10 Outsourcing Articles
10 Outsourcing Articles
Date: Sunday, August 24, 2003 8:51 AM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
http://www.cbsnews.com/stories/2003/07/31/eveningnews/ends/main566131.shtml
Where Have All The Good Jobs Gone?
http://www.nytimes.com/2003/08/19/business/worldbusiness/19indi.html?ex=1062311465&ei=1&en=86d51c1fc031da6d
Indian Companies Are Adding Western Flavor
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059479145597
or
http://makeashorterlink.com/?R2F1626A5
US banks transfer analysts' work to India
http://pittsburghlive.com/x/tribune-review/news/s_150970.html
Offshore flow
http://charlotte.bizjournals.com/charlotte/stories/2003/08/11/editorial2.html
Pillowtex tragedy illustrates lingering issues of free trade
http://makeashorterlink.com/?F2B261EA5
Retraining grants for laid-off Pillowtex workers
http://www.charlotte.com/mld/charlotte/business/6528220.htm
Easley orders review of contracts, vendors - Governor wants to
determine if work, such as at call centers, is done abroad
http://www.goerie.com/apps/pbcs.dll/article?AID=/20030822/NEWS02/108220389
Rally planned to protest Chinese trade practices
http://www.magicvalley.com/news/editorials/index.asp?StoryID=600
U.S. isn't only one losing jobs to other nations
http://seattlepi.nwsource.com/business/apbiz_story.asp?category=1310&slug=Textile%20Doomsday
Textile industry import quotas set to end
http://www.cbsnews.com/stories/2003/07/31/eveningnews/ends/main566131.shtml
Where Have All The Good Jobs Gone?
TERRE HAUTE, Ind., July 31, 2003
This is the 15th in a month-long series of reports called "Making Ends
Meet" about how families are coping with the tough economy,
unemployment and smaller retirement accounts.
When Jean Shaw gets together with her co-workers in Terre Haute, the
talk is all about the future: a future they never imagined.
"Where am I going to get a job paying a decent wage at 56 years old?
Where can I start over?" asks Shaw.
Shaw and her three co-workers are watching their jobs at the mail-order
company Columbia House disappear, the latest casualties of a corporate
trend called outsourcing.
Shaw has worked for the company 27 years, Janice Alsip is going on 34,
Sue Treash has been there 26 and Faye Johnson just completed her 29th
year.
They all worked in the returns department until the company began
sending jobs packing.
Some two years ago "they started outsourcing the e-mails to India, the
correspondence to Panama and a lot of those ladies have lost their
jobs," says Shaw.
Then, as CBS News Correspondent Jane Clayson reports, the entire
returns department was outsourced and reassigned to entry-level jobs.
"Now, I dread going into work everyday," says Treash.
"It's been really difficult because we used to work for a company that
seemed like it really cared about us," says Alsip. "It's really
depressing, it really is."
Columbia House executives refused to explain why they're farming out so
many jobs, but the practice of outsourcing is not uncommon. In fact,
one study shows 3 million jobs leaving this country in the next decade.
"You can't blame companies," says former U.S. Labor Secretary Robert
Reich. "These companies are in intense competition these days (and) the
easiest way to show profits is to cut labor costs."
But Reich warns there are long-term losses in that short-term profit
making.
"The fact is we're losing our middle class, our manufacturing workers,
the low-level, middle-level white-collar workers," says Reich.
Many of the jobs go to countries like India, where companies pay
pennies on the dollar for highly skilled workers.
IBM managers recently warned their colleagues to be ready for a
backlash from displaced workers as more American jobs go.
The big question, says Reich, is "Who is going to buy all of the goods
and services produced by American companies when so many people are
finding that their jobs are so precarious?"
This week Johnson got a termination notice and Alsip got a warning.
To think about those jobs that are going to less-skilled, cheaper labor
makes Shaw feel "unimportant, discarded and sad to think that not just
Columbia House and not just this community, but the whole United States
is on this path."
A path that's leading millions of workers to the unemployment office
and raising questions no one can answer.
"How are we going to survive?"
http://www.nytimes.com/2003/08/19/business/worldbusiness/19indi.html?ex=1062311465&ei=1&en=86d51c1fc031da6d
August 19, 2003
Indian Companies Are Adding Western Flavor
By SARITHA RAI
YDERABAD, India - Arun Kumar had never shaken hands with a foreigner
nor needed to wear a necktie. He vaguely thought that raising a toast
had something to do with eating bread. If it was dark outside, he
greeted people with a "good night."
But Mr. Kumar, 27, and six other engineers graduating from the local
university with master's degrees in computer applications, were
recently recruited by the Hyderabad offices of Sierra Atlantic, a
software company based in Fremont, Calif. And before they came face to
face with one of Sierra's 200 or so American customers, the new
employees went through a grueling four-week training session aimed at
providing them with global-employee skills like learning how to speak
on a conference call, how to address colleagues (as Mr. or Ms.) and how
to sip wine properly.
