Sibling Rivalry

We’ve been hearing a lot about outsourcing (contracting or subcontracting activities previously handled in-house to outside vendors) and off-shoring (moving operations previously handled domestically to locations outside of the home country) in recent years, most often with somebody complaining that faceless, heartless companies were using these methods to obtain lower costs at the expense of American workers. The implication is that these companies should put a higher priority on patriotism than profitability – or, if you are a less rhetoric-obsessed individual, that these companies should take a more holistic approach to their strategy and consider that if their own community has no jobs, there will be no disposable income and no one to purchase their products, thus defeating the point of going offshore in the first place. Of course, it remains to be seen how the people raising those arguments will fare when the “foreign” location turns out to be South Carolina…

The Associated Press, in a story cited by Google News online, notes that Boeing has elected to build its new factory in South Carolina, where it will locate the second assembly line for the new 787 airliner. The primary motive cited is the $170 million in incentives offered by South Carolina’s state government, but the article concedes that part of the rationale behind the selection is the recent labor problems in Boeing’s long-time home base of Washington State, including a machinist’s strike and the inability to reach acceptance of a no-strike contract with the union. Various analysts are now speculating that if the move works out well for Boeing (and it is expected to), the company could move all of the 787 production, and possibly other new product lines as well, to the South Carolina location to take advantage of lower costs, non-union labor, and a favorable relationship with local government. Which would not bode well for Washington State…

Now, no one is suggesting that the people in Washington State have anything against the people in South Carolina; it’s quite likely in fact that the people in Washington State are happy for their Southern counterparts and wish the people in South Carolina all the best. It’s even more likely, however, that the people in Washington State would be happier to have all of the 787 production stay in their neighborhood and have Boeing expand into South Carolina and build something new in their new factory. It’s a near certainty that when the machinist’s union went on strike last year, shutting down Boeing’s commercial operations for over eight weeks, that none of their leadership was counting on the company moving a large portion of their operations to another state, let alone the appearance of a massive national economic crisis that would make it difficult for their membership to find alternative work. Still, we have to question if the strike was really the best choice they could have made at the time – since, even without the current recession, moving operations to somewhere cheaper has been a subject of much discussion in recent years (as noted at the start of this post)…

I’m certainly not anti-union; I’m not even opposed to this specific union, although I suppose it must sound that way. I’m opposed to people who refuse to consider the larger strategic implications of what they are doing, however, and I can’t imagine how the possibility of losing all of those union jobs to another state could possibly have slipped past the union’s leadership in this case, considering that Boeing already makes a large percentage of the 787’s parts in facilities in South Carolina. Fondly imagining that the company is too patriotic to move operations overseas is one thing; blindly accepting that they would somehow balk at giving the work to your brother and sister workers in another state is something else again. And in current climate it’s hard to imagine a state government in the U.S.A. that wouldn’t gleefully try to poach jobs and revenue away from their neighbors if they got the chance…

Which means, I suppose, that if you’re considering labor actions or anything else that might cause someone to send jobs somewhere other than your home state, you should probably give some thought to who else might be willing to take them for less money. Chances are, the list isn’t limited to some companies overseas…