I know that over the last 30-40 years many factory jobs or union jobs in the US were lost to outsourcing, and I know that today many car companies and other manufacturers get cheaper labor by opening factories in other countries. My question is, why did this all happen in one giant wave around the same time? Did some kind of law/regulation change to make this more doable for companies? Or is it just because the world became more globalized in general?
In: Economics
It wasn’t one big wave. It started slowly as foreign markets became more attractive.
Before that there was simply no place you could do this with profits. Transport slowly got cheaper, cheap labour countries got more politically stable (so your factory isn’t stolen by a warlord), and the local market to buy your goods grew.
Also trade borders were removed, but that was also a continous process.
Because cost of labor suddenly increases in the western world. Also, lobbying made it easy an cheap to offshore it
Of the 100% loss in the US labor force, interestingly less than 20% was outsourced to developing countries, while the vast majority was replaced by robotics. US factories actually produce more goods today than in past generations. it’s exactly the opposite of what we’ve all been told by the political class.
Source – Fortune Nov 2016: https://www.google.com/amp/s/fortune.com/2016/11/08/china-automation-jobs/amp/
As for how it happened, I’m going to guess it was a slow progression since adoption of robotics probably took some time and large capital investment and risk initially. Then, as more and more robotics proved successful, and as robotic ability increased, I imagine the pace quickened.
If you had been around in the 60s you would have been used to Made in Japan stickers being as common as Made in China stickers are today. After the end of WW2 the US reached out to Japan in a big way to help them rebuild but in a modern way. They needed work, we needed cheap labor. As more and more western money poured into their economy their standard of living elevated until eventually the only things we bought from them was cars and tech. Outsourcing is not new. We just change which countries labor pool our corporations exploit.
China came online. They got over their bloody revolution and tried communism, keeping their borders shut. And then they finally started opening up to trade and found they had a TON of workers willing to go through some really brutal conditions for a buck.
“Around the same time”? “One giant wave”? You’re talking about a span of 40 years! “Computers” are only 60 years old. Personal computers only became ubiquitous 40 years ago. In the last 20 years we had 3 recessions.
>Did some kind of law/regulation change to make this more doable for companies?
I mean… kinda yeah. Mao finally kicked it, and Deng [reformed China](https://en.wikipedia.org/wiki/Chinese_economic_reform). It took a decade.
>Or is it just because the world became more globalized in general?
Yeah, that too. China trying to be capitalists wouldn’t have worked if global shipping wasn’t viable. Bunker fuel is a byproduct of oil production, and if you want X gallons of gasoline, you’ll have Y gallons of bunker fuel. This is STILL why shipping from China is so cheap.
And it wasn’t ALL China. When Korea and Japan rebuilt after the war, they were producing a lot of stuff that competed with local goods. …I dunno if factories relocated though.
>why did this all happen in one giant wave around the same time?
It didn’t.
[https://fred.stlouisfed.org/series/MANEMP](https://fred.stlouisfed.org/series/MANEMP)
As you can see, the total number of manufacturing employees stayed about the same from the mid-60’s to the early 2000’s. But the population of the country grew about 50% during that time period, so that really represents a slow, steady decline.
Then, from about 2000 to 2010, we see a much sharper decrease. This was a time of technological breakthroughs in automation, but there were also two major recessions, which always have a negative effect on employment of all kinds.
Finally, the number of mfng jobs had actually been ticking up since the end of the Great Recession, though the current COVID recession has put an end to that.
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