Is outsourcing really that bad? (currency, recession, lending, withdraw)

[chuck22b]

Originally Posted by user_id

Ugh, yes we all know all the workers in Los Angeles are documented and legal. The point is they are not really creating jobs in the US, they are importing people to the US instead of products!

Like I said before, no one is stopping anyone from working there if they want to work in a factory environment with those wages and benefits. If they actually discriminate against who they employ, then that's another issue. Therefore, they aren't "importing" labor per say, but using the labor that is available, and willing to work for them in the States. A lot of American industry was founded off the backs of immigrant labor willing to work hard jobs.

Its important to note how they profit. They charge a lot for their products in their retail divisions. The products are the same quality as others, but they are marketed as a more "high end" brand. They would not do well if they did not control their retail operations like say hanes. Hanes has to sell products that are competitive on a wholesale basis.

Agree, it's vertical integration and marketing. Their "uniqueness" and branding is what makes them profitable and manufacturing in the US is part of that "branding". If every company manufactured in the US, then they wouldn't be as unique or profitable.

Likewise, they aren't necessarily competing against Hanes or wholesale brands either. They are competing against GAP, Guess, and like brands at that level. Pricing at these brand levels are higher... and profits rely on marketing more so than manufacturing cost benefits.

Are you under the impression that every factory out of the US has poor working conditions? They don't.

I'm not suggesting that. But I'm more than certain that labor costs/wages and regulation compliance costs are higher here than developing nations.

Firstly, you have to note the stupidity of that. Secondly, this is just their marketing. American apparel is good at marketing, thats why they are succesful. They would get eaten alive if they had to compete on price with the likes of Hanes, Gildan, Fruit of the Loom, etc.

It isn't stupid because it's part of their marketing strategy. Really? If they did the same thing as everybody else they wouldn't be "special". Like previously mentioned, they aren't competing with wholesale brands, but using marketing and brand image to sell simple clothing. By stating company policy publicly, or creating policies and marketing it publicly, essentially they are promoting their brand. In their case, every facet of their business is part of the brand... including their employees, manufacturing, etc. the company itself is the brand. Instead of Guess, GAP, etc. where the clothing is the brand or the brand stops at the retail store, etc.

Anyhow, you need to think a bit more deeply about their business model and why they succeed. They are virtually integrated and as a result control their manufacturing and retail, but most of the money is made on the retail end of things. Its more realistic to think of them as a retailer than a manufacture. If you are virtually integraded you can manufacture in the US and still make money, of course you may make more by out-sourcing. But having locally controlled manufacturing has its benefits and if used can out strip the cost benefit to out-sourcing. But, pretending as if this could be model for US manufacturing in general is inane. Most retail is done on a retail/wholesale sort of model and as a result cost becomes the primary issue. American apparel could not compete with the likes of Hanes, Gildan, Fruit of the Loom, etc on the wholesale front and they don't.

Already explained above that they aren't competing in the wholesale market. True, vertical integration has it's benefits, especially in markets that change rapidly such as fashion. Hanes et al, aren't necessarily considered fashion but functional clothing.

It should also be mentioned that apparel, especially what they are making, is light labor wise. In fact America apparel's apparel is usually made more simplistically than others. For example, their ladies cut t-shirts are not side-seamed (they are tubes, like men's shirts) where as most ladies fitted shirts are side-seamed. Personally, I find American Apparel to be less quality than the cheaper imports.

I think the quality is just as good or marginally better. Furthermore, from what I heard about apparel, and the manufacturing of apparel, it actually takes a lot more labor than most think and that is why there is a cost benefit to offshore apparel manufacturing.

Either way, making simple, unisex, clothing saves manufacturing costs, but is marketed as something "unique" from overly flamboyant clothing from other retailers. I agree, American Apparel's strength is marketing, and speed to market through vertical integration.

All I'm saying from this case sample is that manufacturing in the US is possible but has to take on a different model than those outsourced overseas. I agree that manufacturing as it exists elsewhere is not coming back in force (unless there is unprecedented rapid growth overseas raising cost of living). Rapid prototyping, mechanization, mass specialization, lean manufacturing, and vertical integration amongst other methodologies would be how things are made in the USA.

-chuck22b

[user_id]

Originally Posted by chuck22b

Like I said before, no one is stopping anyone from working there if they want to work in a factory environment with those wages and benefits. If they actually discriminate against who they employ, then that's another issue.

Sorta hard to work there when you don't speak the language of choice - Spanish. Seriously, you expect some black, white, Asian, etc workers to apply? They will be fish out of water, it has nothing to do with discrimination at the company level.

And just to note, the factory is close to number of other ethnic groups.

Originally Posted by chuck22b

Like previously mentioned, they aren't competing with wholesale brands, but using marketing and brand image to sell simple clothing. By stating company policy publicly...

Again, my point was that looking at them as a manufacturing success story is short sighted, they are a retail success story.

Originally Posted by chuck22b

Furthermore, from what I heard about apparel, and the manufacturing of apparel, it actually takes a lot more labor than most think and that is why there is a cost benefit to offshore apparel manufacturing.

