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Thread: 787 Dreamliner teaches Boeing costly lesson on outsourcing

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    Actually if things were produced COMPETITIVELY in the USA , no we could NOT afford to spend more money or to buy better products. Again going back to basic global economics, if making products in the USA means having to pay mandatory ~15% employee benefits plus ~15% environmental / worker safety / green energy costs that foreign manufacturers do NOT have to pay, then US products by definition must be ~30% more expensive than imported products that do not have to bear these costs. If the US company tries to 'eat' that 30% cost differential they will not remain profitable, not survive, not continue to employ US workers. If the US company tries to float a 30% price increase to cover the 30% cost differential they will not be able to sell a significant volume, thus will not remain profitable, not survive, not continue to employ US workers. Now if the US company could cut employee wages and benefits by 30% ( or lay off every third worker and force the remaining two workers to pick up the slack ) then they stand a chance of remaining profitable ... however this is usually unacceptable either by law ( minimum wage ) or by the simple fact that US workers are unlikely to remain productive at a 50% increase in workload for the same paycheck.

    The laws of economics unfortunately overrides 'hope' ... well they do unless the gov't decides to print up money and spend it paying above market prices for certain US company products ( in this case Boeing 767's ) or subsidizing certain US corporations !
    You keep bringing up things like benefits and those are not available to every factory worker so that's not true. Things could be made in the USA competitively.

    And before anyone brings up unions, I am not talking about unions because for the most part I am not for unions. However I am for the American worker.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    The fact is that we still make a LOT of stuff in this country. Manufacturing is still a major part of our economy. What we have shifted away from are many low wage, labor intensive industries ( textiles , clothing , electronic assembly ) in favor of high tech industries that require skilled and educated workers. This has pushed a lot of former manufacturing workers into service industries where they have to compete with ILLEGAL immigrants thus depessing wages. This hits paticularly hard among black males and the Latino communities. Just look at the unemployment figures for men under 30 and black males under 30.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    You keep bringing up things like benefits and those are not available to every factory worker so that's not true.
    Every (legal) US employer must pay mandated 7+% Social Security tax on behalf of every employee. US employers must also pay for worker's comp and state unemployment insurance coverage for every employee. US employers must also pay a $7.50+ minimum wage for unskilled US workers ... thus proportionately higher wages for semi-skilled US workers. All of these US employee 'mandates' add costs for US employers that much of their 'offshore' competition does not share. Also, there are de-facto mandates that every US employer provide liability insurance coverage for employees.

    Bottom line is that the minimum mandated 'all in' cost of unskilled US labor is on the order of $10.50+ per hour. This compares to Asian labor rates of $2 per hour or less. De-facto 'all in' costs of semi skilled labor are thus on the order of $15+ per hour, compared to Asian semi-skilled labor rates of $5 an hour or less. There is no disguising this structural labor cost disadvantage faced by every US employer. Then start adding on the comparative productivity loss of US workers who must follow mandated US worker safety and environmental practices that the Asian competition does not etc. And we haven't even touched on the comparative costs of 'clean' versus 'dirty' energy, the comparative costs of business / property taxes, the comparative costs of gov't mandated recordkeeping, the comparative costs of product liability / lawsuit defense measures, the comparative costs of soon to be enacted ObamaCare mandatory health insurance coverage for US employees ( or employer fines ) ...

    These are the reasons behind Eric's observation that many low skilled and semi-skilled jobs are ( permanently ) disappearing from America as fast as the US corporations can manage it !

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    Actually if things were produced COMPETITIVELY in the USA , no we could NOT afford to spend more money or to buy better products. Again going back to basic global economics, if making products in the USA means having to pay mandatory ~15% employee benefits plus ~15% environmental / worker safety / green energy costs that foreign manufacturers do NOT have to pay, then US products by definition must be ~30% more expensive than imported products that do not have to bear these costs.
    No they don't. Labor and energy do not make up the entire cost of the product. For many products, they're only a small percentage of the cost. Labor is only approximately 10% of the cost of manufacturing a car. Therefore, paying employees an extra 15% would increase the price of a car approximately 1.5%, all else being equal.


