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RE: Outsourcing - light commercial and high end residential - Scott

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Thank you for your response - it is not easy to convince one who accuses
you of being a racist by simply swearing that you are not. I have always
considered myself on the liberal side, although my politics are
pragmatic - I vote my conscience and not a party.

Warning: This is a long letter so if you have the guts read through it,
if not hit the delete key now.....................

I am considered a protectionist, but only because the United States has
done nothing to stop lobbyist from promoting the ideology of Globalism
while the purveyors of Globalism are Multi-National corporation which
were, at one time, American companies whose corporate board members and
shareholders sold out to what they perceived to be a more profitable

Most of us studied Linear Analysis in College as part of our Civil
Engineering requirements. As we can apply it to issues such as Mike
Cochran did to justify the use of LRFD in light-framing. It can be used
just as effectively in business. For those who make products, there is a
line (actually an area surrounded by a line) where cuts are made and
profit is maximized. The line represents the ideal boundary where cost
of doing business, warehousing stock and profits are essentially
perfect. Outside the line, the business becomes unprofitable - either
expense exceed income or product remains warehoused too long or any of a
number of reasons why most businesses and engineering practices don't
meet their expectations.

Many of us remember when the United States benefited from the cost of
the Second World War. While England made machines and cars that lasted,
America made replaceable products intended to last only a few years
while the philosophy was that manufacturing techniques would require new
and improved machines. When products wore out or needed replacement
parts (around the world), American products were shipped out. This
helped us rebuild the debt we incurred through the war and helped other
countries rebuild the damage that was caused by the war. This was
Globalism - other countries needed what Americans made and purchased it.
America purchased products from other countries that their people
wanted. Pretty simple, but this could not last. The reason why it could
not last was that Capitalism could not control greed and with investors
who did not have their hands in the operation of the business, then
there was no thought to the security and responsibility that American
business owners offered their employees. Stock holders demanded the
highest return each year or they sold off stock and businesses sought to
reap as much profit as was required to satisfy their shareholders and
obtain the wealth of being high up in the business to benefit for stock
options and contracts. They still do except that CFO's and CEO's changed
and the companies isolated themselves further from the workers who would
soon pay the price of maintaining profit margins - outsourcing.

In 1974, the oil embargo hit and inflation took off. American and other
developed nations realized that petroleum was our life's blood and
suddenly the Middle East had us by the short-hairs.  Businesses had to
shave costs in order to compensate their shareholders for the rising
cost of overhead. Small businesses took a dive because they could not
get the credit they needed to keep their businesses running (I was in
industrial sales from 1974 until 1978). The first to change was
warehousing, utilities and leasable space. Companies stored less and
leased smaller warehouse space. In the next ten years, businesses did as
much as possible to cut the fat out of everything but employees.
Multi-national mergers with those who had a surplus of cash to invest,
bought into American businesses (the credit card industry and the Auto
Industry are just two examples) and while Japan helped us by bringing
the manufacturing of American and Japanese automobiles to Americans as
they did in Japan, their exposure to Capitalism and to greed inevitably
lead to the Japanese falling into as much or more debt than other
nations. Their philosophy of having a business where every work was part
of the "family" failed to happen and they, like other developed nations
sought out cheaper labor to handle assembly. 

There were a few industries (and still are) that were not hit as hard by
the multi-national movement - healthcare, pharmaceuticals, grocery etc.
However, the majority of manufacturing left the United States. In
addition, the pharmaceutical industry believed that Americans should pay
more for their drugs than underdeveloped nations that set a price limit
based on the living wage of their people. So today, it is cheaper to go
across borders to purchase prescriptions than it is to buy it in the
U.S. This is another story, but the same laws used to protect us are
used to extort more money from us - by companies who have had the
highest profits in years.

Contrary to Aswin's comments, Americans produced Silicon but never
manufactured or assembled very much electronics in this country. The
last American Electronics that I can remember was Motorola and they
could not compete with Asian production labor rate. I was in the
business as a Panasonic and BASF representative when I moved to
California. To compete with Sony and others, there were unspoken rules
called Fair Trade where prices were set by the manufacturer for what the
retailer could sell the product for. This was deemed unfair in the US
because large volume buyers were allowed to reduce the MSRP or
Manufacturers Suggested Retail Price. MSRP was not an American idea - it
was created by Japanese businesses such as Sony and Panasonic. They
issued a warning to businesses who sold their goods for less than MSRP
and it went to court. The retailers won - they had the right to sell for
whatever they could to compete. The point of this is that it is easy to
rape, but hard to compete fairly. 

