Overheard on CNN.com: U.S. companies too dependent on overseas manufacture?
Students protest in China in June 2010, displaying model effigies of workers who have committed suicide at Foxconn.
January 11th, 2012
07:46 PM ET

Overheard on CNN.com: U.S. companies too dependent on overseas manufacture?

Editor's note: This post is part of the Overheard on CNN.com series, a regular feature that examines interesting comments and thought-provoking conversations posted by the community.

The issue of foreign labor, outsourcing and "buying American" bubbles up on CNN.com from time to time, and almost always leads to a fascinating discussion about the economics and ethics of overseas manufacture. Protests over pay (and a threat of mass suicide) at a plant that makes Microsoft's Xbox game systems re-ignited the debate over work conditions in foreign factories. Chinese contractor Foxconn, the plant owner, makes brand-name electronics for Apple, Dell, Hewlett-Packard, Sony and Microsoft.

Microsoft investigates mass suicide threat at China plant

Our readers wondered whether it would be possible to sustain the U.S. economy on entirely American-made goods. The most-liked comment started a huge discussion thread.

28Mamerican: "Here is a novel idea, manufacture products of American products in America."

Shown here are some of the replies, which themselves were quite a discussion. One of the most common things noted was that items would be a lot more expensive if they weren't made in China and other places overseas.

gstangler: "Nice try, but the workers here don't want to work for the price the companies need to make it worth their time to develop and market. Convince the uneducated working in America that the $20-per-hour union overpaid positions are no longer acceptable, and you'll see the factories return."

ibivibiv: "You know an Xbox wouldn't be $1,000 if the @#$%heads in charge stopped pigging down multimillion-dollar bonuses while people in China were so desperate they want to kill themselves and people in the United States can't even find a job to kill themselves over. It's going to be awesome to watch them try to fly their jets around when all of that paper with presidents on the front these corporate d-bags have amassed is worthless. Xboxes would cost $1,000 to support some jerk's ridiculous lifestyle, not some factory worker's paycheck."

drowlord: "You guys are delusional to think that there's a 15%-20% price difference between a labor-intensive product made in China compared with one made in the United States. There's a 3,000% difference in the cost of labor.

TikiGawd: "I bet you'd love to pay $6,000 for an iPad."

AlanBenLee: "This idea is viable only if you want to buy a $1,000 iPhone."

whiskeylover: "Microsoft could close the plant and bring the jobs back to the United States. But there is a problem with this. 1) Either the cost of an Xbox would increase 100%, in which case you'd still be complaining or 2) Microsoft would have to eat the cost of doing business, which would be illegal since the company has a legal obligation to try to maximize profits for its shareholders."

There were a lot of repliers to this same thread who placed responsibility on consumers.

Vagabond8: "I love this idea, too. The problem is if you take a product made in China, and one that sells for 15-20% more that was made in the USA, the consumer almost always goes for the cheaper option. We only have ourselves to blame on this one."

ReligiousGuy: "Those who are ready to pay more to buy American-made goods, please provide proof that you are not buying anything that is imported. You get clothes, gas, automobiles, household items, etc. that are 100% american? And that's all that you buy?"

MovingFWD: "I would rather pay more than destroy my own country."

MikkyH: "As long as you are prepared to pay more for said products, then it can realistically happen."

Also on this thread, commenter ibivibiv said they have observed cases in which an American-made product is cost-effective.

ibivibiv: "I have another great example of how to torpedo your false assumptions about price differentials in products made here in the United States and China and where the profits are going. Go to your local Sears store. Go to the tools. Find the Craftsman tools. Now look on the rack, there you will find packages of specific tools that look identical. After closer inspection, you will note that some packages (the older ones) have a small "Made in the USA" logo. There will also be newer stock identical items that say "Made in China" in small print. Notice that the price is the same for both products. So tell me one more time how making a product in China means we get it cheaper here? Methinks someone is keeping all the money and totally BS'ing all of you into thinking they would have to raise the price of things. Wake up and start demanding U.S. products."