Honestly, I don't care what you "heard about". Go to an apparel factory, there are many both small and large in the Los Angeles area. You'll find that they are rather rapidly able to make apparel. Of course, some apparel is more labor intensive than others, but the sort of things American apparel are involved with is rather easy. The fabric comes in tubes. Its quickly cut (seconds) and sewn rather quickly. There really is not that much to sew/hem.

Originally Posted by chuck22b

All I'm saying from this case sample is that manufacturing in the US is possible but has to take on a different model than those outsourced overseas.

There are many manufactors in the US, American Apparel is not a good example.

[chuck22b]

Originally Posted by user_id

Sorta hard to work there when you don't speak the language of choice - Spanish. Seriously, you expect some black, white, Asian, etc workers to apply? They will be fish out of water, it has nothing to do with discrimination at the company level.

And just to note, the factory is close to number of other ethnic groups.

Regardless of who they hire, they are hiring people here and following the wages, rules, and guidelines set here forth. Perhaps the original garment shop before it became American Apparel already hired a lot of immigrants and a significant number of Spanish speakers. Either way, they are creating jobs and solidifying the tax base here.

Again, my point was that looking at them as a manufacturing success story is short sighted, they are a retail success story.

Yes, you are right. They are a retail/marketing success story. But, they used manufacturing and vertical integration as an additional competitive advantage. Who says any other retailer can't follow a similar model?

Honestly, I don't care what you "heard about". Go to an apparel factory, there are many both small and large in the Los Angeles area. You'll find that they are rather rapidly able to make apparel. Of course, some apparel is more labor intensive than others, but the sort of things American apparel are involved with is rather easy. The fabric comes in tubes. Its quickly cut (seconds) and sewn rather quickly. There really is not that much to sew/hem.

There are many manufactors in the US, American Apparel is not a good example.

Ok, anyhow, the point of this thread wasn't about manufacturers per say, but about offshoring. And American Apparel is an excellent example of a retailer that forgone offshoring manufacturing to gain a competitive advantage and market branding by bucking the trend of other retailers that have the image of using "sweatshop" labor overseas.

I guess if you want to point out American Manufacturing, P&G would be a better example of how mass manufacturing in the States looks like - highly automated.

-chuck22b

[user_id]

Originally Posted by chuck22b

Regardless of who they hire, they are hiring people here and following the wages, rules, and guidelines set here forth. Perhaps the original garment shop before it became American Apparel already hired a lot of immigrants and a significant number of Spanish speakers. Either way, they are creating jobs and solidifying the tax base here.

They create jobs and importing the work force for them.

Personally, I don't care. I just think its funny when people pretend to be righteous when they purchase American Apparel.

Originally Posted by chuck22b

Who says any other retailer can't follow a similar model?

The model does not work in general. There is the obvious issue of intelligent property rights, but also manufacturing known how. How exactly is a large retailer going to figure out how to do everything? It works for American Apparel because they are retailing a single sort of item and can be made in the US without too much of a disadvantaged price wise.

Originally Posted by chuck22b

And American Apparel is an excellent example of a retailer that forgone offshoring manufacturing to gain a competitive advantage and market branding by bucking the trend of other retailers that have the image of using "sweatshop" labor overseas.

The thread is about outsourcing and a company that is importing workers from another country is still in a sense outsourcing labor.

[chuck22b]

Originally Posted by user_id

The thread is about outsourcing and a company that is importing workers from another country is still in a sense outsourcing labor.

That was the argument I pointed out about people who use "illegal" immigrants - that it is the same as offshoring but some folks got offended. Legal immigrants coming to the States to work is nothing new and isn't the same as offshoring unless they have an H1B or some other tie to the employer (mandatory work relationship making them "cheaper" than native counterparts).

Anyhow, in American Apparel's case, they aren't using illegal immigrants and they pay fair wages, operate under the law, and provide benefits. If your willing to work in the same conditions there's nothing stopping you. So what if they currently speak Spanish... if you want the job you'd take it. Or you can do the American thing and sue American Apparel for discrimination.

-chuck22b

[user_id]

Originally Posted by chuck22b

Anyhow, in American Apparel's case, they aren't using illegal immigrants and they pay fair wages, operate under the law, and provide benefits.

They are not? How do you know? Fake docs are a dime and dozen in Los Angeles. You think American Apparel gives a damn? Nope.

[Randomdude]

Originally Posted by user_id

You seem to think the US exports nothing. Its odd. Even if you create tariffs the work would not come running to the US. It could not. If the US stopped importing it would have to stop exporting. Brilliant idea, bring no skilled jobs back to the US while destroy high tech export industry in the US.

1. Obviously they export something, and yes, the work WOULD come running to the US. Their only other choice would be to simply fold. They depend on the US consuming their junk. They cant sell it to the Chinese, they cant afford to buy it, certainly not in the numbers the US can.

2. Do you know who the major consumers of the US "high tech" export industry are? If they all came back to the US, it wouldnt ruin the industry, it would simply shift the demand for the products to the US. Foreign citizens arent consuming our "high tech" crap, its mostly foreign industry, which is employing it to manufacture junk to send right back out to the US.