    Quote Originally Posted by Melonie View Post
    If the US company tries to 'eat' that 30% cost differential they will not remain profitable, not survive, not continue to employ US workers. If the US company tries to float a 30% price increase to cover the 30% cost differential they will not be able to sell a significant volume, thus will not remain profitable, not survive, not continue to employ US workers. Now if the US company could cut employee wages and benefits by 30% ( or lay off every third worker and force the remaining two workers to pick up the slack ) then they stand a chance of remaining profitable ... however this is usually unacceptable either by law ( minimum wage ) or by the simple fact that US workers are unlikely to remain productive at a 50% increase in workload for the same paycheck.
    Again you're making things up. There are plenty of American and foreign owned businesses that are able to manufacture products in the US profitably. Why do you make posts like this, without knowing if what you post is true? The world economy is a lot more complicated than just saying wages are lower in Asia, therefore businesses can no longer profitably manufacture products in the US.

    Quote Originally Posted by Melonie View Post
    The laws of economics unfortunately overrides 'hope' ... well they do unless the gov't decides to print up money and spend it paying above market prices for certain US company products ( in this case Boeing 767's ) or subsidizing certain US corporations !
    That's not the laws of economics, that's your ideology. There are plenty of American businesses that are very competitive in the world economy. Why is it you're always criticizing the US for printing up money to make us competitive, but not China for keeping their currency artificially low?
    Last edited by eagle2; 02-23-2011 at 12:21 AM.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by eagle2 View Post
    787 dreamliner teaches boeing costly lesson on outsourcing

    the airliner is billions of dollars over budget and about three years late. Much of the blame belongs to the company's farming out work to suppliers around the nation and in foreign countries.

    read more...
    omg i've been waiting on this plane to come out!!! I've been watching the specs for years fantasizing!

    Btw i hate planes and haven't been on one in years and thought when this one comes out, i would just have to try it!

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Labor is only approximately 10% of the cost of manufacturing a car
    The complete picture is that US ASSEMBLY labor is now about 10% of the cost of manufacturing a car. However, this ignores the Asian / Mexican / eastern european labor content included in the sub-assembles that the US assembly plants are importing ! If the entire vehicle and all of its sub-assemblies were still produced in America the percentage of labor cost would be far higher. Bankrupt Delphi and a host of other former US sub-assembly producers serve as ample evidence of this fact !

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by eagle2 View Post


    Again you're making things up. There are plenty of American and foreign owned businesses that are able to manufacture products in the US profitably. Why do you make posts like this, without knowing if what you post is true? The world economy is a lot more complicated than just saying wages are lower in Asia, therefore businesses can no longer profitably manufacture products in the US.
    This I totally agree and actually against Melonie. I *never* alluded that everything needs to be outsourced. But, there are plenty of things that are best done in USA and there are plenty many things that are best outsourced (Medical transcriptions, sewing shoes etc)

    I'm only against Kelly's stupid assertion that outsourcing is unpatriotic. That is far from the truth and show a lack of understanding of economics, supply chain and trade.

    E.g": 5 guys within one floor in US can churn out higher quality software than 50 sitting in various offices remotely.

    Melonie, Taxes mean diddly squat when you have to produce quality items. If you produce poor quality products, the piddly 20% or so you save on taxes mean nothing when you lose 10000% on potential revenue (i know you can't lose 10000%, but I mean you can't have 10000% growth in revenues which is the same) .
    That's basic math and in many of your posts your ideology prevents your from doing this basic math

    I'm a libertarian and small-government guy myself, but I know which things are practical (free trade of goods, services and ideas, reduction of laws, efficiency in govt services) and which aren't (end the fed, or the stupid gold standard)