Finally, there were some readers who said we ought to rethink our attitudes about China.

AmitAtlanta: "Foxconn, who makes products for Dell, Hewlett-Packard and Sony, employed 800,000 employees in China in October 2010. And we talk about creating a few hundred jobs all over the country every so often! Can we be more stupid?"

RobertOKUSA: "It was only a matter of time until the Chinese labor movement reached the point where the American labor movement was at the end of the 'Robber Baron' era 100 years ago."

In another thread, the commenters talked about future threats to jobs. But as above, there were plenty of people who said it isn't practical to expect not to have immigrants working in the United States.

IanA1: "Just wait until engineering goes. If you think you're special and worth $55,000+/year when up-and-coming Chinese and Indian engineers can be had for $10,000/year in a country with no labor laws, you are in for a painful surprise at how you are no different than the working-class guy who has been getting bent over for the last 20 years. Don't expect much sympathy in the process, either."

MarkBDC: "Yes, but please keep illegal scientists and entrepreneurs out of USA. That will save us, let them go to China and India where they get visas and incentives."

Another set of responses blasted American consumers for causing outsourcing.

Pagan2012: "Corporations are not the traitors of this country. Americans who purchase things made in China are the traitors. We want our goods cheap, and when given the choice to buy a more expensive American good or a more cheap Chinese good, we choose to pay for the Chinese item. It is Americans who create the demand, not corporations. Do you want cheap goods made here in the United States? Put all our prisoners to work! Round up the murderers, the pedophiles, the drug dealers, the rapists etc. and make them work for their meals. Give them a cell with a hook and a rope. If they want to kill themselves, then let them. If they want to live, then make them produce cheaply made goods. They chose to not be citizens of a democratic republic the moment they chose to commit a horrendous crime against American citizens. They are only as useful to our society as we make them. Iran is not the biggest threat to America, China is. Fundamentalist religious attitudes and communism each vie for the top position of everything that our Founding Fathers fought against. In purchasing goods that are made in any country that violates human rights, we support that ideology plain and simple."

ImInLine: "Wrong, I'd pay a little extra for American-made, but all American companies have them made in China. ... If given a choice, I'll go with American ... so yeah, it's the corporations who are the traitors."

sandman416: "What is worse is the U.S. companies that shipped manufacturing to China. I look at boxes of things I used to buy and now they say made in China. I put it back if I can find something American-made or ask myself, do I really need it?

Is the quality of American-made products better? What do you think?

fleetingfree: "As for USA manufacturing, I save a lot of money by buying clothes from the USA that don't fall apart in a month like that garbage from China in Wal-Mart. It may cost twice what Wal-Mart does, but it lasts 10 times longer."

SupraPwn: "Be careful. Buying a Japanese car made in an American factory is better than buying an American car made at a Mexican factory."

The story talks about Microsoft in particular responding to the mass suicide threat. Some readers were hard on the computer company, while others said the Chinese companies must take responsibility for their workers.

SirKris3: "Microsoft shouldn't act surprised. This is what happens when you outsource jobs to a foreign sweatshop that imploys virtual slave labor to keep costs down."

Artexerxses: "You should understand parallel metaphors. It is the management at those factories that must get nailed, not the client contribution. If China raises its price, then perhaps Americans will use American factories and the Chinese will still use their own factories.

Leapfrogging from Artexerxses' point, what would American companies do if Chinese products became more expensive? Here's one conversation about that. Some readers said there is a near-endless supply of that kind of labor in other places.

Teriander2: "The Chinese are getting smart. They're realizing they have rights. Soon they are going to start demanding retirement plans and 401(k). Then American companies will have no choice but to return to American labor. Go Chinese!!"

alientech: "American corporations will find cheap and quiet labor somewhere else until they run out of semi-slaves willing to work for them."

