Solutions for U.S. Unemployment and the Loss of Manufacturing Jobs: 29

[corus]

JMW in his post of Dec 17 is quite correct as far as the UK is concerned. In order to reduce unemployment in certain areas, such as Northern Ireland and the North of England, they designated these areas as Enterprise zones. These zones had lower business taxes than other areas so that new businesses would move there. The effect wasn't to just 'shifting the problem' from one area to another within the UK, however, but to attract foreign investors. The net result was for foreign companies to set up businesses there. Rather then 'outsource' their maunfaturing companies in countries where wages are less they found it advantageous to set up business in the UK due to lower taxes. The added attraction was, of course, that they had whole of the european market to sell their products.
To get back to the original question of 'Solutions to US unemployment....' then perhaps Enterprise zones might be worth considering if that hasn't already been tried.

corus

 

[funnelguy]

Absolutely has been done. On local as well as state and federal levels in the states. My experience is that engineering intensive companies sometimes shy away from the truly depressed areas because of a lack of infrastructure.

Also, companies look favorably upon an area with good technical schools. These schools provide newly graduated employees of known caliber through co-op programs and also are useful for continuing education of existing engineers and technicians.

Engineers tend to migrate to where the jobs are and their educations and technical skills allow that.

"Enterprise" zones in the states typically attract mature low tech manufacturing and distribution companies, IMO. The good news is that many of these zones stipulate wages to be paid. But ultimately I think we simply end up shuffling the jobs around and not creating any new ones. At least in the US.

 

[chris9]

Engineering jobs will continue to migrate to Asia until the pay in developing countries has caught up with the west. When this happens many jobs will come back.

In the meantime, only the innovative companies who recognise the importance of long-term research and development will survive. Sadly, I think most companies are investing overseas to reduce cost rather than to improve their products.

Consumers often avoid cheaper goods because of perceived poor quality; take a look at the fashion industry.

 

[jmw]

I have noted the comments made that company directors have an obligation to their shareholders to maximise profits.

I am not happy that this is the whole story. It's a bit like War Criminals saying they were only obeying orders.

This is also a great cop-out for companies caught selling drugs nbanned in one country to another country where they are not (yet) banned, for example.

First, the rules by which a company is controlled are prescribed by a variety of legal requirements and obligations. So, option one, modify the law.

Secondly, we tend to forget shareholders have a voice too. Much more vocal of late. In the past many shareholders have been loath to do anything other than let the board get on with it. But we have seen quite a bit of activity regarding "Goldern Parachutes" and the excessive bonuses paid to CEOs even when their stewardship is sending the company down the tubes. We have also seen some quite effective campaigns targetting "ethical" investments.

If the shareholders declare that they don't won't to see jobs going offshore, they can say so and the board is then responsible to follow that directive.

 

[corus]

Sadly the idea that it is the people, as shareholders, that own the companies and CEOs must obey their will is far from the truth. Most shareholders are in fact large pension companies and their ilk, who invest their money in stocks and shares. They themselves wish to see increasing profits from companies, where ever that labour comes from to provide those profits.

corus

 

[Zapster]

People vote with their feet. When you walk into a Wal-Mart store you are voting for more jobs to go overseas. Why is this a problem, when it is what the majority of people want? Note: this is not what I want. However, if asked, I wonder how many people believe in banning products from developing nations?

 

[chris9]

I believe the majority of shareholders want to make maximum profit in the shortest time possible. Very few will be happy to forsake short-term profits for long term stability and growth.

Zapster is right, people vote with their feet. When the going gets tough many shareholders will sell stock to limit the damage. This reduces share price further and the CEO then decides to reduce the R&D budget to try and balance things out.

James Dyson is an example of the exact opposite. A few years ago I had a conversation with one of his engineers. He told me that sales were suffering and profits were falling. So what does James Dyson do to turn things around? He doubles his R&D budget!!!!

I’ve just bought a Dyson Vacuum cleaner for £240. I could have got a similar one for £40 with a bag but they do a poor job. I am more than happy to pay extra for a product that has been driven by an engineer who puts functionality first. It is worth every penny.

Dyson has also moved most of his manufacturing to Malaysia but insists on retaining R&D in the UK. Maybe this is how engineers in the West can successfully compete in a global market, retain product knowledge and outsource some of the manufacturing?