Off shoring is the relocation ofbusiness processes such as production, manufacturing, or services from onecountry to another. Despite devaluation of US dollar and rising overseas wages,the overall economic impact of off shoring ispotentially enormous. Large organizations currently in the exploratory phasewill take the leap into off shoring making this process to remain strong in2008. Companies throughout the United States have shifted much of their work to Mexico or other overseas countries. Even the roly-poly red suited Americansymbol of Christmas the Santa Claus is also off shored.
There is a dramatic decline inboth the apparel and textile industries in the US. Due to availability ofabundant and cheaper labor, many companies in the US have shifted theiroperations to overseas countries like India and China.
Halco the specialized makers orSantas suits since 1930, and who had to their credit of manufacturing 95% oftheir products in the USA itself, have off shored their business to China and havelaid off their workers. Manufacturing Santa suits was the last sector of theapparel industry to be left in the United States, and Halco was the lastmanufacturer of Santa suits in the country. This year, the last locallyproduced Santa suit was completed in May, and the workers were laid off. Thecompany had been in existence for the past 60 years, and many workers have beentailoring these suits in this company for more than 50 years.
Halco is a popular manufacturerof Santa outfits, and its suits have been featured in movies, televisionprograms and commercials. Santa Claus costumes and his associates, the elvesare outsourced and made mainly in China, Hong Kong, and many other overseascountries. The reason behind this outsourcing is simply financial. In US, thewages for garment workers is usually $10 per hour, and considered higher ascompared with the Asian wages of 30 cents for an hour. The wage difference isvery vast. Halco still sells 50,000 suits for a year.
During the 70s apparel industryin US was in its glory with 1.5 million garment workers. Later on, as the offshoring tide advanced, the numbers dropped to 500,000 and is currently leftwith 200,000. What started as an industrial phenomenon in the US apparel industry with an initial focus on cost savings from outsourcing manufacturingactivities to countries with low wage economies is now beginning to seekimprovements in terms of quality too.
In the past times, Americans werewell equipped with good capital, technology and organization which made theirapparel industry output more successful then other countries. But they were notable to substitute cheap foreign labor. Off shoring has enabled the Americancompanies to use their capital and technology efficiently; combined with foreignlabor. This is good for the manufacturers, but vice versa for the workers inUS. Significantly, when a country loses its entry level jobs, it does not havethe potential to employ staff for senior level jobs as well. When manufacturingjobs are lost, so does design, engineering and R&D.
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