Or is the profit margin what determines whether manufacturing is sent overseas? Could increasing profit by outsourcing actually lead to more jobs? There appeared to be different schools of thought among our readers.

THDUDEABlDES: "Don't you people get it? They could easily manufacture these products here if corporations didn't require such high profit margins of themselves. So the CEOs drive a BMW instead do a Bentley, and (Microsoft founder Bill) Gates is worth 7 billion instead of 15. Is it really so difficult to fathom?"

Aloisae: "Technically, CEO salaries would be part of the expenses along with other wages and so decrease the profit margin. The profit margin, however, theoretically will positively impact stock values, which would increase the worth of the CEO's presumed holdings in the company they manage ... as well as the worth of the company's stock in the average worker's pension funds and IRAs. For what it is worth, a profit margin plunge (not increase) and the resultant belt tightening that decreased reinvestment (and since this has become a protracted strategy still continuing in large part to the current day thus subsequently increased profit margins) is a significant part of the economic conditions that led to the recession. You actually want companies to have a healthy enough profit margin to reinvest or there won't be any jobs created and the economy won't rebound since level of investment has a lot more to do with economic growth and recovery than pure consumer spending."

THDUDEABlDES: "I appreciate your insights, and would agree with that to an extent. However, current circumstances prove that profit has little to do with job creation. Corporate America is flush with trillions in profit, and aren't responding by creating jobs (in America, anyway)."

There are a lot of good points made on all sides. What do you think? What roles do consumers play, and do you buy American? Share your opinions and ideas in the comments area below and in the latest stories on CNN.com. Or sound off on video via CNN iReport. Be sure to also consider a visit to CNN's Freedom Project page to learn more about other labor-related issues.

Compiled by the CNN.com moderation staff. Some comments edited for length or clarity.

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Filed under: Business • China • Economy • Jobs • Overheard on CNN.com • World
soundoff (35 Responses)
  1. Peter

    It's called reality vs ideology. Ideally, we want to buy American to help our own country. Realistically, as long as corporation chases capitalism in which profits are the main driver, then it won't happen. Also as America has more and more poor people, people would continue to shop for cheap stuff and deal breakers (look at our Black Friday and Cyber Monday and New Year sales). Asking poor people to pay more for American made products is like asking for their life. Perhaps government can have subsidy for poor peopel to buy American, otherwise there is no way.

    So in the end, it comes down to who is more realists, who is more idealists. Looking at history, such trend have ebbed and flowed all the time, not just in American history.

    January 12, 2012 at 11:35 am | Report abuse |
  2. eamon

    The companies in the USA and Europe that have their products made for them in China ought to be ashamed of themselves,and the people should not buy anything with "Made in China"(or other 3rd world countries) on them. This is capitalism at its absolute worst. Can anyone here name three Chinese manufacturers?

    January 12, 2012 at 1:08 pm | Report abuse |
  3. eamon

    It is not reality vs ideology;it is greed vs human dignity

    January 12, 2012 at 1:10 pm | Report abuse |
  4. Alger Dave

    The truth of the matter is that our cost of labor in the US is going down, and the cost of labor overseas and in Mexico is going up. Mexican workers at factories near the US border can easily make $1,500-2000/mo. and there are plenty of these jobs. That's about equivalent to a $10/hr. wage here in the US, minus the other benefits. Chinese factory workers are notorious for jumping from factory to factory to make more money. This labor inflation has caused wages to go up very quickly in that country. All of this has combined to bring back some manufacturing to the US, but we've got a ways to go. The trend right now, though, is on-shoring this work, and that trend will continue to build momentum, barring any major change in wage inflation around the developing world.

    January 12, 2012 at 2:39 pm | Report abuse |
  5. Tim Teng

    And Foxconn is a Taiwanese company with factories in China.

    January 12, 2012 at 2:52 pm | Report abuse |
  6. Steve Moss

    The fact is we all have to look daily for American made products. Websites like b4USA should be visited before every purchase.

