10 Articles Worth Reading

Date: Thursday, August 25, 2005 1:02 AM

JOB DESTRUCTION NEWSLETTER

by Rob Sanchez
August 25, 2005 No. 1321

Article 1:
http://www.manufacturingnews.com/news/05/0808/art1.html
Heritage Foundation Says Congress, DOD Should Learn To Live With Globalization; Providing Troops With Best Equipment Usurps Making It In America
Heritage wants conservatives in Congress to stop promoting "Buy American" proposals that would require federal agencies to purchase a larger share of goods from U.S. producers. Requiring agencies to buy from American producers does not solve the problem, but makes matters worse. In its report, Heritage provides the rationale for abandoning a "Buy American" approach to the problem. A nuclear submarine probably should not be contracted out to the Chinese. I would, however, say that for most other things that it's okay to let the market decide where we get things from.

Article 2:
http://msnbc.msn.com/id/9038294/
Agilent cuts 95 in Roseville
Agilent Technologies Inc. is cutting 95 jobs from its Roseville telecommunications support unit to save money, with some of the jobs going to its branch in Fort Collins, Colo., and others to India.

Article 3:
http://seattlepi.nwsource.com/business/236999_gates18.html
Microsoft chairman makes pitch for foreign workers
Gates recalled a time when Microsoft hired a wave of people from India to work in the United States. News reports there lamented the departure of so many brilliant people, he said, while those here bemoaned the arrival of workers perceived as competing with domestic talent. "It really can't be bad news in both countries," Gates said. "If we sent them back, was the U.S. going to say, 'Good news -- geniuses are gone?' " It was one of several moments of laughter during the opening session of the National Conference of State Legislatures in downtown Seattle, where Gates was interviewed onstage by University of Washington President Mark Emmert.

Article 4:
http://www.newkerala.com/news.php?action=fullnews&id=15708
Outsourcing boosts economy: British official:
Sydney: A top British industry official Sunday said developed countries should not worry over job losses to low-wage countries like India and China as off-shoring forces an economy upmarket to where the big rewards are.

Article 5:
http://www.infoworld.com/article/05/08/23/35OPreality_1.html
Are U.S. workers second-string IT hires?
Why is the Department of Labor refusing to post on its Web site a database of more than 50,000 job openings -- many for IT workers -- for 2006? Are they precluded by law to do so, as a DOL spokesperson claims?

Article 6:
http://knowledge.wharton.upenn.edu/index.cfm?fa=viewArticle&id=1278&specialId=40
R&D in India: The Curtain Rises, The Play Has Begun...
Motorola's two research and development facilities in India helped produce a sub-$40 cellular phone for emerging markets. Microsoft in January launched its third international research center in India. Intel has 800 India-based engineers working on software and hardware designs for its communication and semiconductor product lines. Other U.S. companies are designing everything from auto parts to consumer electronics in India through outsourcing or setting up their own facilities in areas such as Bangalore, India's Silicon Valley. All these efforts and more represent just the beginning of advanced research and development in India.

Article 7:
http://post-gazette.com/pg/05235/558207.stm
Letters to the business editor: 8/23/05
Cheap foreign labor takes jobs
and
Sold out to highest bidder

Article 8:
http://www.baltimoresun.com/news/opinion/oped/bal-op.sowell18aug18,1,4467094.story?coll=bal-oped-headlines
Our real need: Some plain talk on immigration
IMMIGRATION HAS joined the long list of subjects on which it is taboo to talk sense in plain English. IMMIGRATION HAS joined the long list of subjects on which it is taboo to talk sense in plain English. At the heart of much confusion about immigration is the notion that we "need" immigrants - legal or illegal - to do work that Americans won't do. What we "need" depends on what it costs and what we are willing to pay.

(text not included for 9 and 10. Click on link to read.)

Article 9:
http://www.vdare.com/roberts/050822_hegemony.htm
Americas Lost Hegemony
US executives, with an eye to quarterly earnings and their bonuses, continue to spend considerable resources lobbying for increases in work visas that enable them to replace their American engineers, scientists, and technical people with lower cost foreigners. These executives lie through their teeth when they assert the lack of qualified Americans for the jobs. The fact of the matter is, the executives force their American employees to train their foreign replacements and then fire their American workers.

Article 10:
http://www.computer.org/portal/cms_docs_itpro/itpro/content/promo6.pdf
Offshoring: What Can Go Wrong?
Does it benefit a US firm to offshore its IT work - specifically software development and maintenance?

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http://www.manufacturingnews.com/news/05/0808/art1.html

August 8, 2005 Volume 12, No. 15

Heritage Foundation Says Congress, DOD
Should Learn To Live With Globalization;
Providing Troops With Best Equipment
Usurps Making It In America

BY RICHARD McCORMACK

The debate over what to do about the U.S. defense industrial base is intensifying, as foreign factories are supplying more components and subsystems that make up the U.S. arsenal. But the worry is misplaced, argues the Heritage Foundation after studying the issue for the past eight months. There is no way to stop globalization, so those people expressing so much angst should accept it for what it is: an opportunity for the U.S. military to equip its soldiers with the best technology made anywhere in the world.

The debate pits those who believe the U.S. needs to adopt policies that ensure a strong base, who are generally labeled as being protectionists, against those who believe in letting the global free market work without any hindrance placed upon it by centralized federal control.

Responding to the rising concerns of conservative defense hawks worried also about the rise of Communist China's industrial capacity, the Heritage Foundation jumped into the debate. "No organization is better positioned to bridge the gap between [military and economic] perspectives than is the Heritage Foundation," the group writes in a new report on the subject. "We have a rich history of supporting strong national security policy as well as advancing the principles of free markets. For this reason, we believe it is our responsibility to address this issue."

For all intents and purposes the economic "free-marketers" won the internal Heritage Foundation debate. "The Heritage Foundation has been clear from the beginning of the project that we will not back down from our commitment to free markets," it writes in its report titled "The Military Industrial Base in an Age of Globalization: Guiding Principles and Recommendations For Congress." "We also understand that the military 'market' is unique and that we could not allow our commitment to free enterprise to cloud our vision of what is right for national security."

As a result, concessions were made, because the highly charged nature of the issue has the potential of creating a rift within even an organization like Heritage, according to some of those involved with the study.