    Sadly, as a libertarian, I'm appalled by the fear-mongering tactics used by tea-partiers instead of seeking the truth.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Melonie, Taxes mean diddly squat when you have to produce quality items. If you produce poor quality products, the piddly 20% or so you save on taxes mean nothing when you lose 10000% on potential revenue (i know you can't lose 10000%, but I mean you can't have 10000% growth in revenues which is the same) .
    That's basic math and in many of your posts your ideology prevents your from doing this basic math
    I hear what you're saying, but still have to take issue with your assumption that Chinese / Korean / Indian etc. products are not of competitive quality for mass market products. Lenovo, Haier, Samsung, Kia etc. have certainly established themselves as 'major brands', even though 50%+ of their labor and sub-assembly content is Chinese ... and the balance is still much lower priced than US labor and manufacturing costs.

    Also, 36% US corporate taxes versus <10% foreign taxes is NOT a trivial difference !!! This is the reason that every major US corporation credits as much profit as they can to overseas divisions i.e. unrepatriated profits on foreign operations are not subject to US corporate taxes.

    The earlier point about US aircraft component sub-supplier joint ventures with Chinese companies in the new Chinese aircraft industry 'consortium' shows that US technology is now easily 'transplantable'. A good portion of the reason is the ability of those US sub-suppliers to indefinitely defer the resulting foreign operations income from US corporate taxes ! This also negates the argument that Chinese aircraft are inherently inferior to US aircraft ... since in essence both will be built from similar sub-assemblies and components based on US designs, even if actual production takes place in China ( at much lower cost ).

    IMHO the above trend of US company joint ventures with Chinese companies is an extremely bad development from a strategic standpoint. With China's history, there is no way that proprietary leading edge US technology is going to be kept safe from Chinese 'plagiarism'. Speculative outcome of US technology exposure plus far better educated recent engineering and scientific college graduates leads to a high probability that the US will no longer have a technological edge in another 10 years.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by xanfiles1 View Post
    I'm only against Kelly's stupid assertion that outsourcing is unpatriotic. That is far from the truth and show a lack of understanding of economics, supply chain and trade.
    No, it's not stupid. American companies should only hire Americans. If they don't do this, then they are unpatriotic. especially if they are taking AMERICAN TAX BREAKS FROM AMERICANS. Many of these companies are getting tax breaks while they send jobs overseas.

    I stand by what I say and don't think it's stupid. Any company sending American jobs overseas are traitors. I know quite a bit about economics, probably more than you.
    Last edited by Kellydancer; 02-23-2011 at 01:43 PM. Reason: spelling

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    I hear what you're saying, but still have to take issue with your assumption that Chinese / Korean / Indian etc. products are not of competitive quality for mass market products. Lenovo, Haier, Samsung, Kia etc. have certainly established themselves as 'major brands', even though 50%+ of their labor and sub-assembly content is Chinese ... and the balance is still much lower priced than US labor and manufacturing costs.

    Also, 36% US corporate taxes versus <10% foreign taxes is NOT a trivial difference !!! This is the reason that every major US corporation credits as much profit as they can to overseas divisions i.e. unrepatriated profits on foreign operations are not subject to US corporate taxes.

    The earlier point about US aircraft component sub-supplier joint ventures with Chinese companies in the new Chinese aircraft industry 'consortium' shows that US technology is now easily 'transplantable'. A good portion of the reason is the ability of those US sub-suppliers to indefinitely defer the resulting foreign operations income from US corporate taxes ! This also negates the argument that Chinese aircraft are inherently inferior to US aircraft ... since in essence both will be built from similar sub-assemblies and components based on US designs, even if actual production takes place in China ( at much lower cost ).

    IMHO the above trend of US company joint ventures with Chinese companies is an extremely bad development from a strategic standpoint. With China's history, there is no way that proprietary leading edge US technology is going to be kept safe from Chinese 'plagiarism'. Speculative outcome of US technology exposure plus far better educated recent engineering and scientific college graduates leads to a high probability that the US will no longer have a technological edge in another 10 years.
    OK, I will agree with you again. All things equal, taxes matter. Also, I never alluded quality is tied to any country.