Originally Posted by user_id

Honestly, its not even worth talking about. Tariffs are a bad idea on so many levels.

No, they arent.

Originally Posted by user_id

Again, if the goal is to correct trade imbalances than reducing oil imports is a rather powerful way of doing that.

The goal is NOT to correct trade imbalances, the goal is to force American jobs back to this country. I could care less what kind of imbalance is going out for junk we cant possibly produce ourselves. Sure, would it be nice to not be on the leash of OPEC, yeah. However, the only jobs it would create would be indirectly through alternative energy jobs. Many of those would end up being farmed to H1-Bs and illegal immigrants any how.

Originally Posted by user_id

Anyhow, this conversation does not matter. The majority in congress are not silly enough to push for increased tariffs.

Because the majority of congress is on the payroll of multinationals.

[Randomdude]

Originally Posted by user_id

They are not? How do you know? Fake docs are a dime and dozen in Los Angeles. You think American Apparel gives a damn? Nope.

So, you are saying that, because a number of any given company's workforce speaks Spanish as a preferred language, they must be illegal, or "imported"?

Thats bunk. Over 10% of legal US residents speak Spanish as their first language, and people who speak Spanish are the fastest growing segment of legal immigrants. Additionally, American born children who have Spanish speaking parents, and still speak Spanish in the home, are growing much faster then English speakers.

Finally, almost 50% of Los Angeles is Hispanic, with over 40% speaking Spanish as their first language.

It is hardly impossible, or even hard, to fill a factory with legal Spanish speaking employees in Los Angeles. In fact, Im willing to bet you can go down almost any street in most of the city and find a handful of businesses staffed with nothing but Spanish speakers, all legal.

[user_id]

Originally Posted by Randomdude

1. Obviously they export something, and yes, the work WOULD come running to the US. Their only other choice would be to simply fold.

No, Americans could simply pay the tariffs. Just because you put tariffs on something does not mean people will stop importing it.

Originally Posted by Randomdude

....Foreign citizens arent consuming our "high tech" crap, its mostly foreign industry, which is employing it to manufacture junk to send right back out to the US.

The rest of the world rather obviously produces things for their own use too. The US is not even a growing market for countries like China anymore. If the US put tariffs on the things they import, they will put tariffs on things we export.

Originally Posted by Randomdude

The goal is NOT to correct trade imbalances, the goal is to force American jobs back to this country. I could care less what kind of imbalance is going out for junk we cant possibly produce ourselves.

You need to think about this more. The only thing that matters is trade imbalances. If trade is balanced there are no "jobs to force back". For every job you create by forcing back production for something will import you'll lose jobs for something we export. You see, that is what it means to have balanced trade. Imports and exports are equal.

Originally Posted by Randomdude

So, you are saying that, because a number of any given company's workforce speaks Spanish as a preferred language, they must be illegal, or "imported"?

No, I'm not saying just because someone speaks Spanish they are illegal. I'm saying many of the workers in Los Angeles are illegal and they have fake docs. American Apparel does not care whether it hires someone that is illegal or not. There are almost 1 million illegals in Los Angeles county, about 1/10 the population. Now, living over 3,000 miles away I'm sure you're the expert. But many of the factories and industry employ these people.

[Randomdude]

Originally Posted by user_id

No, Americans could simply pay the tariffs. Just because you put tariffs on something does not mean people will stop importing it.

Americans arent going to pay tariffs on substitutable goods, which is a majority of the junk that is imported.

Originally Posted by user_id

The rest of the world rather obviously produces things for their own use too. The US is not even a growing market for countries like China anymore. If the US put tariffs on the things they import, they will put tariffs on things we export.

I agree, they would tariff us. However, I believe, most of what we export are items being used to construct industry, to create products they are exporting back. So, just cut out the middle man.

Originally Posted by user_id

You need to think about this more. The only thing that matters is trade imbalances. If trade is balanced there are no "jobs to force back". For every job you create by forcing back production for something will import you'll lose jobs for something we export. You see, that is what it means to have balanced trade. Imports and exports are equal.

Not neccessarily. If we stop importing a good, and it is not replaced, it does NOT create any jobs by balancing trade. This is so in the oil industry. If we stopped importing oil, we not only would not gain any equivalent oil jobs, wed probably lose thousands in the processing and refinement sectors. The only new jobs would be indirectly associated with whatever fills the energy gap.

Originally Posted by user_id

No, I'm not saying just because someone speaks Spanish they are illegal. I'm saying many of the workers in Los Angeles are illegal and they have fake docs. American Apparel does not care whether it hires someone that is illegal or not. There are almost 1 million illegals in Los Angeles county, about 1/10 the population. Now, living over 3,000 miles away I'm sure you're the expert. But many of the factories and industry employ these people.

How do you know? How do you know that American Apparel doesnt care?

Im not saying that illegals arent employed in Los Angeles, nor am I claiming to be an expert. I am saying that just because you found a factory of Spanish speakers, doesnt mean they are illegal. Close to half the legal population in Los Angeles speaks Spanish as a first language. There are probably literally dozens of operations in Los Angeles that not a person speaks English well, or as their first language, but all of which are legal.