Where are the Jobs? For Many Companies, Overseas

**min0 lee** · 12-31-2010, 02:22 PM

Gotta love these politicians.
Where are the Jobs? For Many Companies, Overseas - CBS News

Corporate profits are up. Stock prices are up. So why isn't anyone hiring?

Actually, many American companies are just maybe not in your town. They're hiring overseas, where sales are surging and the pipeline of orders is fat.

More than half of the 15,000 people that Caterpillar Inc. has hired this year were outside the U.S. UPS is also hiring at a faster clip overseas. For both companies, sales in international markets are growing at least twice as fast as domestically.

The trend helps explain why unemployment remains high in the United States, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown. But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated think semiconductors and software, not toys and clothes.

And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Meanwhile, consumer demand in the U.S. has been subdued. Despite a strong holiday shopping season, Americans are still spending 3 percent less than before the recession on essential items like clothing and more than 10 percent less on jewelry, furniture, electronics, and big appliances, according to MasterCard's SpendingPulse.

"Companies will go where there are fast-growing markets and big profits," says Jeffrey Sachs, globalization expert and economist at Columbia University. "What's changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out." With the future looking brighter overseas, companies are building there, too. Caterpillar, maker of the signature yellow bulldozers and tractors, has invested in three new plants in China in just the last two months to design and manufacture equipment. The decision is based on demand: Asia-Pacific sales soared 38 percent in the first nine months of the year, compared with 16 percent in the U.S. Caterpillar stock is up 65 percent this year.

"There is a shift in economic power that's going on and will continue. China just became the world's second-largest economy," says David Wyss, chief economist at Standard & Poor's, who notes that half of the revenue for companies in the S&P 500 in the last couple of years has come from outside the U.S.

Take the example of DuPont, which wowed the world in 1938 with nylon stockings. Known as one of the most innovative American companies of the 20th century, DuPont now sells less than a third of its products in the U.S. In the first nine months of this year, sales to the Asia-Pacific region grew 50 percent, triple the U.S. rate. Its stock is up 47 percent this year.

DuPont's work force reflects the shift in its growth: In a presentation on emerging markets, the company said its number of employees in the U.S. shrank by 9 percent between January 2005 and October 2009. In the same period, its work force grew 54 percent in the Asia-Pacific countries.

"We are a global player out to succeed in any geography where we participate in," says Thomas M. Connelly, chief innovation officer at DuPont. "We want our resources close to where our customers are, to tailor products to their needs."

While most of DuPont's research labs are still stateside, Connelly says he's impressed with the company's overseas talent. The company opened a large research facility in Hyderabad, India, in 2008.

A key factor behind this runaway international growth is the rise of the middle class in these emerging countries. By 2015, for the first time, the number of consumers in Asia's middle class will equal those in Europe and North America combined. "All of the growth over the next 10 years is happening in Asia," says Homi Kharas, a senior fellow at the Brookings Institute and formerly the World Bank's chief economist for East Asia and the Pacific.

Coca-Cola CEO Muhtar Kent often points out that a billion consumers will enter the middle class during the coming decade, mostly in Africa, China and India. He is aggressively targeting those markets. Of Coke's 93,000 global employees, less than 13 percent were in the U.S. in 2009, down from 19 percent five years ago.

The company would not say how many new U.S. hires it has made in 2010. But its latest new investments are overseas, including $240 million for three bottling plants in Inner Mongolia as part of a three-year, $2 billion investment in China. The three plants will create 2,000 new jobs in the area. In September, Coca-Cola pledged $1 billion to the Philippines over five years.

The strategy isn't restricted to just the largest American companies. Entrepreneurs, whether in technology, retail or in manufacturing, today hire globally from the start.

Consider Vast.com, which powers the search engines of sites like Yahoo Travel and Aol Autos. The company was founded in 2005 with employees based in San Francisco and Serbia.

Harvard Business School Dean Nitin Nohria worries that the trend could be dangerous. In an article in the November issue of the Harvard Business Review, he says that if U.S. businesses keep prospering while Americans are struggling, business leaders will lose legitimacy in society. He exhorted business leaders to find a way to link growth with job creation at home.

Other economists, like Columbia University's Sachs, say multinational corporations have no choice, especially now that the quality of the global work force has improved. Sachs points out that the U.S. is falling in most global rankings for higher education while others are rising.
"We are not fulfilling the educational needs of our young people," says Sachs. "In a globalized world, there are serious consequences to that."