    Quality is absolutely defined by the team structure, the tools and process that they use.

    There are certain product development that fits into Adam Smith's 'Division of Labor' and the teams can be split across, outsourced but there are certain products that are created from 'Integration of Labor' where the team has to be in the same building (else quality will massively suffer)

    All I'm saying is that there are enough 'To Do List' for the whole world and every one can be employed to make products. It is just a question of creating the right money supply (and this is where Gold standard fails massively). If your money supply management is top notch, full employment, efficient allocation of resources are possible.

    Gold absolutely cannot supply money when there is need for it.
    Money has to be allocated where it provides the highest return (that is the real problem not sound money)

    Take for example. If NASA comes up with an idea to harness solar power but needs a $50 Trillion Space Hub to be built (and has a payback period of 5 years or an NPV of 40%), then the most stupid, the most idiotic and the most clueless thing to do is wait for someone to dig up $50 Trillion (or whatever the ratio you set) worth of gold and start the project.

    The smartest thing to do is have the Fed (through banks) print this $50 Trillion and start the project now (remember this $50 Trillion is not for consumption but an investment that provides real returns)

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    The complete picture is that US ASSEMBLY labor is now about 10% of the cost of manufacturing a car. However, this ignores the Asian / Mexican / eastern european labor content included in the sub-assembles that the US assembly plants are importing ! If the entire vehicle and all of its sub-assemblies were still produced in America the percentage of labor cost would be far higher. Bankrupt Delphi and a host of other former US sub-assembly producers serve as ample evidence of this fact !
    No, the overall labor cost for the vehicle comes out to 10% from the sources I've seen. Here's one:

    http://www.factcheck.org/askfactchec...more_than.html

    Even if it's a bit more, the cost of labor, along with the cost of electricity, doesn't come anywhere close to making up 100% of the vehicle cost.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post

    Also, 36% US corporate taxes versus <10% foreign taxes is NOT a trivial difference !!! This is the reason that every major US corporation credits as much profit as they can to overseas divisions i.e. unrepatriated profits on foreign operations are not subject to US corporate taxes.
    The amount of taxes corporations actually pay in the US, is among the lowest of any major industrialized country.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    ^^^ your factcheck should go a little deeper when checking their facts. Factcheck, like the US Gov't, fails to account for the foreign labor content embedded in the imported sub-assemblies included in the US product !!!

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    and ... as expected ... the Pentagon just awarded Boeing a $35 billion contract for new military tanker aircraft based on their 767. The decision rejected the Airbus competing offer, even though the Airbus planes would have been cheaper for US taxpayers ( partially due to Airbus production taking place in low tax Alabama using significant amounts of non-union US labor ).

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    That was a surprisingly good read. Outsourcing to cheaper sources isn't generally the problem, especially in this case. Simply put.. it was a lack of unity in the given project at hand.
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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    ^^^ agreed ... bumbling management is bumbling management ... engineering defects are engineering defects etc.

    The 'gold foil hat' crowd would tell you that management and engineering issues have existed for defense contractors since day one. However, in the past, the extra 'costs' of these issues have usually been easily 'buried' via the defense contractor's de-facto monopoly status or 'cost plus' gov't contracts or via cost shifting from one product line to another. Yes there have been glaring past examples where this has NOT been the case ( i.e. the famous DeHavilland Comet and the subsequent Boeing 707 ). Arguably the case of the 787 is entering new territory since there is now abundant global competition from other aircraft manufacturers, Boeing does not have a lot of 'gov't orders' for aircraft to allow for possible cost shifting ( until yesterday's 767 order anyhow ), and Boeing has arguably 'overpromised' the 787 to both Boeing stockholders and potential customers.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    ^^^ agreed ... bumbling management is bumbling management ... engineering defects are engineering defects etc.