    January 12, 2012 at 6:59 pm | Report abuse |
  7. Mike Iov

    What about a percentage? 50 – 50? / 60-40? / 75-25? We all know that we live in a global economy but there is nothing wrong with working with the home team, Laws, tariffs, internationally make a big difference. I believe that if an idea was put into the American public by the media and key political figures that we would see some movement to the "Buy American" theme, Wal-Mart use to do this but they changed their ways. Time for a smart retailer or two to show there colors. 50 – 50 chance? Time will tell. May you live in interesting times.

    January 12, 2012 at 9:45 pm | Report abuse |
  8. jon

    The truth is we can buy American and the more we do the quicker American business will stop importing

    January 13, 2012 at 5:54 am | Report abuse |
  9. ClarkAFB

    Fact – the USA has borrowed the money from China for at least the past 10 years to finance a spending spree on everything from tax cuts (twice), to engaging in two unfunded wars, to expanding rx drug benefits under MediCare (2006), to consumer borrowing accross a wide spectrum of industries (think housing bubble). This has resulted in a massive wealth transfer from the US to China (a bond is a loan). I pay more for American where I can even find an equivalent product. I buy American wherever possible, whenever possible. ABC – Anywhere But China!

    January 13, 2012 at 5:12 pm | Report abuse |
    • Mohamed

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      February 11, 2012 at 10:15 pm | Report abuse |
  10. Andy Tegs

    This is a argument has a component of non-sequitir.

    Marketing principles teach that outsourcing is ultimately good for both parties. That is how economics work. As Americans, our obligation is to generate goods to outsource that are worth buying. That is the real fear of the American public. The responsibility to generate capital goods that are useful on an international level. Once we accept this, then both China and the United States will be elevated. Trade agreements and tariffs with equanimity are the only solution and that is what our political leaders should be demanding. Refusing international trade will ultimately isolate, and lead to a self righteous suicide.

    January 15, 2012 at 4:57 pm | Report abuse |
  11. tapirking

    Interesting article and interesting comments. Buying American is not as hard as a lot of people make out. Many products made in this country, cars, socks, jeans, cleaning products, cost about the same as similar products made abroad. Libman makes great mops and brooms in Arcola, Ill that cost the same as mops and brooms made in China. Wigwam Mills makes socks that cost no more than socks made in Honduras or Mexico. I am blogging on this subject every day at simply-american.net. Please stop by to read my posts on all things Made in America. Apple could make iPads in this country for the same price as in China, but they would have to cut their markup from 55% to 38%. Most buinesses, apparel, shoes, groceries, operate with markups under 5%. So, American made Apple products is surely a possibility.

    All the best,

    John Briggs

    January 16, 2012 at 9:19 am | Report abuse |
  12. Comeonnow

    All this Union bashing, really??? After WW2 there was a boom in this Country, Unions were strong, almost at 45 %. People were doing great, Lots of homes were built and Mom stood home, she didn't have to work. Salaries were up because of Unions, workers across this country were doing well. Then the CEO's got greedy, started useing people with power to start bashing Unions so people could be afraid of them. Then little by little and then by chunks, now unions are around I believe 10% across this country. As the Unions were crippled by fox so called news, cnn etc. people started believing the trash and lo and behold the corporate masters got their wish and now people are barlely making it, jobs are overseas. You hear stories, I see some union workers, hardly working and they are getting paid so much, its not like they are even making a 50,000 a year by the way, but I work in a non union company and I see the exact same thing. Unions fight for their workers, it used to be, a mechanic working at ford, Union was making 50,000 a year, and his buddy working for a non union plant was making 30,000 a year doing the exact same thing. His friend would go to his boss and say why is my friend working at Ford making 50,000 a year for the exact same thing that I do and guess what, now both were making 50,000 a year. Now there is hardly any of that going on. Joe working at electronics are us is making 10.00 an hour and his friend mike is at electronics 24/7 is also making 10.00 an hour. Corporations are making billions and their employees are making dollars. If you even bring up a Union in China they will put you in jail for up to 10 years. Some companies that I worked at said I could get fired if I even say the word Union. They realize that if there were more Unions, thats one less girlfriend of they many they probadly have scattered across our country and around the world, one less mega million dollar personal yacht, one less mansion of the many they will still have. There is a huge income inequality going on this country, I don't have all the answers but ALL of Our representives in both Houses are bought and paid for by Corporations, even our Surpreme Court, Just look at the Citizens United bill that was passed a year ago amongst other bills. Members of Our so called supreme court attending Corporate million dollar bashings. A well paid work force, is a Strong country. Don't complain, do something, get involved, End apathy, lets make sure our representatives listen to us vs the corporations, if they don't we will stop voting for them. Call them, write letters, visit their offices. Join Occupy, or support them, Get off the couches and get doing something. Democracy requires you, Voting once every four years isnt doing anything. Let them know who you are. Stay in contact with your representatives. Or run for office yourself, be the change you want to see in this country. Corporations are not people.