Capitalism is not perfect, neither is Democracy or Socialism and neither
is a Dictatorship - when greed enters the equation, profitable economics
crosses that line of perfection and people lose jobs. Rather than
addressing this problem, Pankaj is sitting back seeing the opportunities
coming his way but is not thinking ahead past the inevitable.

I hope those of you who are still with me can see where I am going. I am
sorry about the length, but some things can't be said easier in less
words. I've never been very good at that. I promise not to be any more
verbose than I have to. 

There is not enough technology jobs opening up in developed nations that
can not be done cheaper in underdeveloped nations. The rich get richer,
the poor poorer and the middle class disappears. It's not likely that
those of us who have ten or more years in professional jobs that are
threatened by outsourcing can not reasonably be retrained. Furthermore,
the idea of American citizens leaving the United States to seek
immigration or citizenship in another country is not considered kindly
in a nation known as a melting pot of cultures. The big question should
be whether China, Taiwan, India and other underdeveloped resources would
be willing to open their borders to the melting-pot of Americans seeking
a way to make a living and affordable housing. It may lead to dual
citizenship or even permanent immigration into another country. How will
that country welcome those from developed nations and will they share
the job market or allow those entering to compete for work?

Before I am accused of racism again, let me identify "underdeveloped"
nations as "underutilized sources of labor" and not unqualified labor.
India has produced some of the most intelligent philosophers, teachers,
engineers (personal friends included) whom I have had the greatest
respect. Still, there is unrest and over-crowding and only an infant
manufacturing process growing that is one hundred years behind Developed
nations in civil liberties. Developed nations, in my opinion, include;
Canada, England, most of Europe, Australia, Israel and pockets of
countries in Africa and the Middle East and Slavic nations. I'm sure
I've left out many but I think my point is clear - India and China would
not welcome the number of immigrants into their country seeking to
become legal citizens and occupants of land or territory in these
countries as the had in the developed nations. 

Following that thought structural engineering firms will need to
outsource drafting services and engineering to compete. This leaves a
skeleton staff in the United States (or any other developed nation) to
market new projects or attend to the inspection and observation services
needed during construction. The potential job markets that developed
nation graduates will seek are in underutilized nations. 

With this said, I would like to ask Aswin how much work China and India
are outsourcing to other countries right now? They are sending
"representatives" to set up businesses in the United States (and other
developed countries) with the sole intent of outsourcing back to their
homeland. This diminishes the resources and value of the dollar (I can't
speak for Pounds, German Marks, Yen etc.).

The rest is like a snowball rolling downhill. Unless we do something to
reverse the trend, or the countries who are the recipients of our work
raise the value of their workers - demanding equal benefits, there may
be no future for our children at home. 

The United States has always made their immigration policies available
to millions who wish to enter this country legally. It may not have been
as timely as many wanted, but the opportunities were here. We did not
try and control the flow of money earned legally and sent back to
families in less fortunate countries to help them survive. We also took
the international debt on the back of the United States and other
countries to help underdeveloped nations. This is debt not assumed by
the government but by the people who are the government. However, when a
company seeks to do nothing more than satisfy investors at the expense
of the health and welfare of American's who are displaced or laid off
and unable to recover, something is morally wrong.

The bottom line, as Chris Wright (I think it was Chris) brought up is
that we (workers) must meet our present budget to break even and
survive. Even if we have no debt, we have basic needs that include food,
staples, utilities, healthcare and much more. I don't see these
businesses lowering their prices to supply residents in this nation with
basic needs because wages were forced down or people became unemployed.
We must be able to maintain a minimum living wage and this has been in
my rhetoric for many years that includes raising minimum wage where the
cost of living won't allow two incomes to rise above welfare. 