    The 'gold foil hat' crowd would tell you that management and engineering issues have existed for defense contractors since day one. However, in the past, the extra 'costs' of these issues have usually been easily 'buried' via the defense contractor's de-facto monopoly status or 'cost plus' gov't contracts or via cost shifting from one product line to another. Yes there have been glaring past examples where this has NOT been the case ( i.e. the famous DeHavilland Comet and the subsequent Boeing 707 ). Arguably the case of the 787 is entering new territory since there is now abundant global competition from other aircraft manufacturers, Boeing does not have a lot of 'gov't orders' for aircraft to allow for possible cost shifting ( until yesterday's 767 order anyhow ), and Boeing has arguably 'overpromised' the 787 to both Boeing stockholders and potential customers.
    It seems in this case though, outsourcing was just a plain bad idea. Penny wise and pound foolish... quite literally. They would have saved a ton of money on development costs and time if developed completely in house rather than all over the world for political reasons.

    I actually own a bit of Boeing stock which I bought in the earlier part of last year. All this "wonderful" news has really made me question the company. I have a feeling once they release the 787, they're going to drop a bit due to the "promises" they're going to "deliver" on.
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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by eagle2 View Post
    No they don't. Labor and energy do not make up the entire cost of the product. For many products, they're only a small percentage of the cost. Labor is only approximately 10% of the cost of manufacturing a car. Therefore, paying employees an extra 15% would increase the price of a car approximately 1.5%, all else being equal.
    <<<Snips>>>>>>>>>>
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    "Figures lie, and liars figure".
    Not saying that you're a liar, or that above data is erroneous, only leading to 2 other axioms that can be at play here:
    1) "There's more than one way to look at things."
    2) "Ask 10 different people, you'll get 10 different answers".

    Here's another way of looking at the labor cost data you presented- consider GM's 3Q10 ending 9-30-2010 data:
    Revenue~ $34B
    Expenses~$32.2B
    Op. Income~ $1.8B
    Net Income~ $2.2B

    OK, Expenses are $32.2B, so labor costs based on your data should be~$3.2B for 3Q10. I'd be willing to bet the price of a 1 hour VIP that beancounters will look at a 15% increase in labor costs this way: " A 15% increase in labor costs would increase our costs by ~$480m, which would cut our 3Q profit by 21.8%".
    Both mine and your math is correct, but which (if any) outlook will take all concerned parties (company, customer, and employee) where they want to go? Continued in another post........................................
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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    and<< Snips>>>, even though the Airbus planes would have been cheaper for US taxpayers ( partially due to Airbus production taking place in low tax Alabama using significant amounts of non-union US labor ).
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    Continued thought train from post#43......................................

    I have a couple of questions for you, Mel:
    1) During your feature performer career, did you view yourself as a liability?
    2) Do you think other feature performers see themselves as liabilities?

    Outsourcing( or, more correctly in many cases "offshoring") is an emotional hot button for some. Boeing executives have admitted in interviews that they did too much. Rather than try to pin down whether foreign or domestic subcontractors most contributed to Boeings problems, I'll construct an analogy more meaningful to many board members.

    I submit that Boeing doing the degree of outsourcing that they did would be somewhat analagous to a feature performer hiring a body double to do some of her feature shows at a lower rate, and pocketing the difference. Taking hypothetical further, lets say that feature moonlighting at something else while body double does her show ( eg- shooting porno movie) surpasses what she pays body double, thus making "numbers" look good. OK, I can hear the roar of dancers saying "don't even go there". But , lets say that someone did go there. To carry out plan, a certain ammount of coaching/followup would be required, which could easily erase any supposed advantage.

    It is clear that some Dollar Den posters view labor (particularly unionized labor) as a liability. Hard to argue that after looking at balance sheets. I've not seen Mel's answers, yet. I doubt that much, if any, of feature dancer population views themselves as liabilities. The asset/liability dividing line isn't always black and white, but shades of gray. I submit that employees, like feature dancers, can be an asset, particularly when they are relevant to company core business. Things like accumulated "tribal knowledge", company loyalty/focus, smooth established interactions between departments, etc, aren't readily depicted on a balance sheet, yet they are very real. Once dismantled, longstanding functions are hard to rebuild, or duplicate.