Heritage wants conservatives in Congress to stop promoting "Buy American" proposals that would require federal agencies to purchase a larger share of goods from U.S. producers. Requiring agencies to buy from American producers does not solve the problem, but makes matters worse. In its report, Heritage provides the rationale for abandoning a "Buy American" approach to the problem.

"The seemingly arcane nature of the military industrial base relegates most debate over it to the halls of Congress, small offices in the Pentagon and the boardrooms of America," according to the Heritage Foundation report. "Yet the decisions made today regarding the military industrial base affect every American and will influence the armed forces for decades to come, just as decisions made over the past 100 years continue to have ramifications...As critical as the military industrial base is to U.S. national security today it, it is not a new issue."

Project leader Jack Spencer, senior policy analyst for defense and national security at the Heritage Foundation, sat down with Manufacturing & Technology News editor Richard McCormack at Heritage headquarters on Capitol Hill and discussed how the debate over preserving the defense industrial base should be "flipped on its axis." Here's what he had to say:

Question: How do you reconcile the conservatives on national security issues with the conservatives on economic policy issues?
Spencer: In our opinion, national security should always trump the free market, but we're committed to free markets and we did not want to back down on our commitment to free markets as we went through this process. It just so happens that as we analyzed the arguments we heard from people who did not agree with us we found that they were really parochial in nature. It reinforced our belief that the commitment to free markets is how you genuinely best protect national security. Some of the things in [our report] run counter to our economic policy people and are different than what they would have said otherwise.

Q: Do you think the United States needs to have a strong manufacturing base in order for it to have a strong national security force?
Spencer: We believe that we should focus our efforts on access to what our men and women in uniform need rather than being able to manufacture here in the United States. If getting them what they need when they need it means that it should be domestically produced, fine. A nuclear submarine probably should not be contracted out to the Chinese. I would, however, say that for most other things that it's okay to let the market decide where we get things from.
Our belief is that subjected to the free market, the United States is still going to produce most things because our comparative advantages are innovation and new technology. If liberated from protectionism, we can compete and that is where we will always emerge as winners. The free market is how we do best national security-wise either way.

Q: So you have no problem with the massive shift of high-tech production offshore and its implications for the U.S. military?
Spencer: If you accept that the world is globalized then we should make our focus on maintaining access to things instead of producing them ourselves. One of the keys in order for that system to work is knowing where you get things from. If you don't know where you get things from and you just know that it's not here in the United States, then you increase your risk substantially because if a potential adversary knows where you get things from it becomes a leverage point that they can use against you.
Since we are going down this road of increased globalization of getting a larger percentage of our parts abroad, then we should know where they come from at all levels of production. That is the next problem that we face. And it's not a problem that we face today because we still don't depend substantially on things coming from abroad, though its growing every day. It's a problem that will increase significantly and quite swiftly over time.
Once we know what it is we get and where we get it from, then we have to be careful not to use that knowledge as a further reason to protect American industry. Rather, it should be a hedge against a foreign competitor using it against us.
So our conclusion is with globalization comes transparency, which we don't have right now.
That is one of the areas where we found a lot of disagreement among all of the experts. You talk to someone like Suzanne Patrick [former Undersecretary of Defense for Industrial Policy] who says, "We know where we get everything. We've done foreign-content studies. We've gone down to the second and sometimes third tier."
Well, what about the fourth, fifth and sixth tiers? Once you start asking that question, they start giving you answers such as, "It's too difficult," or "It's unknowable."

Q: Would a system of reporting the location of production be intended specifically for defense enterprises?
Spencer: Yes, that's all we address.

Q: But a lot of what the Pentagon is buying is commercial off the shelf technology. It's dual use. Are you going to require that Cisco disclose where it makes a switch before it's able to sell it to the Defense Department even though it's a commercial product being used in a military application?
Spencer: There needs to be an understanding of where that switch comes from.

Q: So Cisco would have to report to the Pentagon that its switches are coming from China?
Spencer: There needs to be some safe mechanism -- and it doesn't have to be every single item -- for that information to be shared. Knowing where things are made becomes part of the equation for DOD. If they get a certain item from different places, that decreases the risk as well.
I don't expect Cisco Systems to give all this information because the way the system is set up right now I can almost guarantee it will be used against them. But the alternative is to protect everything and continue manufacturing it here. Then you have the same problem of Cisco saying this isn't made here and then people will say we need to make those here. You see that issue emerging with semiconductor chips and all kinds of other things. There is a huge movement on Capitol Hill to prevent these things from going abroad and it's a huge problem. What we're saying is we shouldn't fight it. Not only should we not fight it, but it's not a bad thing. Yet we need to know where it comes from and what is the risk associated with it coming from there.

Q: The number-one guiding principle in your report is for Congress to eliminate "excessive central control." That seems to run counter to this proposal of creating a system of transparency. If you start requiring contractors to report on everything they sell to DOD, aren't you going to need some type of central control for that repository of data?
Spencer: Knowledge of something and control over something are very different things. Look, we're not going to back down from our commitment to the market. We recognize that the military market is unique and that you usually do have a monopsony situation and that it's not the same as a free and open market. We recognize that. What we're trying to protect against is using that as an excuse for having unsubstantiated protectionism such as Buy America. That is the reason we did all of this. We're trying to provide context as to why Buy America is not the right way to go. We're trying to provide context and framework as to why a free market is best for the United States. We show that whenever you over-protect anything like the ship industry, that it's the ship industry that can't compete.
It may have been a good idea to protect the ship industry when that legislation was enacted for a year or two or 10, but what it allows in the long term is a perpetuation of the status quo. It stymies innovation. That level of over-protection created opportunities for the Chinese, the Australians and any other number of people to leap ahead of the Untied States and its capabilities militarily and commercially for these sectors. That is the whole point.

Q: How would you require companies to provide the government with the information on where everything they sell to the government is made?
Spencer: I'm not sure how to do it yet, but I'm confident we can come up with a way because the private sector is not going to want to give the government any information that the government can then turn around and use against them. You had that same dynamic in the initial months and years after September 11, when you had chemical companies that didn't want to provide information. But they're working through that and it might provide a pretty good model for what to do here.