"Teetotalers practice by sipping Coke out of their wine glasses," Mr.
Kumar said at the session in early July.
As more and more service- and knowledge-intensive jobs migrate to
India, such training programs, covering some substance as well as
style, are increasingly common at companies with large numbers of
Indian employees.
It is particularly imperative for employees of software companies to
appear culturally seamless with Americans. American clients account for
more than two-thirds of India's software and services export revenues.
Growing at 30 percent a year despite a global downturn, the sectors
account for 18 percent of the country's total exports.
Sierra Atlantic, a midsize software services company whose clients
include the Oracle Corporation of Redwood City, Calif., says that
one-fourth of its 400 employees, all but a handful of them Indian and
most of themworking out of the Hyderabad offices, are constantly
interacting with foreigners.
For Sierra and others, including the Bangalore-based Wipro Ltd. and
Infosys Technologies, two of India's largest software and services
exporters, the training in Western ways is intended not only to help
employees perform daily business interactions with American or European
colleagues and customers but to help the companies transcend their
image as cheap labor.
As India's software companies expand, they are competing to hire the
most skilled engineers. And Mr. Kumar is typical of the thousands of
eager young engineering graduates from small-town India who are
thronging India's technology hubs - cities like Hyderabad, Bangalore
and Chennai - in search of these jobs.
Though he and his peers are technologically adept and fluent in
English, most lack the sophistication needed to flourish in a global
business setting.
"It is not always understood that speaking a common language, English,
is rarely a guarantee of communicating the same way," said Partha
Iyengar, vice president for research at Gartner India Research and
Advisory Services.
That point has been increasingly driven home as top Indian software
companies like Infosys, Wipro and the Bombay-based Tata Consultancy
Services have moved to the next level of competition by offering
product development, call centers, support services and bidding on
multimillion-dollar deals.
Such companies already provide services for some multinationals,
primarily those based in the United States, including General Electric,
American Express and Nike. They are expected to gross an estimated $12
billion in export revenues this year, up from $9.5 billion last year,
according to the National Association of Software and Service
Companies, the industry trade group known as Nasscom. And that means
more contact with customers and clients abroad - and more often as full
professional partners. "Your interaction with people of alien cultures
will only increase," Col. Gowri Shankar, a 30-year veteran of the
Indian Army and Sierra's trainer, told Mr. Kumar and half a dozen other
young engineers that morning in July, "and you should be equally at
ease whether in Hyderabad or Houston."
Colonel Shankar and some other trainers are on the staff of their
companies , though some companies, like Wipro, bring in Americans.
The Sierra programmers listened raptly as Colonel Shankar listed common
complaints: speaking one of India's many languages in front of
foreigners, questioning colleagues about their compensation and
cracking ethnic jokes. Some things he covers are not acceptable in any
corporate setting and some are particular sore points with foreigners.
He is fiendish about punctuality and a stickler for protocol.
"Americans are friendly, but do not slap an American on his back or
call him by his first name in the first meeting," said Colonel Shankar,
whose training materials are fine-tuned by information from programmers
returning from trips abroad.
Across the world, Global Savvy, a consulting company in Palo Alto,
Calif., trains high-tech employees to work together in projects around
the world. "The training in American culture is not to make Indian
software professionals less Indian," said Lu Ellen Schafer, the
executive director. "It is to make them more globally competent."
Among Ms. Schafer's clients are Cisco Systems and the LexisNexis unit
of Reed Elsevier as well as Wipro and other Indian companies. Ms.
Schafer says she urges her American clients to refer to Indians as
"consultants and partners," not "contractors and vendors." She prefers
to train Americans and Indians together, to stress that globalizing is
a two-way street.
For the Indian software companies that have expanded their lines of
business, there are new cultural challenges.
"The Indian programmer mind-set is to provide only what is asked, but
the consultant is trained to offer alternative viewpoints," said Ranjan
Acharya, corporate vice president for human resources development at
Wipro, which has trained 650 of its employees in what it calls "power
consulting." Still, he said, "we train our people to appear right,''
without appearing to be the final authority.
The pressure in consulting, a business many of the top software
companies are trying to ramp up, has become intense as global giants
like Accenture expand in India. "While Indian companies do very well at
the low end," said Andrew Holland, executive vice president for DSP
Merrill Lynch, "global corporations still prefer to look at large
consultancies like Accenture higher up the chain."
And the competition on the low end will soon include software companies
from countries like China and Russia.
Companies that distinguish themselves as strategic partners will
separate from the low-cost pack, said Marc Hebert, Sierra Atlantic's
executive vice president for marketing.
Whether the cultural training will make a difference is unclear.
