Hm... reverse outsourcing?

[dagibbs]

Chinese firms off-shoring to the USA?

http://www.latimes.com/news/nationworld/world/la-fi-chinainvest5-2008may05,0,2206623.story?page=1

gacked from boingboing

Comments

[boywhocantsayno.livejournal.com]

Shouldn't that be called "insourcing," then? :P

[dagibbs.livejournal.com]

Well, from the originating firms point of view, it is still outsourcing. But, it is in the reverse of the usual direction.

[foms.livejournal.com]

I'm having trouble understanding the math. If he saves $1.5M on the land and saves ~$0.40/kWh on power (presuming that electricity in SC costs somewhere in the neighbourhood of $0.20/kWh) but loses 120 employees times $10.00/hour less the tax credit on labour then he has to use a huge amount of electricity to come out even over a few years.

I suspect that there are other factors.

[dagibbs.livejournal.com]

I wonder how much power he uses? There was the mention of consistent power being one of the other factors. If the product is for the US, there will likely be shipping cost reductions, and also there may be tariff reductions and political/marketing advantage to "made in the USA".

[elizilla]

He may get more out of each employee. For all the talk of laziness and over-entitlement on the part of American workers, I have seen a number of studies where they find that American workers are more productive than workers in other countries. They may not actually work harder, but infrastructure difficulties, like the power failures mentioned in the article, can translate into a lot of employee hours wasted. And from what I hear at my job, it seems that the employee turnover rate in certain countries can be very high. Don't underestimate the cost of recruiting and hiring new employees, even for low-skill, low-paying jobs.

I've also talked to people who have contracted things overseas, and they report a lot of waste as all the suppliers and contractors race to the bottom. Seam allowances get reduced, polystyrene gets substituted for polypropylene, 16 gauge wire gets substituted for 14 gauge, etc. When these substitutions happen, if you don't catch them in time, a lot of employee hours are wasted in assembling things from substandard materials, in substandard fashion. They will probably have less trouble with this in SC, because they'll have more people who understand that specifications exist for a reason; they aren't just a failure to realize it could be done cheaper.