Q: There is a connection that people are making and have been for a while, that if production goes overseas, then you're not creating the wealth that is needed by our society to support a robust military. You see the wealth of the country being drained in both the trade deficit numbers and the budget deficit numbers.
Spencer: This gets into economic issues and I'm not an economist, but I will say this: People assume that the trade deficit is some horrible thing. Our economists say consistently, "Who cares about the trade deficit? What does that really matter? We have very low unemployment." The problems that arise come as a function of anti-market mechanisms. If you subject the economy to the market, then you will have the United States competing in any number of areas. Production has not gone down in the United States. People throw out these manufacturing numbers saying we don't manufacture in the United States. But it's not true; we produce as much or more as we ever did.

Q: There are questions about whether U.S. companies are competing in a free market because they're competing against state-owned enterprises in China, or companies that receive untold numbers of subsidies and tax breaks or don't have to abide by the rule of law, especially with regard to intellectual property. Their good ideas and intellectual property are being stolen. So it's great to have a reliance on free markets, except in a global economy, the free market isn't free. Foreign companies are winning market share by cheating.
Spencer: Should the Department of Defense and the men and women in uniform be the ones who pay the price for that? We argue no. As long as they have what they need when they need it in a timely manner and it's the best available, they should not be subjected to these political debates.

Q: Do you think it's okay for the Chinese to be equipping the U.S. military?
Spencer: Are you going to tell a young 19-year-old Marine that he can't go to the local REI shop and get a set of waterproof gloves that were made in China? Because that is what you're telling him. You're saying his government can't go do that. I don't think you can tell him that. That should be the focus here -- on the men and women in uniform. All these other things are important but it's for other people to take care of. The Pentagon should not be the ones paying the price for that.
Secondly, show me an example of where we didn't have what we needed to fight and win a war in this global environment? We just fought one of the most controversial wars in a long time with Iraq. The French provided us what they needed to provide us. Everybody gave us what they needed to give us. Contracts were upheld. Contracts were maintained. The one example that the [anti-free market people] cite [of a product that wasn't provided by a foreign contractor] is the Swiss and the JDAM crystal. It took us 72 hours to have two separate fixes on that.

Q: In all of your meetings and discussions, did you hear of any other examples beyond that one?
Spencer: No. That's it! That's it! First of all, the Swiss company came around and said, "There was a mistake, here is your JDAM crystal." And, by the way, the manufacturers themselves got on a plane and figured out a way to get new ones. Within that amount of time not one Iraqi target went un-bombed. So until you start showing me some evidence that you're not going to have access -- after we have just gone through this war -- then I'm not buying it.

Q: But that's the Swiss. What happens when hundreds of high-tech components like those crystals have to come from China?
Spencer: As we rely more and more on China, they could use that as a leverage point against us because they could be the adversary, and if they are the adversary, they will use those leverage points against us. That comes back to the transparency. They can't use it against us if we know where it is, or at least it provides us with time because war with China doesn't happen overnight. War with China happens at the end of a chain of events. As you begin down that chain of events, then you need to understand, "Where do I get this widget from? Does this widget come from China and if so, can I build it in Peoria? If I can't build it in Peoria, I need to figure out a place where I can build it. And if I can't build it in Peoria I should be able to scour the globe for it and have the channels in place to easily scour the globe for it."
That is why you focus on access. That is where the transparency and access equations come together.

Q: So there is no real worry about the production capability of the United States?
Spencer: When people start making these arguments that we have to be able to do it at home, no we don't. We just don't. And if we can, great. If I can buy my ammunition at home and Americans can have jobs and Billy and Sally can get an education and their parents never have to go on welfare, well that's just dag-gone perfect, but if that's not the case, then we shouldn't have men and women in uniform who don't have the best weapons when they need them because our government is making the wrong decisions.

Q: Do you think that providing U.S. taxpayer dollars to foreign companies to give them the capability they need to innovate and develop new technology and also produce it for adversaries is okay?
Spencer: What does it mean when you keep technology here? Does it mean that you're not sharing it with the Brits or Australians? So that's another one of our principles: that not all trading partners are created equal. We would take a more open approach to almost all defense technologies with a small handful of allies.

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http://msnbc.msn.com/id/9038294/

Agilent cuts 95 in Roseville

By Mark Larson
Sacramento Business Journal
Aug. 21, 2005

Agilent Technologies Inc. is cutting 95 jobs from its Roseville telecommunications support unit to save money, with some of the jobs going to its branch in Fort Collins, Colo., and others to India.

All 95 are in Agilent's Operations Support Systems group, which supplies products and services to run telecom networks.

Some workers are being offered transfers, said Steve Beitler, spokesman for the Palo Alto-based company. Others are not. He couldn't say how many. Workers were told last week, and some of the jobs will end by September.

"Greater efficiency and cost-effectiveness is always a goal," Beitler said.

The job shift means only 25 employees will remain in Agilent's telecom unit in Roseville. Another 100 work in Folsom, he said, but none is affected by this change.

The jobs will move over the next four to six weeks, he said, reducing Agilent's work force in Roseville from 430 to 335. Another 65 jobs are being spun off in an asset sale, Agilent announced Monday, reducing the company's payroll in all of Greater Sacramento to 370, including the 270 in Placer County.

The comedown of a local startup
The 95 jobs are part of the telecom unit, formerly known as Objective Systems Integrators Inc., that Agilent bought for $665 million in 2000.

Telecom network veterans Tom Johnson and Richard Vento co-founded OSI in Folsom in 1989. On Johnson's kitchen table, they drew up a business plan to develop software to manage broadband and wireless networks and to upgrade phone networks. The company went public in 1995, raising $60 million in its initial public offering.

They hired a CEO, but the company's performance sagged. Johnson and Vento returned after 18 months as co-CEOs, pulling OSI into profitability in the year before Agilent bought it.

With its telecom network management specialty, OSI's operations largely stayed in Roseville and Folsom, and were folded into Agilent's test and measurement division -- the core of Agilent when it was spun off from Hewlett-Packard Co. in 1999.

Testing and measuring were the specialty of Hewlett-Packard when it was founded in 1938; electrical measurement devices were its first successful products.