    January 17, 2012 at 2:58 am | Report abuse |
  13. working abroad

    Globalization has probably given more jobs than it has taken, and provided cheaper products that allow consumers to buy more than they otherwise could. However, nothing comes without a cost(s). Short term the benefits (cheaper products, higher profits, political influence in the new manufacturing countries) probably outweigh(s) or at least seems to outweigh the negatives. Longer term it is probably a bad strategy. Less available manufacturing jobs, thus less income to buy even the cheaper products will ultimately result in lower profits through reduced sales. Also less tax will be collected at the same time as higher social taxes are required (more people needing government aid) The political influence already works both ways. Perhaps even worse, developed democratic countries become at risk of dependence on production of even militarily strategic components to countries that do not share their ideals. At the end of world war 2 it was this fact that resulted in the decision to merge French German and British key industrial endeavors and to co produce military hardware, the desire to make any sustained future war between those players completely impractical. However I am not aware of any key components required by the Chinese military produced in the USA or Europe... But both Europe and the USA are more and more dependent on chip manufacture abroad. Corporations are driven by share holders, share holders are driven by greed. Greed is a human trait that is probably here to stay. It is unlikely that share holders can be convinced to stop thinking about this years profit for the "overall good" and long term prosperity. I believe that legislation forcing companies to pay wages comparable at least semi comparable to the low end of wages for similar works performed in the home country would go a long way to solving the problem. If combined with legislation enforcing domestic labor laws to be applied to foreign workers we would really level the playing field. Otherwise we simply allow corporations to exploit the lower standard of living and lack of legal recourse for foreign workers in developing countries. Doing this legislatively (and applying the rules to all companies wishing to sell their product to our consumers) is the only way to do so without unduly burdening domestic manufacturers and shareholders. This can be combined with tax breaks for companies investing in manufacturing in the country in which they wish to sell. Hey – I have no problem with encouraging a Chinese company to open a factory and employ American workers to save shipping, export and quality recall costs :).

    January 18, 2012 at 7:20 am | Report abuse |
  14. Ray Allen

    I remember talking to officers during my enlistment, and their concern was that our military hardware that is manufactured overseas could have a hidden "backdoor" to allow a potential enemy access to the command and control systems in everything from an F-35 on down.

    There is no reason that the automated factories being built overseas that use minimal personnel couldn't be built here.

    The only reason that Foxconn and other manufacturers in the third world treat their employees the way that they do is that peons and slaves are often cheaper than a machine.

    A healthy profit to benefit your shareholders and employees is a laudable goal.

    Unbridled greed at the expense of and detriment to your employees is not sustainable.

    February 6, 2012 at 6:16 pm | Report abuse |
  15. Bea Smith

    Care about Social Justice for Vulnerable Workers?
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    March 31, 2012 at 2:51 am | Report abuse |
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