"As an aggregate, Indian software professionals have not changed in the
way they present themselves," said Peter Nag, vice president and global
program management officer for Lehman Brothers in New York, which is a
client of Wipro. "We find that Indians hesitate to say no even though
we ask them all the time to speak their minds. Then there are small
things, like getting up from the seat when a senior colleague enters
the room. This feels strange."
"But there are many good individuals _ technically qualified and
culturally sophisticated," he added. "They are the types we would hire
here on Wall Street."
Still, some companies training their employees say they are already
seeing the benefits. Sierra said that in February its Indian unit won a
bid against a technically able Indian competitor because the Sierra
employees were seen as a better fit. "It all adds up to better rates
and bigger projects," said the project leader, Kalyani Manda.
Ms. Manda said she noticed a difference when she herself conformed,
even in a seemingly minor way. On her first trip to the United States
three years ago, she wore a salwar kameez, a loose-fitting Indian
garment, and felt totally out of place. "On the next trip," she said,
"I wore pants, fitted in better and delivered more."
As the training of Sierra's fresh recruits progressed, Mr. Kumar, who
has never written a letter before except to his family, exulted, "I
wrote a business letter to my project head which I began with 'Dear Mr.
Hari.' ''
A colleague, Aastha Vij, 23, was equally jubilant.
"I'm actually looking forward to meeting my first American client," Ms.
Vij said. "I'm no longer nervous."
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US banks transfer analysts' work to India
By David Wells in New York and Khozem Merchant in Bombay
Published: August 19 2003 21:58 | Last Updated: August 20 2003 0:18
US investment banks are transferring work to India as they revamp
equity research departments in response to the Wall Street analyst
scandal and the bear market.
Banks including JP Morgan Chase and outsourcing companies such as
Office Tiger say they are not replacing existing jobs but shifting
tasks normally done by junior analysts such as number crunching to
allow senior analysts the opportunity to publish reports and talk with
clients.
Joydeep SenGupta, a partner at business consultancy McKinsey in New
Delhi, said every big investment bank and the occassional asset
management company is outsourcing some research work or at least
exploring the issue.
JP Morgan Chase, which began using the research services in May, said:
"Our objectives are to provide support for our existing sector teams,
improve productivity and continue to differentiate the quality of our
research."
Banks say the arrangement helps make expensive US-based analysts more
productive, and India is ideal for outsourcing because of its education
levels and lack of language barriers.
The number of jobs transferred so far is small. Nasscom, an Indian
industry trade group, estimates 100 to 200 equity research jobs had
been moved. This compares with thousands in information technology,
software development and call centres.
The need to hire help stems in part from declining research budgets.
Reseach typically was funded by equity trading revenue and investment
banking revenue, both of which have slumped, and the ties between
investment bankers and analysts are now closely watched by regulators
after April's research settlement.
To keep costs low, JP Morgan Chase and its rivals are asking analysts
to cover more companies and sectors. Hiring support staff for them in
India is another method of keeping budgets trim because salaries are
much lower.
Alan Johnson, a New York-based compensation consultant said a US
employee with an MBA going for an analyst position could make between
$100,000 and $145,000 and a college graduate could receive about
$65,000. In Mumbai, an MBA can expect about $25,000 and other employees
might make half that. Real estate and employee benefit costs are also
much cheaper in India.
Success with outsourcing information technology, software development
and call centre jobs - Nasscom says US banks saved between $6bn and
$8bn in the four years to 2002 in such areas - is leading to
partnerships covering more complex work.
http://pittsburghlive.com/x/tribune-review/news/s_150970.html
Offshore flow
[picture]
Employees of Prithvi Information Solutions
Heidi Murrin/Tribune-Review
By Michael Yeomans
TRIBUNE-REVIEW
Thursday, August 21, 2003
The way Madhavi Vuppalapati sees it, the ever-increasing outsourcing of
information technology jobs, primarily to India, isn't stealing jobs
from Americans.
It's freeing American technology workers to be more creative while
moving the more mundane work of writing tedious software code to
developing countries.
But the offshore trend is becoming so much more. Jobs ranging from call
center operator to payroll clerk are being shipped offshore as U.S.
companies move from outsourcing individual software application
development projects to entire back-office departments.
The burgeoning offshore trend is becoming big business as companies
large and small are seizing the opportunity to lower their labor costs,
while receiving high quality work. More and more companies are becoming
receptive to the trend after seeing the benefits reaped and the risks
reduced by the first-movers. Some companies, like Microsoft Corp. and
Pittsburgh-based FreeMarkets Inc. have now jumped in with both feet,
establishing their own development centers in India.
Others, like Mellon Financial Corp., are turning to outside vendors to
manage an increasing amount of work offshore.
Locally, iGate Corp. is one of the pioneers of the offshore development
field, but Vuppulapati's company, Prithvi Information Systems Inc., is
growing fast.