**theCaptn'** · 12-31-2010, 02:32 PM

Americans are too expensive and too lazy to employ - I would have 10 dotheads for half the price any day.

. . blame the corporations, naturally

**min0 lee** · 12-31-2010, 04:04 PM

Originally Posted by theCaptn'

Americans are too expensive and too lazy to employ - I would have 10 dotheads for half the price any day.

. . blame the corporations, naturally

Not fair, the Americans outsourced you to China where all the jobs are.

**Dark Geared God** · 12-31-2010, 06:45 PM

Originally Posted by theCaptn'

Americans are too expensive and too lazy to employ - I would have 10 dotheads for half the price any day.

. . blame the corporations, naturally

I agree I wait for my welfare check and free cheese very month damn lazy round eye

**Big Smoothy** · 12-31-2010, 06:49 PM

The process of globalization has gone on for for decades.

But it's now, that we are feeling and realizing the result - and the reality is very bad, to say the least.

As for the corporations, it's all about stock performance. If the stock price is flat or below expectations for a period of time, the CEO gets the chop.

Employees? Not considered important and treated like garbage.

A terrible business model.

Remember, the slogan for the braindead sheep: "freedom is not free."

**Dark Geared God** · 12-31-2010, 06:59 PM

Originally Posted by Big Smoothy

The process of globalization has gone on for for decades.

But it's now, that we are feeling and realizing the result - and the reality is very bad, to say the least.

As for the corporations, it's all about stock performance. If the stock price is flat or below expectations for a period of time, the CEO gets the chop.

Employees? Not considered important and treated like garbage.

A terrible business model.

Remember, the slogan for the braindead sheep: "freedom is not free."

i think it's bush's fault all of it

**lnvanry** · 12-31-2010, 08:44 PM

I can't speak for all the companies in the articles but I can speak for CAT.

The company has been using a transnational strategy since the late 80s and is THE successful case study for all other companies looking implement this type of strategy. They do not "outsource" American jobs...they create jobs in indigenous markets to compete with respective indigenous companies with regard to labor rates, local raw materials, etc...all the while protecting against foreign transaction exposure

Example:
Country X has a growing market. CAT builds brick and mortar plants (or subs out manufacturing to local country X manufacturers while controlling final assembly) to manufacture its parts and employs local employees at these facilities. It now can compete with country X competitors by having access to same local raw materials as well as labor rates. Revenues and profits in country X will be used to cover expenses incurred in country X as well.

Additionally, most countries have certain customized needs that CAT doesn't implement globally...it tailors these aspects in its local manufacturing plants. Country X needs bulldozers that operate with reduced emissions and reduced noise pollution (yes, there req'ts actually exist outside the US).

Bottom line, it manufactures local products for local markets. It doesn't necessarily manufacture parts in country X and then export them to the US or Country Y and Z. What is made in country X generally stays in country X. CAT makes very very large and heavy equipment. It is cost prohibitive for it ship parts around the world even it if has cheaper rates in China. If it wants to capitalize on cheaper labor for the US market, it moves its plants to southern states (where the UAW isn't as powerful) or to Mexico or Canada when applicable.

Of course this CBS article fails to explain any of this and misleads the reader to believe CAT is exporting jobs to China and screwing American employees in the process. CAT creates jobs in the markets where it has demand and growth. CAT already adds to the US export market as is

Pls read for yourself if you'd like:
http://www.caterpillar.com/cda/files...inal+814pm.pdf

When the US has an increase in demand for CATs products, then CAT will create more jobs and plants here...just sayin

**Glycomann** · 12-31-2010, 08:58 PM

Originally Posted by theCaptn'

Americans are too expensive and too lazy to employ - I would have 10 dotheads for half the price any day.

. . blame the corporations, naturally

I employed a Middle Asian PH.D and he was F***ing retarded. I'm still cleaning up his messes 3 months after I fired his ass.

**Big Smoothy** · 12-31-2010, 10:11 PM

Originally Posted by Dark Geared God

i think it's bush's fault all of it

These economic policies have been the same for the last 6 decades. Post WWII is then the began to increase.

I think GWB accelerated it, and Obama is continuing the same policies.

These eonomic policies are very difficult to change.

The powerful interests of massive corporations, and the military industrial complex, and the Federal Reserve handing out free money electronically, to the very same organizations and people that created this mess because of their greed and corruption.

Now, what jobs are there in America?

Low paying service sector jobs with no benefits.