    In prior post, I cited analysts estimating cost of Boeings outsourcing on 787 to be $12B-$18B on top of the $5B originally estimated. Putting the "lowball" figure into perspective: $12B would pay for 10,000 workers with average total compensation of $120,000/yr for a 10 year period. Think $12B is small potatoes in that case?
    Last edited by minnow; 02-26-2011 at 01:16 AM. Reason: sp corr
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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    I have a couple of questions for you, Mel:
    1) During your feature performer career, did you view yourself as a liability?
    2) Do you think other feature performers see themselves as liabilities?
    Basically NO ... for several reasons ...

    - feature performers do not impose any employee benefit costs, health insurance costs, retirement benefit costs, unemployment or workers comp insurance costs etc. on the clubs that engage us

    - feature performers' equivalent 'rate of pay' is directly proportional to their 'productivity' i.e. the lion's share of feature performer earnings do NOT come from the clubowner's pocket but from 'direct sales' to customers.

    - feature performers made their own monetary investment in the 'capital equipment' which enables them to be 'productive' i.e. breast implants, costumes etc.


    as compared to ( union ) labor ...

    - union workers receive all sorts of benefits at their employer's expense, with little or no matching contribution expected from the worker's pocket.

    - union workers 'rate of pay' is totally IN-dependent of their 'productivity' ... and once hired they cannot be fired for poor productivity absent provable wrongdoing or negligence ( and sometimes not even then )

    - union workers made little or no monetary investment in the 'capital equipment' they use / operate ( i.e. said investment was almost entirely made by their employer )


    If you're fishing around for me to agree that certain ( union ) workers provide less added value to their employer's product than the combined cost of those workers' salaries and benefits to their employer, then yup I agree !!! In comparison, where feature performers ( very rarely ) fail to produce enough added revenue for clubowners to cover the cost of engaging that feature ( happened to me only once in 10 years due to a major snowstorm ), it's typical for the clubowner to reduce the feature's payment in order for both parties to 'share the loss'. Feature performers have incentive to do so because their future ( repeat ) ability to return and earn money at the particular club is contingent on remaining in the good graces of the clubowner. Obviously ( union ) labor has no such regard for 'loss' sharing when their employer is losing money !

    ~
    Last edited by Melonie; 02-26-2011 at 02:22 AM.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Kellydancer View Post
    I have posted more evidence than you. I posted articles about it (and there are many more available). Anyone can write a research paper that's not proof.