Founded in 1998 when Vuppulapati was paid $5,000 to develop an
application for financial services giant Merrill Lynch, the company is
expected to reach $50 million in sales this year. She wants to double
that by the end of 2005.
"Every company is now making a strategic decision to outsource some
(information technology) function," she said.
Nestled in a small office in Oakland, Prithvi employs 15 people
locally, but has 350 employees worldwide -- including 200 in Hyderabad,
India, one of two Indian hotbeds, along with Bangalore, of offshore
development.
Abhijeet Pradhan, Prithvi's business development manager, said India
has two advantages over other offshore development centers, like China,
Ireland, Israel and Russia.
First, nearly all educated Indians speak English. Secondly, India is
turning out an astounding number of information technology graduates
from its universities each year.
Pittsburgh-based iGate Corp. is one of the recognized leaders of
offshore development.
Chief Executive Sunil Wadhwani said the number of people it employs
overseas is likely to double to 6,000 over the next few years --
primarily in India.
iGate for the past few years has increasingly leaned on its offshore
business, a process that has accelerated in recent months as the
company has made several strategic moves to increase its offshore
presence. Company co-founder, Ashok Trivedi, has returned to India
after 30 years in the United States to oversee the company's stepped-up
India presence.
Among the recent moves by the company, which have resulted in half of
the company's 4,000 employees now being based in India, are:
= Changing the name of its India-based subsidiary, Mascot Systems, to
iGate Global Solutions to reflect the growing importance of Mascot to
iGate's identity as a provider of offshore information technology
staffing and services.
= Acquisition of Quinant Services Ltd., a financial services
outsourcing company in Bangalore that is constructing a
100,000-square-foot facility. Along with the acquisition, the company
announced it has hired Phaneesh Murthy, former head of sales at Infosys
Technologies, India's leading offshore outsourcing company, as chief
executive of iGate Global Solutions.
= Acquisition of the clinical research arm of University of
Pittsburgh Medical Center, in conjunction with the acquisition of
Mumbai, India-based DiagnoSearch, a clinical research outsourcing
company that taps the massive India population for candidates for drug
trials.
iGate's Business Process Outsourcing division operates two call centers
in India's capital of New Delhi, totaling 100,000 square feet and with
more than 1,500 seats, with a planned expansion to 3,000 next year.
Wadhwani said the labor costs in India are about an eighth of what they
are in the United States. After considering the costs of opening and
operating a facility and extra travel costs, he said moving development
offshore provides savings in the range of 50 to 60 percent.
He said the increasing labor demand in India is starting to push up
salaries, but, he said it will be a long time before salaries there
begin to become a disincentive for moving work there.
Another advantage of having an operation in India is the 12-hour time
difference that permits companies to hand-off work across the globe for
around-the-clock development for projects requiring a rapid turnaround.
Vuppalapati gives the example of a client for whom Prithvi has taken
over the responsibility for maintaining 150 Excel spreadsheets. This
frees the client's employees to analyze the data.
"Companies will move into more value-added activities with their
employees," Pradhan said.
More than 140,000 immigrants from India came to the United States in
2001 and 2002, second only to Mexicans in the numbers to arrive. Some
of these have returned to India to organize offshore development
companies.
FreeMarkets Inc. is investing $4.2 million over the next two years to
establish an Internet auction monitoring center in India. Over time,
the company said, it could expand its operations there to include
software development, engineering and customer call center functions.
Mellon Financial Services Corp. Chairman Martin McGuinn recently
outlined his company's offshore initiatives to employees in an e-mail,
indicating that the company has targeted 20 to 25 percent of its
software development to be handled by companies with offshore
operations.
"Offshore outsourcing has reset the cost structure within our industry,
leaving companies that adopt it much better positioned to compete in
the current economic environment," he wrote. "Offshoring also enables
our professionals to focus on the highest value-added activities and
ensures that our technology, processes and applications are truly
industry leading."
The company's Investor Services department has moved back-office
processing to India and its call center to the Philippines.
McGuinn acknowledged that the offshore evolution at Mellon is at the
cost of some U.S. jobs.
Some perceive the offshore job movement as a threat. The Washington
Alliance of Technology, an offshoot of the Communication Workers of
America, is working to unionize white-collar technology and service
workers in an attempt to thwart the flow of jobs overseas.
Mike King, a senior manager of the Pittsburgh office of Deloitte &
Touche, said the offshore trend is a "drain on jobs" that will continue
until wage rates increase substantially in the countries where the work
is going, like India, Russia, China and Singapore.
He said the United States must constantly innovate to create new
higher-value-added jobs to replace the ones lost in order to thrive.
Michael Yeomans can be reached at myeomans@tribweb.com or (412)
320-7908.
http://charlotte.bizjournals.com/charlotte/stories/2003/08/11/editorial2.html
Pillowtex tragedy illustrates lingering issues of free trade
David Mildenberg
At his Aug. 4 appearance in Kannapolis, Gov. Mike Easley showed up 20
minutes late, then talked for 30 minutes about how devoted he was to
helping the newly unemployed Pillowtex workers.
