Individuals seeing their former source of livelihood leave the country are understandably upset, if not downright angry.
Those still employed who earn their living in the same industry are likewise understandably nervous. After all, the definition of a recession is when your neighbor loses his job; a depression is when you lose yours.
I don’t mean to minimize the pain and anguish these individuals and their families are suffering, but what we are experiencing now is nothing new. In fact, it has been going on in one form or another for hundreds, if not thousands, of years.
As Henry Ford once said, “Competition is the keen cutting edge of business, always shaving away at costs.”
That’s all offshore “outsourcing” really is — a byproduct of competition in an increasingly global economy.
All one has to do is look back in time on the numerous industries that made this country an economic powerhouse … and take note of the fact that many of these same industries no longer exist, at least not in this country.
Throughout history, any number of countries have taken their turn as major economic powers, each because it was able to provide a good or service that either no one else could, or at a price that no one else could beat.
That’s the essence of a market economy. It’s just simple math: profits and losses, revenue and expenses, dollars and cents. That simple truth hasn’t changed much during the past several millennia.
Cutting costs is not always about firing people and closing plants. In fact, those actions are last resorts. More often, it involves incrementally improving productivity and streamlining non-wage-related costs.
But make no mistake about it: Sometimes the only way to keep a company solvent is to pick up and move it somewhere else. Sometimes it’s to another region of the United States. Sometimes it’s overseas.
That’s not to say that moving overseas is a panacea. If cheap labor were the answer to all our problems, Bangladesh would be the manufacturing center of the universe.
Clearly, it’s just one of the factors, along with infrastructure, raw materials, labor quality and reliability, transportation costs, and access to markets, as well as taxes and business climate.
In fact, the due diligence process for an international location is much the same as it would be for another region in the U.S., at least in terms of the factors you analyze.
The real difference is in the laws and customs that govern business practices from country to country. Don’t ever assume that they’re just like in the U.S. because, quite often, they’re not.
That’s why, if you’re considering expanding your operations overseas, it’s critical to find someone who knows “the lay of the land” to help guide you through the process.
Find someone who is familiar not only with the business practices of the particular region or country you’re interested in, but someone who also understands business practices in the United States. That will allow you to make more accurate comparisons, as well as to ensure that you don’t overlook anything important.
So if pressure from competitors is driving you to consider an overseas location for your company, rest assured that you are one of a long line of companies throughout history that have made that decision.
Just remember that language isn’t the only difference you will encounter.
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