flattener, which is when a company bases an entire factory in another country to reduce costs. Companies typically use offshoring to save millions, even billions of dollars worth of taxes each year. In this article, it states that some big companies saved billions of dollars, just by putting the majority of its foreign profits into accounts in countries with low tax rates, like Ireland and Bermuda. Companies like Forest Laboratories Inc. do nearly all of their business in the United States, but most of their profits show up in a mailbox in Bermuda, where there is no corporate income tax. This article supports Friedman's case that offshoring is a flattener because rich countries like the U.S. can be hurt economically, which levels the playing field.