He praised two Charlotte A-list executives, Mac Everett of Wachovia
Corp. and Jim Hance of Bank of America Corp., for trying,
unsuccessfully, to find a buyer for Pillowtex while protecting their
banks' interests.
Then Easley dashed off without taking a question from workers or
journalists.
Left in his wake were 6,500 former Pillowtex employees suddenly
surrounded by glad-handing pols who, in reality, can deliver little
more than photo ops and press releases.
Sens. John Edwards and Elizabeth Dole have made obligatory stops in
Kannapolis. And U.S. Rep. Robin Hayes has worked the crowds.
They all promise help for the laid-off workers. On the larger issue of
how a company with the remarkable brand appeal of Pillowtex can
collapse, however, none have any real answers.
It's easy to blame free trade for this mess. It's easy because it is
essentially true that manufacturing in the United States is dying -- a
victim of trade policies that are pushing thousands of jobs every year
overseas. Even now, Hayes says it's probably too late to stop changes
that will make it even easier for China to dump more product here in
2005.
The fact that free-trade policies would encourage U.S. manufacturers to
move jobs overseas or that low-wage competition would force some
companies here out of business is not a sudden revelation.
Everyone from right-wingers Ross Perot, Roger Milliken, Pat Buchanan
and Jesse Helms to Ralph Nader and left-wing unions predicted this
disaster.
The shame is that so little is being done to prepare the U.S. work
force for this transition. A national economic policy that dictates a
shift to 21st century high-tech industries should include employees who
will work in it.
Globalization of the economy has created obvious benefits. It's meant
remarkable growth for Triangle technology firms and for Charlotte's
financial industry.
But anyone who thinks those benefits reach all North Carolina workers
need to get out of the office more. In a just world, the academics and
think-tank wonks who pushed free trade would be swapping their tenure
documents and government contracts for the unemployment insurance
applications now flooding Cabarrus and Rowan counties.
Our leaders -- over the past decades, not months -- should have
displayed either the courage to promote fair trade protecting the
manufacturing base or showed far more zeal in assisting workers now
bearing the brunt of globalization.
It's too bad Pillowtex workers didn't get to hear retiring U.S. Sen.
Ernest Hollings's view of the trade crisis, which he offered the same
day Easley blew in and out of town.
"Riding up here, I saw this state could care less," Hollings said. "I
just saw (University of South) Carolina license plates, (Clemson) Tiger
paw license plates, they just can't wait for the kick-offs here at the
end of the month.
"They just don't worry about the 60,100 textile jobs alone we have lost
since NAFTA. We always brag on BMW in Spartanburg County. Ten years ago
we were down to 3.2% unemployment there, and now we're at 8.5%
unemployment. And in the country this is endemic. In the country
itself, we don't make anything any more.
"I had to make a talk on trade last week, and I looked it up and found
out that at the end of World War II we had 40% of our work force in
manufacturing. And now we're down to 10%. We've got 10% of the country
working and producing, and we've got the other 90% talking and eating.
That's all they're doing.
"And we're eliminating jobs -- hard manufacture, service, high-tech --
all except the press and the politicians. They don't import us. If
they'd imported us, they'd get rid of us, too.
David Mildenberg is a Charlotte Business Journal staff writer. He can
be reached at dmildenberg@bizjournals.com or (704) 973-1149.
http://www.registerbee.com/servlet/Satellite?pagename=DRB%2FMGArticle%2FDRB_BasicArticle&c=MGArticle&cid=1031770510561&path=!frontpage
Retraining, insurance grants available to laid-off workers
Danville Register and Bee
Friday, August 15, 2003
KANNAPOLIS, N.C. (AP) U.S. Labor Secretary Elaine Chao announced
Friday that workers displaced by textile giant Pillowtex Corp. will
have two grants totaling $20.6 million to help them.
A grant of $13 million will be used for retraining, basic remedial
education, job search help and other services. An additional $7.6
million will pay 65 percent of qualified health insurance premiums for
workers, she said.
The grants are less than the $37.5 million that Gov. Mike Easley
requested. The governor and other politicians wanted $19 million for
health insurance premiums and $18.5 million for retraining, including
$2.5 million to expand the capacity of community colleges.
Id rather have more, said Easley, who joined U.S. Rep. Robin Hayes,
R-N.C., Chao and other Labor Department officials in making the
announcement at Kimball Memorial Lutheran Church in Kannapolis. But
Ill also be going back to our senators and congressional delegation
if we need more.
Sen. John Edwards, D-N.C., also noted that the funding was less than
was needed for the displaced workers and their families.
