Outsourcing (True Story)

J.Otto

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A Japanese company (Toyota) and an American company (Ford Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.

Feeling a deeper study was in order; American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing. Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 2 area steering superintendents and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners and free pens for the rowers. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses. The pension program was trimmed to 'equal the competition' and some of the resultant savings were channeled into morale boosting programs and teamwork posters.

The next year the Japanese won by two miles. Humiliated, the American management laid-off one rower, halted development of a new canoe, sold all the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses. The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year's racing team was out-sourced to India . Sadly, the End.

Here's something else to think about: Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages. TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results: TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses. Ford folks are still scratching their heads, and collecting bonuses. IF THIS WEREN'T SO TRUE IT MIGHT BE FUNNY
 

TheSulaco

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Not saying I am for it, but the majority of all foreign manufacturing plants located in the US are non-union. The U.A.W has tried many times to unionize these facilities but have failed in most of their attempts. Labor costs are drastically cheaper at the non-union plants.
 

LearLove

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Along the same lines - what is better for the US economy/worker?

Buying a Toyota built in the USA or a Ford built in Mexico?
 

airksk

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Uh, great true story. Except Ford has had 10 consecutive profitable quarters, and made $1.6 billion last quarter. So far they have made $7.7 billion this year. They also just signed a 4 year contract with the UAW.
 

BUDDHA145

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I bet he owns a hummer!!! xD


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XR650R

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Not saying I am for it, but the majority of all foreign manufacturing plants located in the US are non-union. The U.A.W has tried many times to unionize these facilities but have failed in most of their attempts. Labor costs are drastically cheaper at the non-union plants.
As a member of a union, I feel qualified to say say this. Being non-union dosen't necessarily mean you work in a sweat shop. Most of the factories are located in low cost of living areas, the workers have decent bennifits, good morale, and wages in line with the job they actually do.
That being said, im glad to see Ford (and GM and Chrysler too) sucessful these days. Their sucess might actually have something to do with the fact that their finally putting out a product one might actually desire to have. Go figure.
 

Smarta$$

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The story is so true in the sense of how US corps are run.
 

J.Otto

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Uh, great true story. Except Ford has had 10 consecutive profitable quarters, and made $1.6 billion last quarter. So far they have made $7.7 billion this year. They also just signed a 4 year contract with the UAW.

The story is a bit old, but I do believe it was true at one point. anyway... still a great example of how American corporate mangement thinks!

jobs should remain in our borders. this stuff has been going on for too long, and we wonder why our economy is troubled. So many jobs have been exported outside, and it only benefits the top execs and shreholders; not the workers or economy.
 

AlbieF15

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Along the same lines - what is better for the US economy/worker?

Buying a Toyota built in the USA or a Ford built in Mexico?
Ive wondered this and also what the impact is on all the new plants in the SE US. Kia is in Georgia near my old college, and Mercedes, vW, and BMW are all busy in then the heart of Dixie. Nissan, Hundai, and Toyota all make cars down south as well. Does their growth, and the non-union jobs they created offset (on a national level) the pain in Michigan, Ohio, and other traditional US auto producing areas? What is the total plus and minus total? I'd love to see some studies.

I bought a 2008 Toyota...built in San Antonio. Would I have helped our nation more buying a Ford? It's not a rhetorical or smart -ss questions...I really wonder.
 

Freebrd

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the profits go back to Japan, Korea, & Germany, not here
 

J.Otto

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the profits go back to Japan, Korea, & Germany, not here

They sure do. But OUR workers can support their families and trickle money into our economy.

US companies that manufacture outside the borders, keep their savings and allot it to the upper execs, while none of our workers get any nenfit from it. This country has gotten too top-heavy. The upper mangement and their corporation get high salaries and shields it from us taxes.

At least this way, our workers can line their pockets and spend in the us economy.
 

JohnQ

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Usually seeing some headline with "true story" in parenthesis next to it almost guarantees it is some piece of fictitious BS. I'm sure you could google the exact text of this "true story" and get 10,000 hits.

There may be some good points, but Ford has been solidly profitable for some time now, without government bailouts to boot.
 

AC560

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US companies that manufacture outside the borders, keep their savings and allot it to the upper execs, while none of our workers get any nenfit from it. This country has gotten too top-heavy. The upper mangement and their corporation get high salaries and shields it from us taxes.
First it is important to point out that 4% of the households in America have incomes over $200K (which a fair chunk of mainline Captains fall into) and 25% of households report $85K and above (a good chunk of everyone else). Every union leader in every industry I can think of falls into that 1% (income $343,927 per annum in 2009) that apparently we are all supposed to hate. Most in the aviation industry myself included aren't exactly what I would call poor or under privileged in America.

Secondly everyone does benefit from manufacturing offshore in the terms of lower costing goods. Low value items like toys, household items, etc. would be 2-3x as much to be manufactured in the US. Even Mexico is not a cost effective solution. Think about it, people make toys in China and put them on airplanes to fly here and be sold and that is cheaper then making the same toy 50 miles away from the store where it will be sold. That is how much cheaper China is and without it pretty much everyone on the Cargo forums here would be employed elsewhere.

What globalization has done is increased everyone's standard of living. A family making $85K a year is arguably living better and longer than a millionaire did 100yrs ago. Just as mass industrialization destroyed the 300 odd car manufacturers we used to have in America, buggy whip makers, the local butcher, etc. So has globalization destroyed a segment of the work force. One can either adapt and retrain or go hungry. Clearly the bug whip makers figured out at some point it was time to do something else and found work in a new field.