It is easy for Pankaj to criticize me when he is in India, but please
tell me, Pankaj - will you support a mass immigration from other
developed melting-pots of cultures into your country who can no longer
afford the cost of living in the United States? Will India become the
melting-pot of cultures like the United States has been? Will China
accept a mass exodus from developed nations into their country where the
cost of living is so low that they can take what meager savings they
have to "stake" them to some land, a home and possibly set up some good
old competition? What will India, China, Taiwan and other underutilized
nations feel about immigration of people of different cultures?
Americans have lived together for hundreds of years. We have had our
problems, ask the Native American, African American, Jews and other
minorities who sought a better life if the United States. I for one
remember in the mid 1950's when my family was denied the right to
purchase a home east of Crawford Avenue because it was considered
"Restricted" - in other words Jews were not allowed to live there. 

Scott Maxwell is correct, there is still a need for cultures to
segregate but this is not racism. I've lived in both types of cities. In
Chicago, cultures segregate (until recently) into neighborhoods with
others of their culture. They feel more comfortable. Los Angeles is one
of the more efficient "Integrated" cities, but it is unlikely that you
will get to know your neighbors. I've lived in the same place in Venice
for more than 10 years and while we were friendly to our neighbors, we
never spent time together or got to know one another. Now in La Quinta,
the cultures are split by religious believe and as a Jew, I see a lot of
anti-Semitism and hatred of minorities. My wife who is of a different
faith by birth and all of my grandchildren who are taught the ways of
their parents culturally (my three grandchildren from my one
step-daughter are half Serbian and their grandparents were closer to
Greek Orthodox than to more liberal Christian belief). Again my point is
that these are not racist ideals they are economic ideals and people
like Aswin should not confuse the two. Many Asian countries are
resistant to immigration from other cultures as are almost every other
culture in the world - with the exception of the United States. So it is
an insult to me to discuss economics and because I choose to mention a
label in my show that states made in China be accused of being a racist.

Finally, if Globalism, Fair-trade, the World Trade Organization is what
some of you think is a fair and good choice for the future - regardless
of, as Bill Allen said "... a particular sector is temporarily hurt (or
even disappears)", then you MUST carry the ideology further in your mind
and use some rational logic. If the job market is no longer in the US
and other developed nations, the people who need work won't disappear
they will relocate. They will migrate to where the work is and the cost
of living is low. After that, the bar raises on the standard of living
through competition (Capitalism) and those companies that outsource to
India, China or wherever, will leave and seek an area that is not a
melting-pot and where the cost of living is whatever the workers can
bear and the voice of the worker demands civil rights that the employer
can't afford to give. The rest is right out of US history and your
country will follow the same path we have for more than one hundred

Not Marxism, just some good old brain power is needed to see the logic
of where societies it will go in the future. Some take a leap of faith
that we will recover from this but you have not thoughts to contribute
as to how this will happen. It affects the engineering community as much
as it affects other industries and professions in our life. If you
consider the future of small business like city planners think of
regentrification - when the worker moves far enough away from the
central business district (even electronically) the city will
deteriorate until the property degrades sufficiently to support a meager
living on a small income and countries like America will be back in the
year 1900 seeking Labor Unions to bring back our civil rights. But
clothing will be sewn in the United States sweat shops.

The one common item in this whole debate is not labor but those who hire
you. Think about who they are, who invests in these companies (Wal-Mart
is one of the 38 Blue chip Stocks as is Merck Pharmaceuticals who
inflate their price to Americans and sell pharmaceuticals for 1/2 price
to Mexico and about 75% of full wholesale to Canada based on what those
societies can afford - Americans pay a bigger share.

There is only one conclusion that can occur if the WTO is allowed to
exist -  as Aswin, Bill Allen and Pankaj support - this is a depletion
of wealth to one segment of all society. Your opportunities are greater
than ours now, but this won't last - it's inevitable. If the cost of
labor rises you will be left without work while the multi-nationals move
to other underdeveloped resources. History has already proved this.
Finally, Protectionism and tariffs are only tools to force those who
abuse and wish to rape the profits of one nation into a Fair Trade
ideology. It need not be permanent, but it certainly won't help
Americans who need work during the transition.

Dennis S. Wish


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