This is an emergency for thousands of North Carolinians whose jobs have
disappeared at plants all across our state, Edwards said. The Labor
Department has taken a step in the right direction, but there is much
more that we ought to do for the workers, their families and their
communities.
In addition, Chao has not acted on a request for relief for Pillowtex
workers under the Trade Adjustment Assistance program designed to help
workers who lost jobs because of foreign trade, he said.
Applications for that program typically take six months to process, and
Labor Department officials say they are trying to expedite the request.
Easley saluted Chaos office for working fast to help the Pillowtex
workers.
They continue to certify our workers as trade adjustment victims and
more funds will become available according to the formula, he said.
Secretary Chaos presence here today beings a lot of hope to our
workers and I appreciate what her office is doing.
Sen. Elizabeth Dole, R-N.C., praised Chao for moving quickly on the
funding request.
Im pleased that this money will help provide much-needed assistance
not just for Pillowtex employees, but also for other impacted workers
across North Carolina, she said.
Pillowtex, a sheet-and-towel maker, filed for bankruptcy July 30,
shutting down its 16 plants and announcing the layoff of its 7,650
workers, including 4,800 in North Carolina.
Its the largest permanent layoff in North Carolina history and
followed weeks of prolonged work stoppages, months of uncertainty and
years of financial struggles for the company.
The layoffs, coupled with the return to bankruptcy protection, also
ended more than a century of the companys reign as one of the
Carolinas most dominant textile firms.
About 950 people lost their jobs at Pillowtexs plant in Fieldale,
near Martinsville.
http://www.charlotte.com/mld/charlotte/business/6528220.htm
Easley orders review of contracts, vendors
Governor wants to determine if work, such as at call centers, is done
abroad
STELLA M. HOPKINS & SARAH JANE TRIBBLE
Staff Writers
N.C. Gov. Mike Easley on Wednesday ordered a review of state contracts
to determine if work is done overseas.
Easley also ordered that, when soliciting bids, state agencies ask
where work will be done.
The executive directive -- the sixth for the Democrat who took office
in 2001 -- is part of an ongoing review of state purchasing policies,
said Cari Boyce, the governor's spokeswoman.
The order applies to most areas of N.C. government, including the
Department of Health and Human Services, which oversees the state's
food stamp program. North Carolina is among 40 states where food stamp
recipients rely on help desks in India to resolve problems with their
benefits, according to an Observer survey. In an article Sunday, the
newspaper reported on the widespread use of foreign workers on states'
contracts.
N.C. offices run by elected officials, such as the attorney general,
are not covered by the order, Boyce said.
S.C. food stamp users also use a foreign call center, and programmers
in India are helping revamp the state's unemployment tax system.
While not commenting specifically on state use of foreign workers, S.C.
Gov. Mark Sanford's spokesman, Will Folks, said that this summer, the
governor has used a "wider lens to look at state government operations,
including procurement."
Businesses have increasingly been using lower paid foreign workers for
computer work, call center operations and other service jobs. By one
estimate, the nation will have lost 3.3 million of these service jobs
by 2015, with the majority going to India.
Government agencies, squeezed by tight budgets, are joining the trend,
saying the use of foreign workers can save money and time and sometimes
improve quality. State officials also say that purchasing rules don't
allow them to exclude qualified bidders just because they perform work
overseas.
Critics say government agencies erode their tax base by hiring foreign
workers.
The new bidding process means agencies will know where a potential
vendor plans to do work and can consider that information when
selecting a vendor, Boyce said. However, she said, there's "no blanket
answer" on whether an agency can use that information to reject a bid.
"The governor strongly believes that N.C. state government should hire
companies that employ North Carolina workers whenever possible," Boyce
said.
N.C. Sen. Eric Reeves, a Democrat in Raleigh, called Easley's move "a
step in the right direction" because it gives the agency more
information to make a decision as to whether outsourcing jobs overseas
is a good or bad thing.
But, Reeves said more can be done. In April, he introduced legislation
to ban foreign call centers on state contracts. The proposal passed the
Senate and awaits House consideration.
"I don't want to be harsh on the governor, but ... he can certainly say
that it is the policy of this administration not to do certain things,"
Reeves said.
Senate President Pro Tem Marc Basnight, D-Dare, said he supports the
governor's order and would like to see work done in-state. Although, he
said, sometimes that isn't cost effective.
Boyce said the governor's action was not prompted by The Observer's
Sunday story. The Observer "brought some important facts to light
regarding what North Carolina and other states are doing," Boyce said.
The review of state purchasing rules began in the spring.
The governor was in meetings, unavailable for comment.
http://www.goerie.com/apps/pbcs.dll/article?AID=/20030822/NEWS02/108220389
Article published Aug 22, 2003
Rally planned to protest Chinese trade practices
The Manufacturer's Association of Northwest Pennsylvania is playing
host to a Labor Day rally in Erie's Perry Square to protest China's
trade policies.