**OfficerFarva** · 12-31-2010, 10:38 PM

It's pretty easy to find one in my province if you're in any way at all related to oil business work.

**lnvanry** · 12-31-2010, 11:54 PM

Originally Posted by Big Smoothy

These economic policies have been the same for the last 6 decades. Post WWII is then the began to increase.

I think GWB accelerated it, and Obama is continuing the same policies.

These eonomic policies are very difficult to change.

The powerful interests of massive corporations, and the military industrial complex, and the Federal Reserve handing out free money electronically, to the very same organizations and people that created this mess because of their greed and corruption.

Now, what jobs are there in America?

Low paying service sector jobs with no benefits.

The defense sector is probably the only piece of our economy that has NOT moved in the accelerated direction of globalization (with the exception of a few programs like F-35, SM-3, MEADS, and ESSM). Its a made in America, production and high technology oriented industry...which is why is so critical to our nation (outside the obvious national security priority).

**Zaphod** · 01-01-2011, 03:08 AM

Originally Posted by lnvanry

The defense sector is probably the only piece of our economy that has NOT moved in the accelerated direction of globalization (with the exception of a few programs like F-35, SM-3, MEADS, and ESSM). Its a made in America, production and high technology oriented industry...which is why is so critical to our nation (outside the obvious national security priority).

Actually, it has moved at an accelerated pace overseas. All in the name of higher profits.

**Big Smoothy** · 01-01-2011, 07:25 AM

Originally Posted by lnvanry

The defense sector is probably the only piece of our economy that has NOT moved in the accelerated direction of globalization (with the exception of a few programs like F-35, SM-3, MEADS, and ESSM). Its a made in America, production and high technology oriented industry...which is why is so critical to our nation (outside the obvious national security priority).

Invanry,

I greened you for the great post on CAT.

You are very knowledgable.

In my post above I was referring to the fact that Wall St. and the Military Industrial Complex is taken care of. They get the money. They are in a caste like status.

This is bad; this is wrong.

**LAM** · 01-01-2011, 10:47 AM

Originally Posted by Big Smoothy

I think GWB accelerated it, and Obama is continuing the same policies.

These eonomic policies are very difficult to change.

The powerful interests of massive corporations, and the military industrial complex, and the Federal Reserve handing out free money electronically, to the very same organizations and people that created this mess because of their greed and corruption.

Now, what jobs are there in America?

Low paying service sector jobs with no benefits.

this is the major problem with this current recession as each one in the US gets worst and is caused by different factors than the last since the solution from the last can not be applied to the current.

Big Smoothy...what happened to the "system" when previously the interest rates at the Fed were directly proportional to the unemployment rate? I don't really know much about the workings of the Fed.

I don't think there is ever going to be any sort of great "rebound" at the end of this recession, we will simply stop hemorrhaging jobs at some point.

**lnvanry** · 01-01-2011, 10:48 AM

Originally Posted by Zaphod

Actually, it has moved at an accelerated pace overseas. All in the name of higher profits.

Completely disagree...very little has gone overseas (with the few exceptions listed in my below post). If the defense sector imports cable harnesses or tires its not exactly a "globalized" product.

In most foreign made components and parts are in the name of reduced costs through cheaper rates and materials...its called Offsets (I'm sure its on wiki). Manufactures offer up local content in order to capture a sale. Defense goods usually aren't cheap and the end user in country X wants a way offset the mass $ leaving the country.

Offset agreement - Wikipedia, the free encyclopedia

**LAM** · 01-01-2011, 11:54 AM

Originally Posted by lnvanry

Completely disagree...very little has gone overseas (with the few exceptions listed in my below post). If the defense sector imports cable harnesses or tires its not exactly a "globalized" product.

look at all the call center jobs that have gone overseas. a large part of them they don't directly deal with banks (revolving credit accounts, auto loans, etc.) have been lost never to return.

**Big Smoothy** · 01-01-2011, 04:57 PM

Originally Posted by LAM

Big Smoothy...what happened to the "system" when previously the interest rates at the Fed were directly proportional to the unemployment rate? I don't really know much about the workings of the Fed.

Is your question rhetorical?

I assume you're referring to the days previous to Volcker at the Fed. Interest rates were very high, and (if I recall correctly) Volcker, (who was pushed out by the Reagan admin) and then enetered Greenspan who pursued the policy of keeping interest rates low.

I don't know much either.

Recently (apparently) The Fed has reduced it's too objective to one: dropping to goal of full unemployment, and focusing only on interest rates.

