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In the 1980s the US plant was obsolete and needed to be replaced.  Plant cost was the same no matter where they parked it so they went off-shore to be able to buy labor in a low wage rate environment, e.g., Indonesia, and sell in high wage rate markets and pocket the difference.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Jul 12th, 2016 at 06:29:09 PM EST
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More than systemic under-investment, computerization and robotisation were also creating a whole new generation of manufacturing capabilities which were very capital intensive and which required changed work practices and extensive re-training which are often easier to implement in a green field environment rather than with expensive 50+ aged workers. Labour costs actually became a smaller fraction of the total cost of production, but it was the willingness of (say) Chinese workers to work all hours, learn new skills quickly, and the lack of unionisation which made the move overseas attractive.

Of course once they had acquired the skills, the Chinese set up their own factories with the same technology and the "borrowed" intellectual capital to effectively compete with the original out-sourcers. Too late, the out-sourcers realized their own technologies where being used to compete against them, and in many cases, sought to insource again or transfer to a less entrepreurial culture with less availale capital to replicate the technology.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 13th, 2016 at 10:13:01 AM EST
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In the old German phrase, the outsourcers 'grew too soon old and too late wise.'

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 13th, 2016 at 03:05:47 PM EST
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