American manufacturing outsourced to China

In their outcry over the U.S. House of Representatives' policy to "Buy American" for steel needed for infrastructure projects, the critics seem to have forgotten that by outsourcing most of America's steel manufacturing to China, India, and other so-called low-cost countries, the American steel industry has been decimated to the point that most steel is imported. The American steel manufacturing region is now a rust belt of cluttered factories and laid-off workers surviving on low-wage service jobs. You cannot protect an industry that no longer exists. And this is true about other industries.

China, with its billion-plus impoverished people, has become a magnate for corporations like Hewlett-Packard because of its huge pool of cheap labour. But manufacturing a high-tech product like computer is capital, not labour, intensive.

Relatively small numbers of highly-trained workers are needed to manufacture laptop computers. Then I realized that in order to circumvent Chinese protectionist measures which demand that products for sale in China must be made locally, Hewlett-Packard has set up factories in China while shutting down factories in the United States. By this way, Hewlett-Packard is killing two birds with one stone—they have set up factories in China for the Chinese market, while using the same facilities in China for the American market, multiplying their profits.

But Hewlett-Packard and such other companies fail to realize that by replacing well-paid factory jobs by low-paid service jobs in America, they are eventually undermining their customer base in the U.S. With more and more Americans facing falling incomes due to factory closures, they can no longer afford to buy computers and cameras even though they may be cheaper. The Chinese-based U.S. companies eventually face falling demands. Ultimately, these companies face huge losses, laying off workers in China. All become victims of corporate greed.

Mahmood Elahi

Ottawa, Ont.

Source: http://www.hilltimes.com/