Cost-shedding agenda
Agilent (NYSE: A) has been shucking overhead costs to improve its financials. On Monday it said it is selling its 6,600-employee semiconductor unit to two private equity firms, Silver Lake Partners of Menlo Park and Kohlberg Kravis Roberts & Co. of New York City, for $2.66 billion.

The sale means 65 people at Agilent's Roseville campus will switch to the new company when the deal closes at the end of October, but won't move, said semiconductor unit spokesman Mark Alden.

Agilent is also reducing its 28,000-person worldwide work force by 1,300 people.

Other moves announced Monday:

The sale of Agilent's stake in Lumileds Lighting LLC, which makes light-emitting diodes, to Royal Philips Electronics for $950 million and repayment of $50 million in Lumileds debt.
The spin-off next year of its "system on a chip" unit. Proceeds of the divestiture would go to shareholders through a $4 billion share repurchase program to begin immediately.
On Wednesday Agilent's shares closed at $31.11, up 63 cents and hitting a 52-week high. The 52-week low is $20.02.

The company earned $104 million, or 21 cents per share, in its third quarter ended July 31, on revenue of $1.69 billion. It had forecast $1.7 billion to $1.8 billion. A year earlier it earned $100 million on revenue of $1.8 billion.

Agilent projects fourth-quarter revenue of $1.79 billion to $1.89 billion.

Placer unemployment remains low
"We hate to see jobs lost," said Ed Graves, Placer County economic development director. But he's optimistic that Placer has replacement jobs available for the laid-off workers, both from Agilent and any from Hewlett-Packard, which plans to cut 14,500 worldwide.

Hewlett-Packard has not said how many jobs will be cut from its Roseville site, which employs 4,000.

Unemployment in Placer County is 4 percent, Graves said, and full employment is generally considered to be 4.5 percent unemployment.

Call centers in South Placer have jobs open, he said.

Local agencies working with the state Employment Development Department can help high-tech engineers displaced by Agilent find a new job, Graves said. "It's always a difficult transition."

The jobs aren't the first to leave South Placer for India. Oracle Corp. moved 175 back-office jobs from Rocklin to India in late 2003 -- 27 percent of its local work force of 650 at the time.

Kim Berry, a local tech labor activist who opposes offshoring of tech jobs, said Agilent's decision shows the trend hasn't stopped. He criticized the loss of jobs suffered by U.S. engineers and the harm done to U.S. technology development.

"It's a one-way trip of jobs and technology that's not coming back," he said.

"The government first needs to recognize the harm that it's causing," Berry said. "There should be tariffs and taxes to encourage U.S. companies to keep their jobs in the U.S."

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http://seattlepi.nwsource.com/business/236999_gates18.html

SEATTLE POST-INTELLIGENCER

Microsoft chairman makes pitch for foreign workers
Thursday, August 18, 2005

By TODD BISHOP

Contrary to popular sentiment, a country can never have too many geniuses.

That was one of the underlying messages from Bill Gates during an appearance before a national convention of state legislators Wednesday in Seattle. Microsoft's founder touched on subjects as diverse as technology, education reform -- and his desire to see the United States make it easier for top foreign technologists to work here.

Gates recalled a time when Microsoft hired a wave of people from India to work in the United States. News reports there lamented the departure of so many brilliant people, he said, while those here bemoaned the arrival of workers perceived as competing with domestic talent.

"It really can't be bad news in both countries," Gates said. "If we sent them back, was the U.S. going to say, 'Good news -- geniuses are gone?' "

It was one of several moments of laughter during the opening session of the National Conference of State Legislatures in downtown Seattle, where Gates was interviewed onstage by University of Washington President Mark Emmert. About 7,000 legislators, policy experts and others are attending the conference this week.

Despite the laughter, Gates' comments on foreign workers ventured into controversial territory. U.S. labor groups oppose efforts by high-tech employers to let more foreign nationals work in the country under special visas.

If the business tactics revealed in Microsoft's antitrust cases have diminished Gates' standing among state leaders, it wasn't apparent from his reception at the event. In some respects, they were fawning.

"I think he is, in a real sense, a philosopher of the modern world," said Virginia state Sen. John Edwards, a Democrat.

He cited Gates' ability to draw connections among the areas he focuses on in his work and philanthropy, such as technology, health care and education.

On the subject of education, Gates reiterated comments from earlier this year, when he told the nation's governors that America's high schools have become "obsolete."

"The nature of global competition is that the work forces, particularly in China and India, are getting better educated," he said.

Gates also touched on areas related to Microsoft. He stressed the importance of digitizing records and told the legislators they should share the best practices they've come up with in areas such as communicating with constituents.

That resonated with Utah state Sen. Patrice Arent, a Democrat who doesn't have her own staff and struggles to keep up with a huge volume of e-mail messages from constituents and others.

She said she'd be happy to hear any further suggestions from Gates on the subject -- even via e-mail.

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http://www.newkerala.com/news.php?action=fullnews&id=15708

21 Aug 2005

Outsourcing boosts economy: British official:
Sydney: A top British industry official Sunday said developed countries should not worry over job losses to low-wage countries like India and China as off-shoring forces an economy upmarket to where the big rewards are.

Sir Digby Jones, director general of the Chamber of British Industry, said Britain had injected more than $27 billion into its economy since 2000 by sending unskilled jobs offshore to places like India and China.

Jones told Australian TV network Channel Nine that the British workforce had retrained and was now better skilled. This transformation had resulted in a more flexible labour market and lower unemployment.

"You've got somebody doing the work that is a commodity, send it away ... have the courage, don't protect the market, let it go," Jones said.

"Skill the person into value-added work, they earn more money so they stimulate the economy, they spend in the high street or they pay down their credit card debt."

He added that profitable companies paid more tax and that money could be spent on hospitals and schools.

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http://www.infoworld.com/article/05/08/23/35OPreality_1.html

Are U.S. workers second-string IT hires?

Why is the Department of Labor keeping U.S. citizens from having equal access to more than 50,000 IT jobs?

Reality Check, By Ephraim Schwartz
August 23, 2005

Why is the Department of Labor refusing to post on its Web site a database of more than 50,000 job openings -- many for IT workers -- for 2006? Are they precluded by law to do so, as a DOL spokesperson claims?

This issue is part of a controversy currently raging between the DOL and professional organizations such as the Programmers Guild about the U.S. Citizenship and Immigration Services (USCIS, formerly the Department of Immigration and Naturalization) H-1B visa quota for 2006.