The rally stems from a recent study of Chinese trade practices.
Manufacturer's Association President Ralph Pontillo said such practices
are in direct violation of international law.
"We had heard a lot of complaints that American manufacturers were
getting their pants kicked off by (the Chinese)," Pontillo said. "At
first, we figured 'That's life. It's a competitive world.' "
After a lengthy look at China's trade practices, the association
concluded the Chinese government was breaking the rules.
Pontillo said Chinese companies have been stealing intellectual
property.
In addition, the Chinese government has been putting unfair tariffs on
U.S.-produced goods, artificially valuing its currency and been
requiring U.S. companies to meet illegal conditions to sell in China.
As a result, Pontillo said, U.S. manufacturers are being undercut. He
said that has become a trend that has contributed to the massive
decline in U.S. factory jobs during the past three years.
The Labor Day rally is the first in a series of events the
Manufacturer's Association is planning to call attention to China's
trade practices.
http://www.magicvalley.com/news/editorials/index.asp?StoryID=600
U.S. isn't only one losing jobs to other nations
Originally published Thursday, August 21, 2003
Daniel Sneider
Remember the "giant sucking sound"? That was what millionaire
businessman and political gadfly Ross Perot predicted we would hear
when American jobs escaped to Mexico after the passage of the North
American Free Trade Agreement.
NAFTA is nearly a decade old and though experts dispute the numbers,
the pugnacious Texan was at least partly right. Foreign firms set up
factories along the border -- so-called maquiladoras -- where they took
advantage of cheap labor to produce goods for the U.S. market. They
created 1.3 million jobs and helped fuel an export boom that allowed
Mexico to supplant Japan as the No. 2 exporter to the United States
after Canada.
Now Mexico is hearing the "sucking sound," and it is coming from China.
In the last 2 .5 years, nearly 300,000 maquiladora jobs have fled
Mexico, most of them headed for China. And sometime later this year,
China will likely overtake Mexico as the second largest source of
American imports.
Mexican officials are furious at the Chinese. And they aren't alone.
Throughout Asia, China's economic rise is viewed with anger and growing
fear. Those countries see China drawing away foreign investors at their
expense. Assembly lines are going up at a record pace in China, fed by
a seemingly unending stream of low-paid labor from the Chinese
countryside. Government officials in South Korea and Japan, who compete
for markets with China, accuse it of unfairly maintaining an
undervalued currency to artificially prop up its exports.
These are the cross-currents of economic globalization that Americans
rarely see. We think globalization is about American jobs going
overseas, or the impact of American popular culture in other countries.
But globalization is also about how China's growth can mean trouble for
Mexico. And how the investment decision of a Dutch electronics maker to
shut down a factory in Tijuana can in turn affect the United States,
making it more difficult for our neighbor to the south to provide work
for its growing population -- perhaps spurring more illegal
immigration.
Mexico benefited from the way multinational companies effortlessly move
their capital from country to country in this global economy. Now that
same borderless economy has come back to haunt them.
The list of factories that have shut their doors and moved to China is
long -- more than 520 since December 2000 -- and growing.
Here is a just a sample:
-- Japanese TV maker Sanyo closed six Tijuana plants, laying off almost
1,900 workers.
-- Toy maker Hasbro moved its Tijuana plant to China.
-- Dutch electronics giant Philips shut its PC monitor plant in Ciudad
Juarez, putting 900 people out of work, and moved the work to its plant
in Suzhou, China.
-- In June, Mitsubishi shut down production at a PC monitor plant in
Mexicali, putting 1,200 people out of work.
The driving factor is labor costs. According to Merrill Lynch analysts,
Mexican hourly wages, including benefits and taxes, now average $2.96.
Move to China and you only have to pay 72 cents an hour, wiping out the
advantage Mexico has of proximity to the American market. There will no
doubt be not a few Americans who, hearing this, say that this is a case
of "what goes around, comes around." And there is a basis for thinking
that.
"Ironically, in their denunciations of China, Mexican officials echo
American union officials," points out a study prepared by the Oriental
Economist Report, "who for years have denounced American assembly
plants that have moved south of the border ... to take advantage of
Mexico's lower labor costs."
But critics also point to Mexico's failure to improve its
competitiveness during this past decade. Mexico has not matched the
investment by China in infrastructure such as education, ports, roads
and industrial parks, as well as cheaper electricity rates. Plus
manufacturers can draw on much larger pools of component suppliers in
China.
Mexican officials have a darker view of this competition. Last year the
Mexican secretary of the economy, now the foreign secretary, threatened
to file a complaint before the World Trade Organization against China
for giving "disguised subsidies" to lure manufacturers.
"They are giving money away and subsidizing many of these firms to
produce there," said Ernesto Derbez.