Sure is a punishment for those who try to save.

**lnvanry** · 01-01-2011, 07:17 PM

Originally Posted by LAM

look at all the call center jobs that have gone overseas. a large part of them they don't directly deal with banks (revolving credit accounts, auto loans, etc.) have been lost never to return.

The comment was in regards to the defense sector...

there isn't a 1800 hotline for F-15 pilots to call when some fails, hehehe.

**lnvanry** · 01-01-2011, 07:21 PM

Originally Posted by Big Smoothy

Is your question rhetorical?

I assume you're referring to the days previous to Volcker at the Fed. Interest rates were very high, and (if I recall correctly) Volcker, (who was pushed out by the Reagan admin) and then enetered Greenspan who pursued the policy of keeping interest rates low.

I don't know much either.

Recently (apparently) The Fed has reduced it's too objective to one: dropping to goal of full unemployment, and focusing only on interest rates.

Sure is a punishment for those who try to save.

I'd say the FEDs the single object is maintain USD and USG dominance (keeping unemployment is a subset) via moving the economy forward while keeping our nation's currency competitive...all through the channel of inflation, aka monetary expansion.

**Big Smoothy** · 01-01-2011, 09:55 PM

Originally Posted by lnvanry

I'd say the FEDs the single object is maintain USD and USG dominance (keeping unemployment is a subset) via moving the economy forward while keeping our nation's currency competitive...all through the channel of inflation, aka monetary expansion.

I agree.

It seems that inflation is here, and will be here for 2011.

I'll also include gasoline prices because so many people need & use gasoline.

Inflation is in the supermarkets also, apparently.

How much? We'll see.

**theCaptn'** · 01-02-2011, 04:46 AM

Blame Big Smoothy and other Jews for this mess

**vortrit** · 01-02-2011, 05:28 AM

Originally Posted by Big Smoothy

Inflation is in the supermarkets also, apparently.

Bad news for fat chicks. Bad news for vortrit. He like pokin' fatties!

**Big Smoothy** · 01-02-2011, 09:41 AM

Originally Posted by theCaptn'

Blame Big Smoothy and other Jews for this mess

Now, cap'n.

You know I'm not Jewish nor of Jewish descent.

And there is NOTHING wrong with being Jewish or being of Jewish descent.

And I don't eat candy, either.

Sheesh. Put it ta rest will ya?

**LAM** · 01-03-2011, 12:21 PM

Originally Posted by lnvanry

The comment was in regards to the defense sector...

there isn't a 1800 hotline for F-15 pilots to call when some fails, hehehe.

at least not yet! lol

**KentDog** · 01-03-2011, 06:51 PM

Great posts, Invanry.

I can support both sides of the story in regards to American manufacturing jobs, through my personal work experiences over the past three years specifically in the field of sourcing: 1. For a sub-supplier of John Deere and 2. Currently employed at a Fortune 500 Aerospace & Defense company.

At my previous employer, there was high pressure by our customers to cost reduce components that ended up as US sales, but a lot of the product produced overseas was also new business for global customers in emerging markets: 1. Because that's where the most demand was for new equipment such as tractors and 2. Because the country's government required a certain percentage of the product to have been produced within the country. That being said, I would say the end sale of global product was to ~50/50 domestic vs global customer, but that percentage also had a lot to do with the product we provided and the company's business focus (in addition to actual customer demand).

The stuff that was produced overseas... we're talking simple, high-volume components that go into machinery; easily produced and easily tested. None of the complex components were outsourced and all assemblies were still done in the US. It really speaks to the point that the US is no longer competitive when it comes to easily manufactured goods. And why would it be, with high labor costs that would make the product impossible to sell? Ex. American customers would simply import product from Japan's Komatsu. Unless you can convince US customers to pay much more for US made product, there will continue to be pressures to cost reduce to compete with global competitors.

On the flip side, I currently work for an aerospace and defense company with sales ~50/50 commercial vs government. Nearly 100% of the focus of our globalization strategy is to target NEW business overseas. This is because overseas is where all the new business for aerospace is (or expected to be), and to repeat a previous point, because the foreign customer's government required a percentage of the end product to be produced within their country. This second point is a big reason many American companies are setting up shop overseas.

To add to Invanry's comment regarding defense... the US cannot send this stuff overseas, as it is governed by ITAR laws and regulations (ITAR = International Traffic and Arms Regulations). Simply put, it is in our best interest to keep this technology within the US.

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