Heres how USCIS defines an H-1B visa: "Established by the Immigration Act of 1990 (IMMACT), the H-1B nonimmigrant visa category allows U.S. employers to augment the existing labor force with highly skilled temporary workers. H-1B workers are admitted to the United States for an initial period of three years, which may be extended for an additional three years. The H-1B visa program is utilized ... to employ foreign workers in specialty occupations that require theoretical or technical expertise in a specialized field. Typical H-1B occupations include architects, engineers, computer programmers, accountants, doctors and college professors."

The DOL requires that U.S. employers who want to hire someone on an H-1B visa first submit what is called an LCA (Labor Condition Application). The LCA describes (briefly -- sometimes just a title) the opening available. Thus far, the department has received 51,939 LCAs. Programmers Guild President Kim Berry and others are calling for the DOL to post these LCAs and make them searchable, so that anyone can apply for the open positions.

The cap for H-1B visas in 2006 is set at 58,200, but apparently, according to the USCIS Web site, 22,383 visas have already been approved and 29,556 are still pending. Berry says the DOL is "refusing to disclose the opening to U.S. citizens so that they may have equal opportunity to apply for and fill these U.S. jobs."

David James, a spokesman for the DOL, says, "... statutorily speaking, Congress doesnt give the authority to us, the Department, to do what you are asking us to do. We comply to the fullest extent that the law allows us to comply. This is a congressional legislative matter. The statutory language is very narrow about what we can and cannot do."

Berry says no statute specifies when and how LCA records are released. He believes that the DOL is stonewalling requests by organizations like his to publish these openings on the DOL Web site, despite the fact that a foreign worker with a valid 2006 H-1B visa could not start employment until October 1, 2005. Whats more, Berry says that a disproportionate number of these openings are for software engineers and computer programmers.

Employers are under no obligation to hire Americans, but the DOL should be obligated to make the information available to the public before the jobs are filled, not after, says Berry.

Norman Matloff, professor of computer science at the University of California, Davis, e-mailed me that "there is no question that the Department of Labor, ironically, is acting in a manner hostile to labor." I couldnt agree more.

Is the government exempt from treating customers -- in other words, taxpayers -- with respect? Does customer service not exist in its vocabulary? If there is a reason why the DOL cannot post these positions, it should cite the statute. Or better yet, help lobby for a change.

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http://knowledge.wharton.upenn.edu/index.cfm?fa=viewArticle&id=1278&specialId=40

R&D in India: The Curtain Rises, The Play Has Begun...

Motorola's two research and development facilities in India helped produce a sub-$40 cellular phone for emerging markets. Microsoft in January launched its third international research center in India. Intel has 800 India-based engineers working on software and hardware designs for its communication and semiconductor product lines. Other U.S. companies are designing everything from auto parts to consumer electronics in India through outsourcing or setting up their own facilities in areas such as Bangalore, India's Silicon Valley.

All these efforts and more represent just the beginning of advanced research and development in India. If R&D in India were a three-act play, advanced development for products would be in the first act. Basic research, the software engineering and development to support other labs, is probably in the second act, according to experts. "More than 150 international companies are doing R&D in India," noted Arun Shourie, a former minister for privatization in the Indian government at a conference of Indian Institute of Technology alumni held in Washington, D.C., in May. As the number of companies from the U.S. and Europe moving R&D operations to India rises, hopes are high that the third act will be a grand finale that potentially could turn the country into an R&D powerhouse.

"All the leading pharmaceutical companies have set up research operations in India," notes Harbir Singh, a management professor at Wharton. "These companies have realized that India is not just a location where you conduct clinical trials; you can also do basic research. R&D in India isn't just about low-end work." Singh believes that the movement of global R&D into India is still in its early stages, but will expand over time. "Indian firms are starting to realize that they must become innovators," he says. "Their capital outlays are lower than those of their counterparts in the U.S., but that also makes them more selective about choosing projects."

Indeed, experts say that much of the R&D in India is geared toward smaller projects that complement other innovation centers in Silicon Valley and elsewhere. According to Arindam Bhattacharya, a director for the Boston Consulting Group, R&D centers in India focus on what he calls "competencies," or things like two- and three-dimension modeling, computer-aided drafting and add-ons to existing products.

For the year ending March 31, revenues from product development and R&D services in India stood at $3 billion, up from $2.3 billion a year earlier, according to the National Association of Software and Service Companies (NASSCOM), India's information technology services trade association. (Although that $3 billion figure on the surface is impressive, it is $1.8 billion less than what Intel spends on R&D in a year.)

While it's still relatively early in the movement of R&D to India, experts predict gains ahead. The upshot: The next big technological innovations could emerge from India, China or Russia, far away from Silicon Valley. Rafiq Dossani, a senior research scholar for the Stanford University Institute for International Studies, says R&D is simply following the movement of information technology work to India. "You can see it happening as the U.S. information technology giants come to India," says Dossani. "Big consulting firms such as Accenture and IBM seem to be building every other building."

Opportunity or Threat?

The fact that U.S. multinationals are moving information technology and now R&D to India raises a few issues. To some industry veterans such as Bhattacharya, developing products in emerging markets makes sense. Why? The future growth markets for global companies are likely to be in China and India, both of which have different consumer markets than the U.S. By hiring local engineers and researchers, companies can better tailor products to those emerging markets. "Some things are inevitable," says Bhattacharya. "Growth will come from emerging markets, and in poor countries the products, price and value will continue to be different than in the U.S. A designer in Virginia will have limited knowledge of the emerging market. But an Indian designer will make the same design choices that the market wants because he comes from the same background as they do." That vision of the future means that products will be created everywhere and marketed globally. "Different cultures look at innovation through different lenses," says Ashok Deo Bardhan, a researcher at the Haas School of Business at the University of California in Berkeley.

In theory, those globally created markets will fuel the profit and sales results for U.S. companies. For Cadence Design Systems, a San Jose-based company that makes software and hardware to design semiconductors, building R&D outposts in India, China and Russia was primarily a matter of being close to its customers -- chipmakers that have manufacturing operations in those countries. By putting development operations near chipmakers' fabrication plants, Cadence can offer better support. "We're following our customers," says Jaswinder Ahuja, corporate vice president and managing director of Cadence's India operations. "It's easier to collaborate with them if we're local."