Mexico has yet to carry through on its threat. But the scent of a new
arena of global economic warfare is already in the air.
Daniel Sneider is foreign affairs columnist for the San Jose Mercury
News.
http://seattlepi.nwsource.com/business/apbiz_story.asp?category=1310&slug=Textile%20Doomsday
SEATTLE POST-INTELLIGENCER
Tuesday, August 12, 2003 7 Last updated 11:04 p.m. PT
Textile industry import quotas set to end
By EMERY P. DALESIO
AP BUSINESS WRITER
RALEIGH, N.C. -- If 2003 has seemed terrible for the U.S. textile
industry, just wait - next year could be far worse.
That's because quotas that suppress the number of low-cost imports are
scheduled to expire at the end of 2004, meaning even tougher
competition for American textile companies.
The American Textile Manufacturers Institute says some 8,900 U.S.
textile jobs were lost in July. That doesn't include the effects of the
July 30 bankruptcy declaration by Pillowtex Corp., the 106-year-old
textile maker that could eliminate 7,600 jobs as it liquidates.
Since April, the trade group said, the United States has lost 26,000
jobs in textiles and 21,000 jobs in apparel.
With China's textile makers anticipating the quotas' end, executives
and union leaders say the United States could be left with little more
than niche manufacturers if the Bush administration allows the barriers
to expire as planned.
"It's a tsunami occurring the day after a hurricane. It's going to be a
disaster to whatever is left of the textile and all other related
industries," said Harris Raynor, vice president of the Union of
Needletrades, Industrial and Textile Employees regional office in
Atlanta. "The Pillowtex bankruptcy will be the tip of the iceberg."
Next year's deadline is the end of a decade-long phase-out for quotas
used by the United States and other wealthy countries to limit imports
from developing nations under the General Agreement on Tariffs and
Trade, or GATT.
ATMI, the textile industry group, predicts the quotas' end will only
accelerate China's growing market dominance. The group predicts that
630,000 jobs in textiles, apparel and related industries could be lost
by 2006. About 745,000 Americans work in the textiles or apparel
trades.
"The result will be the collapse of the U.S. textile and apparel
industry," ATMI said in a report last month.
The effects could begin to be felt as early as next spring, as orders
for U.S. fabric and yarn for clothing to be produced in 2005 drop.
"As orders are moved to China, a massive series of layoffs, mill
closures and bankruptcies will ripple through the textile belt
throughout the middle of 2004," the report predicted.
North Carolina would be the biggest loser, with about 85,000 more
textile and apparel workers losing their jobs in the next three years -
or two out of every three now remaining.
Other textile states hit hard would be South Carolina with 42,000
layoffs, Alabama with 30,000 and Georgia with 25,000, the report said.
Major apparel states California and New York would shed about 81,000
and 29,000 jobs, respectively.
The crux of the problem is the same as in every free-trade debate:
Cheaper foreign imports benefit American consumers, but force domestic
producers to cut prices or lose market share.
While U.S. textile workers are underpaid compared to most U.S.
manufacturing workers - earning an average of $13.60 an hour in 2001,
compared to $20.32 an hour for all manufacturing jobs - their
counterparts in China average less than 69 cents an hour.
Textile executives say the quotas that have been in place for the last
decade have helped slow the drain of U.S. textile jobs, serving as a
life-support system for scores of communities.
But importers say the barriers come at a price, costing the typical
American family of four an additional $300 to $750 a year for clothes.
Wachovia Corp. economist Mark Vitner notes that the benefits of free
trade are often not obvious to consumers, who rarely ponder why they
pay just $5 for a pack of 24 Pakistani-made kitchen towels at Wal-Mart
or Costa Rican-made jeans for less than $10.
"People who benefit from free trade never realize it," Vitner said.
"You really can't quantify whether the specific amount of purchasing
power you enjoy is a result of free trade."
U.S. textile industry leaders have focused on the threat posed by China
- even though wages in India, Vietnam and Bangladesh are lower, while
Haiti, El Salvador and Nicaragua have both rock-bottom wages and easy
access to U.S. customers.
They say the Chinese government's control of its currency gives its
exporters an advantage estimated at between 15 percent and 50 percent.
China's government says its exchange rate policy is determined by the
nation's needs.
Textiles' shift to China continues a long-established trend of textile
makers pursuing low-wage labor - first from the Northeast to the
Southeast, then to Mexico and the Caribbean, then to China and the rest
of Asia.
Charles Saunders owns Saunders Thread Co. in Gastonia, N.C., a niche
company that spins thread from sophisticated materials like Kevlar, for
use in safety clothing. Even though his company is profitable, Saunders
believes the industry is headed for catastrophe.
"We may be here for four years, we may be here for four months," he
said. "Who knows? It's a toss-up."
On the Net
American Textile Manufacturers Institute China report:
http://www.atmi.org/Textiletrade/china.pdf
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