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View from Lodi, CA: Outsourcing America?
In 1965, fresh out of college, I went to work for the United States Steel Corporation.
How I ended up at Big Steel remains a mystery. There could not have been 100 people in Allegheny County who knew or cared less about steel than I did.
But I was willing and eager. Pittsburgh was the home of dozens of Fortune 500 companies—Westinghouse, National Steel, Alcoa, Jones and Laughlin Steel to name a few. Back then, a young man showing aptitude and spark had a pretty good chance.
I was hired as part of the sales training program. For the next 18 months our group of 20 trainees went from mill to mill along the eastern seaboard. In the mornings we watched wire, flat rolled and tin plate manufactured. And in the afternoon, we listened as product specialists told us why U.S. Steel made the best steel in the world.
At the end of a year and a half, we weren't metallurgists but we knew a lot about steel.
My first assignment was in New York assisting a salesman who sold specialty steel to railroads. I processed the orders, checked the credit, followed up with the mill and fielded the phone calls. All the while, I was becoming savvier about life at a big corporation.
In the mid-1960s, U.S. Steel employed about 300,000 people. The workers had the powerful United Steelworkers of America in their corner. Their mill jobs were tough but they earned solid middle-class wages and had excellent health and retirement benefits.
The sales and administrative personnel rooted hard for the union at contract time. Whatever they got, we got. And those were the days when steel executives and the White House trembled when union leaders expressed discontent.
In 1970, I moved to Banker's Trust where I learned the corporate finance ropes. I crunched numbers during my first year. But I moved quickly and steadily upward. I always was looking for greener pastures and when the opportunity to work in the corporate finance division of Merrill Lynch came, I grabbed it.
In the early 1990s, Silicon Valley howled that it could not find software engineers and accordingly needed to import workers from overseas. Congress complied by authorizing 65,000 H-1B visas annually. The total gradually increased to 115,000; then, 195,000.
Of course, the industry created the "shortage" by firing American workers and replacing them with the much less expensive foreign workers.
Even if there were a true shortage, do you think for an instant that Silicon Valley would hire the local high-school student and train him?
Importing foreign workers to displace Americans is shameless. But now the other shoe has dropped.
Today, my old Banker's Trust job would be done offshore. According to the February 3 Business Week cover story titled "The New Global Job Shift" all kinds of work can and is done anywhere.
Even Wall Street jobs paying $80,000 and up are getting easier to transfer. Brokerages like Lehman Brothers Inc. and Bear, Stearns & Co. for example, are starting to use Indian financial analysts for number-crunching work.
"You will see an explosion of work going overseas," says Forrester Research Inc. analyst John C. McCarthy. He goes so far as to predict at least 3.3 million white-collar jobs and $136 billion in wages will shift from the U.S. to low-cost countries by 2015.
All this is music to the ears of companies like Microsoft. Said Senior Vice President Brian Valentine the company could get "quality work at 50 to 60 percent of the cost,'' adding, "that's two heads for the price of one.'' Valentine also urged managers to "pick a project and outsource today.''
Added Sivaramakichenane Somasegar, Microsoft's vice-president for Windows engineering in reference to moving jobs to India said. "If I can save a dollar, hallelujah."
A backlash has already started. But will anyone listen?
New Jersey legislators are pushing a bill that would block the state from outsourcing public jobs overseas. At Boeing Co., [runner-up in our 2002 War Against Christmas Competition] an anxious union is attempting to block more job shifts to the aircraft maker's new 350-person R&D center in – Moscow!
And the Washington Alliance of Technology Workers (www.washtech.org) started a nationwide Internet campaign calling for the federal government to investigate the practice of U.S. technology companies sending jobs overseas.
If outsourcing is allowed to mushroom, then the American economy will slide into a long and deep recession.
The combination of cheap imported labor used by hotels, construction, meat and poultry processing, food and restaurant services and outsourcing high five figure salaried jobs is a formula for disaster.