Ahuja adds that Cadence's 17-year-old operations in India were built largely to mimic its U.S. counterpart, creating redundancy for development work. For other companies, taking R&D to countries like India can cut costs and bring products to market faster. By playing time zones between, say India, the U.S., Russia and Singapore, the well choreographed company can develop new products and plug them into the U.S.'s infrastructure of lawyers, venture capitalists, accountants and financial markets to create economic value.

But there may be side effects to taking R&D to emerging markets such as India and China. Critics argue that the moves could impact high-paying jobs in the U.S. According to Ron Hira, a professor at the Rochester Institute of Technology and author of Outsourcing America, the big risk is that the U.S. could lose its capacity to innovate. "This is an area where U.S. policymakers and offshoring advocates have been asleep at the wheel," he says. "Many people inside the Beltway say, 'We'll just innovate our way out of this.' They haven't recognized that our normal policy mechanisms for innovation, such as increasing R&D funding and subsidizing universities, are more geographically leaky than they were before."

At the moment, though, much of the R&D in India isn't seen as an immediate threat. And Cadence's Ahuja notes that its R&D work abroad also happens or originates in the U.S. Cadence has 450 R&D employees in its India facility, roughly a third of the number the company employs in the U.S. Its relatively new centers in Russia and China have 110 and 70 R&D employees, respectively. Bottom line: It's too early to assess the impact as R&D goes global. "Is it a threat?" asks Bardhan. "It could be a threat and an opportunity; probably a bit of both."

Bardhan doubts that all R&D will suddenly flee the U.S. to go to low-cost countries. After all, the U.S. is still the second most popular destination for new R&D funding, second only to China, according to a white paper by the Economist Intelligence Unit. India is third. Nevertheless, if R&D fails to create a major technological advance in the next decade -- a prospect that appears unlikely -- companies will view it as a big cost without much of a payoff in additional sales, new products and number of patents. That situation would result in more R&D to low-cost areas just to save money. "If R&D isn't effective, it will be viewed as a cost center that will increasingly go to low-cost areas," says Bardhan.

Going Quietly

U.S. companies are reticent to discuss how much research and development work resides in India. For instance, General Electric, identified by experts as an R&D frontrunner in India, declines to comment, though media reports have pointed out that GE's facility in Bangalore is working on projects in fields ranging from nanotechnology to photonics. When Jeff Immelt, GE's CEO, visited India in 2002, he noted that the company employed 18,000 people in India, including more than 1,000 scientists. "We make some of the most sophisticated medical products here," said Immelt, according to newspaper reports published at the time.

However, companies that have long been established in India don't see a problem disclosing that R&D resides in India -- along with numerous other locations around the globe. These companies cite a comfort level because they have worked in India for several years, attracted primarily by the country's large talent pool of engineers, designers and scientists.

Take Intel, which spent $4.8 billion on R&D globally in 2005 and as of Dec. 31, 2004, had 25,000 workers devoted to it. The company established an R&D center in India in 1999 to design everything from hardware to the software that is used to make its semiconductors work with other programs. Today, Intel has 800 workers in India working on R&D out of 2,500 total employees in the country, says Agnes Kwan, a spokeswoman. "We conduct research around the world. We're in China, Russia, Israel and Spain too." According to Kwan, the development team in India primarily works on communications products that are used worldwide. Teams in India are responsible for their products from inception to launch.

Motorola has had facilities in India since 1991, says Mary V. Lamb, director of corporate communications and public affairs for Motorola Asia Pacific. The company has two R&D facilities in Bangalore and Hyderabad that focus on software development for new and existing Motorola products. "India has emerged as an R&D hub for the company, a position that is being strengthened constantly," says Lamb, adding that Motorola has 2,000 employees in India, of whom 1,700 are involved in software engineering.

Motorola recently announced it will open a lab in India that will cooperate with other research facilities to advance the technology behind its so-called seamless mobility initiative, which aims to provide corporate voice and data communication wherever a worker goes. Lamb says the company has leveraged its presence in India to become the leading telecommunications supplier to the country's army, paramilitary forces/police, and civil authorities. The creation of a sub-$40 phone is aimed at expanding Motorola's foothold in India's consumer market as well as other emerging markets and "connecting the unconnected," she adds.

Microsoft, which opened its research laboratory in Bangalore in January -- the third outside the U.S., after Cambridge, England, and Beijing -- is another company that views India as a microcosm of the developing world. Considering India's diversity in terms of religion, culture, geography, climate and language, Microsoft believes the country offers opportunities to develop technology that can rapidly be deployed elsewhere. "Solutions that work in India are more likely to transfer to other locations because they will have been tested across these barriers," says a company spokesperson.

Microsoft plans to focus on at least four key areas at its India laboratory. These include multilingual systems, in which researchers will work on areas such as speech recognition and user interfaces in several languages; India, with its 22 languages, is considered a good location for such research. Other areas include the development of technologies for emerging markets; geographical information systems; and sensors and sensor network applications. Daniel T. Ling, vice president of research at Microsoft, told the IIT alumni conference in Washington D.C. that one of Microsoft's major goals in setting up the Bangalore lab is to access India's talent pool through collaborative projects with institutions such as IIT. "Our lab doesn't do any product development, just basic research," he said. "There's a drop in students in computer science in the U.S., so a worldwide pool [of researchers] is very important to us."

India: R&D Exporter

Most U.S. companies use R&D in India to create products that are largely exported to the world. A communications chip designed in India can wind up anywhere. In contrast, R&D in China is primarily designed to create products to sell locally. For instance, Intel's R&D centers in China are focused on speech recognition software and designing hardware that can recognize the characters in the Chinese language.

Intel's Kwan says the speech recognition software could be exported in products elsewhere, but the first target is the market in China. Bardhan says companies are conducting R&D in China to gain market expertise. R&D in India is created for global use. "Much of that R&D is imported into the U.S.," says Bardhan.

