Here in the US, we pretty much outsourced our manufacturing to China.
This has always been the case (since after WWII), but this time, we did it to such an extent, that we have destroyed our domestic manufacturing infrastructure.
A number of folks made a lot of money on this, but a much larger number of folks have really taken it in the shorts. Arguably, a lot of the troubles we've had, over the last decade, have found a root cause in this.
It's no secret. Pretty much everyone knows this, but the will to do something about it is weak.
It's been my experience, that when the pain gets great enough, the change will come. That's not always a good thing. Change like that, more often resembles an amputation, as opposed to a disinfectant swab and some stitches.
Automation ended the vast majority of high-labour manufacturing. What was left was only economical to do without automation at extremely low labour costs.
In the next decade, china itself will see large segments of its manufacturing labour gone to automation.
> In the next decade, china itself will see large segments of its manufacturing labour gone to automation.
I agree. It will be slower than Japan and Korea, because China has a much larger population of poor folks that will work 996, but, one day, we will see a very different China.
It will be a consumer powerhouse. If you think America is a consumeristic society, just wait until China becomes mostly middle-class. There's a reason why so many corporations are abasing themselves so much for entry into the Chinese market.
I think the "global class structure" we have today might be the peak of history.
The relevant calculation:
Annual US Energy Consumption per Capia: 7,000 kg oil equivalent. China: 2,000 kg.
So you're looking at +5,000kg per capita * 1.4bn people annual.
So you'll need to add that energy capacity to the world, ie., a c. 10 trillion kg oil eqv. -- it's not clear we can do this.
Basically the small group of younger workers are going to have their wealth siphoned off to support the much larger older population who doesn’t have financial means to support themselves. Not a big deal when it’s 5 workers to one retired. Huge deal when it’s 2 to 1.
The expectation is that will stall growth for decades. China will be richer, but stuck in a lower income range until they come out the other side.
It’s an interesting theory.
I'm not sure how to factor density into this.
What do Foxconn and TSMC (and 100s of others) do then?
* - first relevant factory operations in 1988 and 1987, respectively.
Is this true? I am under the impression that the US still has loads of high end manufacturing, it's just the low end stuff that no longer exists and even then it's partially due to automation
Exactly. High end has higher margins, and a simpler distribution chain.
It isn't worth it to do the small stuff here, but the small stuff is a really big deal. There are many American households that have nothing made in the USA. China knows this quite well.
“Don’t get into IT or software development it’s all going to be outsourced.”
I'm sure there's a lot of variance, but I don't think "outsourced everything" will be practical for most software businesses that place importance on quality of service.
Outsourcing can be great for developing a green-field new initiative, but at some point the in house folks are going to need to learn the new codebase so they can fix bugs, scale, and keep the lights on.
All of those places have salaries that are a fraction of the typical US salary. US salaries are incredibly ridiculous on the global stage. And all of those places with actually good developers
The overall labour cost is similar.
American developers are just lucky that they live in a low-tax society.
The second issue that still comes up is communication and culture. Successful cross cultural communication requires more clarity in messaging and tasks. It can work and can work well and deliver good quality at great prices, but the obvious savings are partially offset by the higher communication and management costs. Sometimes more than fully offset.
How is it overpaid? Engineers provide a lot more value than they are getting paid. If anything, people abroad are underpaid.
Both can be underpaid, ya know?
Nobody wants to offshore to India anymore because the business culture at the big body shops is totally unethical by western standards and there’s just an expectation of getting swindled on QoS; so people only ship low-value jobs like customer service over there. And even those are moving to South America for time zone reasons (and the business culture more closely aligns with the US).
The difference in pay is not just due to proximity and will likely persist to some degree.
Turns out cultural differences around work, communication, etc between the US and India/China are pretty massive. I seriously doubt that these went away in 2 decades.
Also, your argument around standard of living and education would actually be more proof that outsourcing would not work. It is no longer as financially beneficial.
That being said, you're also right, past failure doesn't mean that it can't ever be successful in the future.
What about France? Minimal cultural differences, and you still get massive savings when it comes to paying salaries.
That being said, yes there are other options. Eastern Europe is more and more popular for outsourcing, so is South America. Honestly, I'm maybe dead wrong but when I compare the mentality two decades ago (ie let's minimize cost by any means, who cares who writes the code? it's just code) and today, I truly see an equivalent to the "not invented here" syndrome.
Unless I'm wrong somewhere
A $100k salary in the US also means the employer is paying $7650 in payroll taxes, typically some amount of money for health insurance ($0-$30k depending on the employer), maybe paying for office space, etc, etc.
A €40k salary in France means the employer is paying (if I read https://www.activpayroll.com/global-insights/france at "Social Security in France" correctly) somewhere around €21k in payroll taxes, plus whatever other benefits/administrative/etc expenses they have. I assumed the "family allowance contribution" of 3-5% is paid by employee, not employer, but I'm not sure.
That's assuming that €40k is the gross wage and not the "wage after employee side of payroll taxes". I don't know what the French custom is here in terms of what the salary numbers mean.
Anyway, the employer cost of just that €40k salary plus the obvious payroll taxes is $73k or so (with the payroll taxes and current exchange rate). Obviously still smaller than the $108k for US salary plus payroll, but not as much smaller as it seems at first glance.
Also note that in the US it's normal to work longer hours for more weeks for that money than it is in France for the French salary, though the effect is actually not too great if the US job is mostly 40 hrs/week, 2-3 weeks vacation, etc.
I welcome outsourcing though. I do quality work and know what it's worth and can advocate for myself. Any foreign worker who can do the same is welcome.