The Japanese economy has been in the toilet for the last 20yrs, nice story and it incites the proletariat but it isn't any reflection of reality.
 

Dumb Pilot

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the profits go back to Japan, Korea, & Germany, not here
Are you sure? How much of the U.S. debt have Japan, Korea & Germany taken on? The health of our economy depends a lot on the health of the economies of the rest of the world, If you want a better example than just a couple of days ago the world bank, China (by relaxing some of their lending parameters) and Germany placed an infusion of funds to try and stabilize the European market, You think that had nothing to do with our economy? think again.
The Japanese economy has been in the toilet for the last 20yrs, nice story and it incites the proletariat but it isn't any reflection of reality.
It has? That is why they were called upon recently to infuse money into the European economy because their economy is in the toilet?

Protectionism is a ridiculous strategy in a global market, quality and innovation is however the way forward, the U.S. has to go back to the days when something that had a label "Made In The USA" meant that it was the best quality product available anywhere in the world, Germany doesn't have cheap labor costs, Japan doesn't either and neither does Korea and they are heavily unionized countries, but they have thrived in a global economy and have become global manufacturing giants, Why? Research and development, a relentless attention to quality, and industrialization. Look at what China is doing now and you will get a glance at to what it takes to go forward in the next 30 to 50 years, they are throwing money at the best minds they can possibly hire from all over Asia and the rest of the world, they are investing in their human resources like crazy with more Chinese young scientists and engineers in school now than all of the western world combined, If you think that they will continue their growth based on making cheap toys then you are very naive. Industrialization, research and development, investment in human resources (and that includes well paid and motivated employees) that will bring back the sense of pride and competition that produces high quality.
 

Donald

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the profits go back to Japan, Korea, & Germany, not here
Not all of it. They pay our workers with some of it. I'm sure they pay rent, property taxes, maintenance and upkeep of the facility, etc.

I agree it is disgusting that some top execs get huge bonuses when their company is losing money. However, if we are going to make it illegal, lets make sure we hit entertainers as well. The last time I took my family to a professional football game, it cost me $400. I used to go to movies a lot more too.
 

Dumb Pilot

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I bought a 2008 Toyota...built in San Antonio. Would I have helped our nation more buying a Ford? It's not a rhetorical or smart -ss questions...I really wonder.
[FONT=Arial, Helvetica, sans-serif]When was the last time you took that Toyota to the shop? besides regular maintenance that is, I have a feeling that the economy is not getting too many of your dollars on repairs. We have to go back to the days when we bought American products because they were the best of the best, we have to stop thinking about "protectionism" and all those unrealistic strategies and go back on the attack with quality and production, If we go back to the manufacturing days, the economy will follow, [/FONT][FONT=Arial, Helvetica, sans-serif]transferring to a consumer based economy was a mistake that needs to be reversed[/FONT]
 

AC560

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It has? That is why they were called upon recently to infuse money into the European economy because their economy is in the toilet?
The Japanese economy is not what I would call a great picture since the mid 80's. Does it remind you of another country which has double digit growth but an overall negative population growth and an aging population that starts with a C and ends with an a?

Are you sure? How much of the U.S. debt have Japan, Korea & Germany taken on?
Japan @ $956B
Korea @ $33B
Germany @ $58B

Roughly $4.7Tn of our @ $15Tn in debt is in T-Bills owned by foreign countries. 99% of Japans debt is owned by Japanese who are retiring and cashing it in, see the problem with owning all your own debt?

[FONT=Arial, Helvetica, sans-serif]If we go back to the manufacturing days, the economy will follow, [/FONT][FONT=Arial, Helvetica, sans-serif]transferring to a consumer based economy was a mistake that needs to be reversed[/FONT]
We are a manufacturing based economy, a highly skilled and expensive one. Where do you think MRI's; Boeing 747-800's; and other exceptionally complicated pieces of machinery get designed and made.

What we aren't is a country which will make a plastic drinking glass for $.0001 per unit. There is nothing an American worker can do to contribute to a better drinking glass, it is purely a price discussion.

What you confuse is the idea if we pay a worker $70 in wages and benefits to make plastic drinking glasses it somehow advances the standard of living. It doesn't it just makes a a drinking glass cost $20 instead of $.50. Don't confuse wages with quality of living.

Warren Buffet is right when he says the best day to be born in America is today. Certainly if you disagree you can always immigrate to China, get there soon so you beat the rush.
 

Dumb Pilot

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Your lack of understanding what is happening with the world doesn't surprise me, on the mean time we are getting rides to the space station with the Russians.
 

AC560

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Your lack of understanding what is happening with the world doesn't surprise me, on the mean time we are getting rides to the space station with the Russians.
Clearly somebody in the conversation has a lack of understanding of what is happening in the world but it isn't me. Things are not all that great in any economy these days but the American economy has weathered better than most and continues to be the strongest and best economy in the world with the highest standard of living.
 

ackattacker

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the profits go back to Japan, Korea, & Germany, not here
A small percentage of the profits goes to pay the executive salaries and corporate headquarters staff in the home county. The rest ultimately goes to the shareholders, which could be anybody anywhere. You can easily buy stock in Toyota and reap the profit as well, it's listed on the New York Stock Exchange.

In this day and age the concept of a corporation having a specific nationality is more a matter of psychology and pride than actual economics.
 
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