Still, India faces major challenges as it attempts to grow into an R&D powerhouse. According to Singh, the first is managing the transition from product development to research. "India has a pool of scientific talent that traditionally has been under-funded," he notes. "India is now trying to release its untapped potential as a result of linkages between global firms and Indian educational institutions." Singh believes it will take time and effort for Indian firms to learn how to operate in the global context. "They have to grasp the dimensions of scale -- and recognize that they are competing on a global stage. Many firms will measure up, but many others will not. The barrier is to understand what it means to be world class. Indian companies are being invited to play on the world stage; they now have to learn what it means to play to win."

Saikat Chaudhuri, a management professor at Wharton, believes India faces three crucial challenges as it strives to become a global R&D player. "The first impediment, which is steadily improving, is the intellectual property regime, or perhaps its perception," he says. "If this is perceived as solid, then more mass-scale investments by global multinational firms in India will blossom (for instance, pharmaceutical majors simultaneously developing future blockbuster drugs in India along with the U.S.), producing cutting-edge technologies and products, and thereby creating strong agglomeration effects."

The second challenge, according to Chaudhuri, is the brain drain. "Even though this has come down substantially (only 30% of IIT graduates now leave India, vs. 70% earlier) and we see many reverse brain-drain cases, the fact remains that the very best people often choose to stay abroad, because they perceive opportunities in India at the highest levels of research not to be on par with the West (for example, being a professor at IIT is still not the same as being one at MIT). Luckily, the overall brain drain trend has reversed, so I see the trajectory as positive and it will only be a matter of time where we see more high-profile moves." By way of an example, Chaudhuri mentions Rono Dutta, former president of United Airlines between 1999 and 2002, who moved from the U.S. to India to become the CEO of Air Sahara.

Chaudhuri notes that India can accelerate this positive development, as well as the growth in indigenous R&D by aiming to remove the third obstacle -- lower levels of basic research. "This can be achieved by investing in R&D facilities and improving the research atmosphere at Indian universities," he says. "While there is a set of top universities that teach and research well, it is not sufficient for a country of India's size; many other universities teach well, but are not sufficiently motivated to pursue top research. Even the Indian Institutes of Management suffer from this problem today. Funding and policy changes would be required to effect a change here. High standards and levels of basic research will feed directly into top-notch applied research and product development, both in content and mindset. On all these fronts, I believe India is making good progress and the momentum is in a positive direction. Some policy changes, perhaps through public-private partnerships where possible, could quicken the pace of this evolution."

While the movement of R&D to India is likely to continue, experts say growth is likely to be gradual. Why? Companies have to overcome internal resistance to moving work offshore and become better managers. "There is huge internal resistance within organizations," says BCG's Bhattacharya. "A lot of designers in India for GM have to work with engineers in Flint, Michigan. That can be difficult with different cultures and weak project management. Companies are grappling with a lot of internal issues."

Build or outsource? Bhattacharya says one of the biggest decisions revolves around creating a R&D center or outsourcing to a services company such as Wipro. Bhattacharya adds that it may be more structured to create R&D centers and hire the workers directly.

What returns are expected? According to Bhattacharya, R&D isn't something that will deliver an immediate return even if companies save on costs. "R&D takes time and you need to build knowledge over a series of projects," he says. "The projects have to then be linked with training."

How will work be managed? R&D teams need to be integrated no matter where they are located across the globe. Sophisticated project management and processes to handle changes are required to nip problems in the bud before they become thorny. "You have to create a community," says Bhattacharya. "Engineers need to talk and throw ideas around."

While these issues will take time to resolve, it's clear that U.S. companies will increasingly be managing R&D operations all over the globe, and that India will be a key outpost. That could well be the third act in India's R&D drama. Until then, please hold the applause and the brickbats.

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http://post-gazette.com/pg/05235/558207.stm

Letters to the business editor: 8/23/05

Pittsburgh Post-Gazette

Cheap foreign labor takes jobs

Pittsburgh immigration lawyer Robert Whitehill has made so many errors and omissions in his article on Sunday, "Puts & Calls: Time to reopen the doors" (Sunday) it is hard to rebut them without being tedious; but here goes.

First, according to Nobel prize winning economist Milton Friedman, "There is no doubt that the H-1B program is a benefit to employers, enabling them to get workers at a lower wage, and to that extent, it is a subsidy." Corporate welfare! The 65,000 basic H-1Bs have been filled already because employers fill the subsidized positions first. By hiring H-1Bs instead of Americans, industry saves on average one-third of what it would have to pay an American ($25,000 a year for a programmer).

This is due to loopholes in the H-1B prevailing wage law. There are no protections for Americans when it comes to H-1B. The employer can sponsor a foreigner for H-1B status even if qualified U.S. workers want the job. Unlike for most employment-based permanent residence visas, to get H-1B status an employer need not prove the unavailability of a U.S. worker. As immigration lawyer Joel Stewart put it, "Employers who favor aliens have an arsenal of legal means to reject all U.S. workers who apply." (Joel Stewart, "Legal Rejection of U.S. Workers," Immigration Daily, April 24, 2000.)

Mr. Whitehill correctly noted that Congress authorized 20,000 new H-1B visas for aliens with a master's degree or higher from a U.S. institution. He incorrectly attributed this to addressing the cap. It was not done to address the cap but at the urging of colleges and universities faced with declining enrollment in technology graduate schools. As American jobs have gone to cheap foreign labor in the form of H-1B visas, American have quit going to graduate school. By giving an American job with the degree, they hope to attract more students. What Mr. Whitehill left out is that not all of these visas have been used.

Nor did he mention the new E-3 visa designed exclusively for Australians. It is a more generous version of the H-1B for 10,500 Australians a year. It is more generous in giving away American jobs in that it has no six-year limit and automatically gives the spouse a green card.

Also omitted was the TN visas for the Nafta countries Canada and Mexico. American employers can bring in unlimited numbers from Nafta.

And then there was that little problem last year where the Department of Labor "accidentally" issued 10,000 more H-1B visas than the 65,000 Congress authorized -- something it had done before. Some H-1Bs do not count against the cap.

The most surprising thing for an immigration lawyer to say about the H-1B is Mr. Whitehill's statement, "It is restricted to individuals who have earned a college or university degree or the equivalency and are working in positions that normally require the level of training, education and experience that aliens have." Congress either left out that language or the Department of Labor is not enforcing it. There are H-1Bs for auto muffler mechanics, Mexican cooks (in California no less) and sandwich shop workers.

