Company's move from country to country looking for those who will work for less money. That is how you build more profit, Most stuff is now made or grown in other country's. The American wage problem, IS an increase the only or best solution? why haven't we increased it a little every few years so business had time to adjust? or would it have mattered? where did this idea that those who start working for mim wage & get pay increases based on time with the company & doing good work that those jobs are s- - t & people doing them are stupid or some other negative you choice to label them. fact is not every one cares about getting rich, many people just want to do a days work go home & leave the job behind. And you used to be able to house & feed on those wages, what happened? I have way more questions than answers.
That's partially true. So I worked at a company that outsourced to China. I was there, talking with the executives, when this issue came up.
The reason they outsourced to China was not as simple as "We make X profit here, and we'll make more profit there".
It was not a decision between we'll only make $50 Billion here, and if we outsource to there, we'll make $100 Billion.
Instead it was choice of "We'll make no profit if we make it here. We'll make a profit, if we make it there.".
The bottom line was, we could not produce the product in the US, and make any profit. It was either outsource and make profits from the outsourcing... or.... not make the product at all.
And that is the reason most companies outsource.
Outsourcing generally speaking, sucks. It sucks. You have to deal with logistics. You have to deal with lost product. You have to deal with language issues. You have to deal with translations of the instruction issues.
And then you have to deal with the fact that every time something goes wrong, it's a long long time to fix it.
At my company we had a particular part that was imported. It was 3 months to get the part. When we finally got the part, we found they had made a critical error, rendering the part useless. So we had to ship it back. 3 month later, we heard from them that they investigated our claims, and determined the error. Then it was another 3 months to have them ship the correct parts back. So as you can see, that was nearly 9 months of waiting for a single part.
Every company would much rather use domestic sourcing. The problem is... you would go broke. It is simply too expensive to make stuff here many times.
It's not a matter of small profit or big profit... is a matter of bankruptcy or profit.
If you doubt that, look at American Apparel. Here was a company that was created, and built on the idea that they would only produce clothing domestically, and avoid 3rd world sweat shops.
And they did. They had factories producing clothing in the US. For about 10 years or so. Then they started losing money. Eventually they went bankrupt, and all the domestic factories were sold off. Today all "American Apparel" clothing, is actually made in third world countries.
In fact, even when they were making clothing domestically, it really wasn't all that honest... because a 2008 report showed that something like 1/3rd of all their work force were illegal immigrants, and most of the rest were immigrants.
So... you see my point? People get this idea that companies are sitting around trying to find some place they can pay people 25¢ less, to make a larger profit. No, if they are planning to outsource, it's because it's either outsource, or out of business.