    Now, please stop stalking me.
    You actually haven't posted any evidence at all, except that outsourcing exists lol.
    Sorry for "stalking" you... it just so happens that your posts are in opposition to mine, and I feel the need to call you out when you don't make sense... if that's stalking, I apologize.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    In prior post, I cited analysts estimating cost of Boeings outsourcing on 787 to be $12B-$18B on top of the $5B originally estimated. Putting the "lowball" figure into perspective: $12B would pay for 10,000 workers with average total compensation of $120,000/yr for a 10 year period. Think $12B is small potatoes in that case?
    Back to the math here. Even if your $12 billion cost overrun estimate is accurate, it includes a LOT more than just foreign labor costs in that estimate number. Thus your assertion that 10,000 US workers could be paid $120k a year for ten years on that basis leaves out the comparative costs of producing domestic sub-assemblies instead of foreign sub-assemblies. Or put another way, your assertion would only be true if US sub-assemblies could be produced at a cost that is ONLY $12 billion more than the cost of outsourced production ( which is extremely unlikely given that prices for world commodities like aluminum and oil based composite materials have skyrocketed over the last 2 years, affecting domestic and foreign production costs alike ). And of that $120,000 only $60,000 would actually reach a US worker's paycheck after Boeing paid for 'employer' SSI taxes, mandated 'employer' costs, health care benefits, retirement benefits etc. for those US workers.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by nelly33 View Post
    You actually haven't posted any evidence at all, except that outsourcing exists lol.
    Sorry for "stalking" you... it just so happens that your posts are in opposition to mine, and I feel the need to call you out when you don't make sense... if that's stalking, I apologize.
    Actually I did post evidence, you did not. No, you stalk me, and you're the one who makes no sense, such as claiming you know more about dancing though I've been a dancer.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by nelly33 View Post
    China and the US are allies now, and have been for quite some time.
    China and the U.S. government, yes; China and the U.S., never. Communists always oppose the capitalist system. They only make use of capitalism when it is required to prop up their stagnant socialist system, and that is what China is doing now. Lenin did it right at the beginning; he called it the New Economic Policy (NEP). It's aim was to industrialise the Soviet Union and help it recover from the mess left from the civil war following the revolution, World War 1 and the regimes ruinous socialist policies. They allowed a measure of private ownership, enterprise and trade with the West and relaxed restrictions on migration in and out of the USSR. Around this time big western corporations literally built most of the USSR's manufacturing industry for enormous profit. After Stalin took over and the USSR was newly industrialized and back on it's feet economically, the Iron Curtain came back down. What's happening in China is nothing new and no indication that communism has softened or collapsing. It is merely a tactic for the purpose of preserving the inherently stagnant communist system.
    Last edited by Hopper; 02-28-2011 at 12:00 AM.
    Quote Originally Posted by Athenathefabulous View Post
    we are all perverts in the SC in my opinion. Hes a pervert, you're a pervert, I'm a pervert.

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    Default Re: 787 Dreamliner teaches Boeing costly lesson on outsourcing

    Quote Originally Posted by Melonie View Post
    Actually if things were produced COMPETITIVELY in the USA , no we could NOT afford to spend more money or to buy better products. Again going back to basic global economics, if making products in the USA means having to pay mandatory ~15% employee benefits plus ~15% environmental / worker safety / green energy costs that foreign manufacturers do NOT have to pay, then US products by definition must be ~30% more expensive than imported products that do not have to bear these costs. If the US company tries to 'eat' that 30% cost differential they will not remain profitable, not survive, not continue to employ US workers. If the US company tries to float a 30% price increase to cover the 30% cost differential they will not be able to sell a significant volume, thus will not remain profitable, not survive, not continue to employ US workers. Now if the US company could cut employee wages and benefits by 30% ( or lay off every third worker and force the remaining two workers to pick up the slack ) then they stand a chance of remaining profitable ... however this is usually unacceptable either by law ( minimum wage ) or by the simple fact that US workers are unlikely to remain productive at a 50% increase in workload for the same paycheck.

    The laws of economics unfortunately overrides 'hope' ... well they do unless the gov't decides to print up money and spend it paying above market prices for certain US company products ( in this case Boeing 767's ) or subsidizing certain US corporations !
    So ironically the reason U.S. jobs are being transferred to socialist China is socialist restrictions on industry in the U.S.

    When Castroite author Susan Sontag was asked in the 1960s why she and other communists supported the sex-drugs-rock'n'roll culture in the U.S. while Castro was ruthlessly suppressing these things in Cuba, she replied that what is revolutionary in a capitalist country is counter-revolutionary in a communist country. In other words, communists encourage things which contribute to social disintegration in capitalist countries because they want to destroy capitalism, but once they get power, they outlaw those things, so they don't undermine the communist system.

    So in the U.S. they put crippling controls on industry for every conceivable "social justice" pretext while in China they disregard human rights and environmental concerns altogether to remove all obstacles to cheap manufacturing of goods.

    In a free markets system, a balance would be achieved in which things would be made as cheaply as possible and at the same time workers would have high enough incomes to easily afford them at those prices.
    Quote Originally Posted by Athenathefabulous View Post
    we are all perverts in the SC in my opinion. Hes a pervert, you're a pervert, I'm a pervert.

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