H-1B is alleged to be a response to a shortage of American workers. Congress relied on industry claims of shortage rather than an independent study -- claims accompanied by a generous campaign donation. Those industry claims have been rebutted by the government's own study.

A shortage is a situation in which the buyer of a product or service is offering a price that is below the market clearing price. Even if supporters of H-1B were correct about a shortage of high-tech workers, H-1B is the wrong solution. What is needed is a free enterprise solution. If H-1B supporters were correct, a shortage should have caused a wage increase for those who have the needed skills. That wage increase would have pulled more American kids into technology courses in college in pursuit of the higher wages and the alleviation of the shortage.

That is not what is happening. Instead the H-1B corporate welfare program is causing a problem where none existed before. With the jobs going to cheap foreign labor, high-tech college enrollment is down. What started as a plan to reduce labor costs may have cost the nation its technology lead.

A real American job killer is what Mr. Whitehill noted: "The H-1B cap was realistically tripled from 65,000 to 195,000 for fiscal years 2001, 2002 and 2003." American programmers got a double hit. Just as the dot.com bubble burst, cheap H-1Bs started showing up. The 195,000 cap went into effect Oct. 1, 2001. On Oct. 30, 2001, I lost my programming job. Unknown to me, five H-1Bs were in the pipeline.

I know three programmers who lost their houses due to being over 50 and unable to find jobs that are being filled by H-1Bs. In the 1980s I hired a programmer for about $35,000 a year. She is now a retail clerk making $8 an hour. If we had no H-1B at all, this would not happen.

JAMES H. MURPHY
Los Angeles

Sold out to highest bidder
American employers want cheap labor. Off-shoring and the H-1B work visa allow them to have it.

Despite the cries of the shortage shouters who complain that Americans are too lazy or stupid to learn tech, there are plenty of American tech workers who are unemployed thanks to the H-1B.

Like the majority of Americans, I used to believe it was illegal to import cheaper labor on work visas to take American jobs. Then my husband and his co-workers lost their computer programming jobs to programmers brought in from India on work visas. The Americans had to train their replacements in order to receive severance. We discovered from the LCA sheets that the Indian programmers are earning about half what the Americans had been earning.

At that time, I naively believed that our elected officials cared about this country and the American workers who made it great. After numerous calls and letters to Washington, D.C., I admitted the sad truth: They've sold us out to the highest bidder. Their collective response to my contacts was, "Americans need training and education."

My husband has training and education. He still lost his job to cheaper imported labor. The shortage shouters also complain that if we don't open wide the doors via nonimmigrant work visas such as the H-1B and L-1, the employers will just off-shore the jobs. What kind of threat is that, when the result is the same? Either the employer imports a worker for the American to train, or they send the job overseas. Same result: Americans with no jobs.

Earlier this year I read an article about a former American programmer who lost his job, couldn't find another and finally became an entrepreneur -- he started his very own pooper-scooper business. Meanwhile, cheaper foreign labor has his former job.

By the way, I happen to believe it is unconscionable for American corporations to expect Americans to fight and die in the U.S. military to protect their interests when they won't hire Americans to work for them.

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http://www.baltimoresun.com/news/opinion/oped/bal-op.sowell18aug18,1,4467094.story?coll=bal-oped-headlines

Our real need: Some plain talk on immigration

By Thomas Sowell

August 18, 2005

IMMIGRATION HAS joined the long list of subjects on which it is taboo to talk sense in plain English. At the heart of much confusion about immigration is the notion that we "need" immigrants - legal or illegal - to do work that Americans won't do.
What we "need" depends on what it costs and what we are willing to pay.

Leaving prices out of the picture is probably the source of more fallacies in economics than any other single misconception. At current wages for low-level jobs and current levels of welfare, there are indeed many jobs that Americans will not take.

That immigrants - especially illegal immigrants - will take those jobs is the reason wages will not rise enough to attract Americans.

It is elementary supply and demand. Yet we continue to hear about the "need" for immigrants to do jobs that Americans will not do - even though these are all jobs that Americans have done for generations before mass illegal immigration became a way of life.

There is more to this issue than economics. The same mindless substitution of rhetoric for thinking that prevails on economic issues also prevails on other aspects of immigration.

Bombings in London, Madrid and 9/11 are all part of the high price being paid today for decades of importing human time bombs from the Arab world. That, in turn, has been the fruit of an unwillingness to filter out people according to the countries they come from.

That squeamishness is still with us today, as shown by all the hand-wringing about "profiling" Middle Eastern airline passengers.

No doubt, most Middle Eastern airline passengers are not carrying any weapons or any bombs - and wouldn't be, even if there were no airport security to go through. But it is also true that most of the time you will not be harmed by playing Russian roulette.

Europeans and Americans have for decades been playing Russian roulette with their loose immigration policies. The intelligentsia has told us that it would be wrong, and even racist, to set limits based on where the immigrants come from.

There are thousands of Americans who might still be alive if we had banned immigration from Saudi Arabia, and perhaps that might be more important than the rhetoric of the intelligentsia.

In that rhetoric, all differences between peoples are magically transformed into mere "stereotypes" and "perceptions."

This blithely ignores data showing, for example, that people who come here from some countries are 10 times more likely to go on welfare than people from some other countries.

The media and the intelligentsia love to say that most immigrants, from whatever group, are good people. But what "most" people from a given country are like is irrelevant.

If 85 percent of group A are fine people and 95 percent of group B are fine people, that means you are going to be importing three times as many undesirables when you let in people from Group A.

Citizen-of-the-world types are resistant to the idea of tightening our borders, and especially resistant to the idea of making a distinction between people from different countries. But the real problem is not their self-righteous fetishes but the fact that they have intimidated so many other people into silence.

In the current climate of political correctness, it is taboo even to mention facts that go against the rosy picture of immigrants. One example: Russia and Nigeria are always listed among the most corrupt countries on earth, and Russian and Nigerian immigrants in the United States have already established patterns of crime well known to law enforcement but kept from the public by the mainstream media.

Self-preservation used to be called the first law of nature. But today, self-preservation has been superseded by a need to preserve the prevailing rhetoric and visions. Immigration is just one of the things we can no longer discuss rationally as a result.

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