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OUTSOURCING TO CHINA

This started as a technical letter but soon degenerated into a debate about outsourcing, and so on. To keep our technical letters pages technical, we've moved the debate to this editorial area.

 

Dear Sirs,
Here we meet the question about "black anodized (Type 2,Grade 2)"
We don't know what kind of "black anodized (Type 2,Grade 2)"
Hot or cold? This black anodizing is hard black anodizing?or others?
Thanks in advance for your help.

[name deleted by editor]
mechanical part co. - Changzhou, Jiangsu, Cn


Hello Wangjun. This probably is referring to or type II conventional (68-72 deg F.) sulfuric acid anodizing, dyed black. Try to get a copy of the spec, or clarification from your customer; good luck with it.

Ted Mooney, P.E.
finishing.com Inc. - Brick, NJ

P.S. to the readers: Every week we receive dozens of inquiries which we don't print because they are just too vague. I now understand that phrase "throwing it over the wall", and the claim by some that much of the economy of outsourcing to China is illusory and merely a reflection of inept accounting practices. How can anyone afford for their work in process to just be lying around 12,000 miles away, in the hands of people who have no idea what is expected of them and little if any experience in the processing? :-)


"How can anyone afford for their work in process to just be lying around 12,000 miles away, in the hands of people who have no idea what is expected of them and little if any experience in the processing? :)"

Although some may disagree with me, it wont bother me one little bit to have these Chinese (and other "outsource" countries) fail miserably at delivering a quality product, on time, even at cost to American owned companies. Hopefully a lesson will be learned, and the work, and subsequent jobs, can be brought back to the USA.
I, for one, will not reply to questions from these folks, nor from countries that continually make threats against America.
I'd be curious, Ted.. what percentage of questions coming in now-a-days are "foreign"? At a quick glance, it appears to be close to 50%. A significant increase from when I first started participating in this forum in the late 90s.

Marc Green
- Boise, ID, USA


12,000 miles away and has no way to ask the right question.
I hope you find what you are looking for.

How much profit loss will the company that sent the parts to China witness?

Ryan Cook
- Toccoa, GA


I agree 100% with the comments made! We have been in the Plating and Anodizing business since 1918! And this technology was hard earned!

Max T. Faeth, President
Highland Plating - Los Angeles, California, USA


Mark: answer whichever questions you want and refrain from answering whatever questions you want, for whatever reasons you like. I certainly don't fault anyone for choosing to not give away the store! None of us can afford to share everything with anyone, let alone everyone, anyway.

But for myself --
With Afghanistan under our occupation executing Christians for apostacy ... with our president lobbying hard to turn control of our 6 east coast seaports over to the government of the U.A.E. ... with NAFTA treaties encouraging export of manufacturing jobs to Mexico ... with a substantial insurgency in Iraq making it impossible to know whether we're posting a good guy's letter or a bad guy's .. with not even one of the major plating process suppliers being American anymore ... with most of the smaller ones desperately working to sell or license to Asia ... I'm neither sufficiently in the loop nor politically and economically competent enough to presume to decide which inquiries it is in the political interests of the U.S. or the interests of the American metal finishing industry to let you see :-)
You'll have to decide which to read and which to answer by your own lights.

"The World is Flat" by Thomas Friedman is a best seller that purports to explain what is happening to us with regard to outsourcing, and why. I have a copy and am at least flipping through. It seems to imply that the biggest reason you see an increasing number of postings from Asia is not the outsourcing per see (although that's certainly a factor), but the huge investment in Internet infrastructure by India, which is now starting to be echoed in China and the rest of Asia.

Ted Mooney, P.E.
finishing.com Inc. - Brick, NJ


China and India are not stealing our jobs or work. Our customers are sending the work that way, usually because they believe it is a sound business (read, economic) decision. It is not much different than a customer switching suppliers in town because the original supplier does not provide the product or service that the customer wants (or needs).

I have not seen anyone who responds, 'give away the shop' with their advice. As mentioned earlier, a lot of our business is hard earned, and where that provides us with a competitive advantage, we usually keep that knowledge proprietary.

Most people here ask a specific question to a unique problem and get an intelligent and informative response. It may not be exactly what we need, but if not, it points us in the right direction. Those that don't ask an intelligent question see NEW by their inquiry header for weeks. The site by nature is self governed. As Ted pointed out, if a question is worthy of a response, one is received.

Willie Alexander
- Colorado Springs Colorado


It's in the best interests of finishing.com and its readers to encourage questions and answers from all corners of the world. It encourages the continued use of English as the international language of commerce and science and also, worldwide use of Aluminum Association, AISI, ASM & ASTM standards for materials & processes. We are also fortunate that much research from non-English speaking countries is published in English language journals, and I hope that it remains so. China graduates far more engineers and scientists from its universities than does the United States, so openness will benefit the US more in future years.

I sympathize with those who've lost work, and "throwing it over the wall" may characterize efforts of a small business attempting to outsource w/o overseas contacts. But, Boeing, GM, Intel, etc. must have a magic door to highly qualified finishers in China -- GM makes a profit there!

How many readers would care to post a question in a foreign language forum? I don't know whether finishing.com makes a profit on India, but there are many good answers from there to balance any poor questions (seems true in general), and this will likely become true for China given time. It's also beneficial for Chinese readers to observe worker health/safety and pollution control issues, so as to generate support for such issues there.

Criticism should be directed toward the US government for failing, both bilaterally and via the UN, to promote environmental protection, worker safety and labor rights in China. Further, the enormous energy emissions loophole given in the Kyoto agreement to China as a "developing nation" should no longer apply; China will almost certainly surpass the U.S. in 2006 in exports of manufactured goods. Action in these areas, plus encouraging the "floating" of the yuan, would appreciably "level the playing field."

One more editorial comment: Despite the pro-business rhetoric of the current Administration, its actions are hurting the overall US economy and thus businesses. "For the United States, the recent peak level of the federal debt relative to GDP was reached in 1993 at 49.4%, when the budget deficit was $255 billion. In 1994, even though the deficit was still over $200 billion, the debt fell relative to GDP. By 2001, federal debt had fallen to a low of 33.0% of GDP. In 2002, the ratio of debt to GDP began to rise for the first time in eight years, and in 2004 stood at 37.2%." -- Congressional Research Service, The Library of Congress, Order Code RL31235, January 28, 2005.
[There was a budget surplus from 1998-2001.]

"By reducing national saving, large and persistent federal deficits lower the amount of resources that U.S. Residents are able to devote to investment in productive capacity at home and abroad. Domestic investment (private and public) affects the growth of U.S. output and productivity in two main ways. First, for a given level of technology, an increase in capital raises output per worker (labor productivity). Second, because new capital is often the vehicle for introducing new technologies into the production process, an increase in investment may raise TFP growth.
...
Federal deficits reduce future living standards by slowing the accumulation of national wealth as they lower national saving. Deficits reduce national saving by shifting resources into public and private consumption through increases in federal spending and cuts in federal taxes."
-- Long-Term Economic Effects of Chronically Large Federal Deficits, Congressional Budget Office, OCTOBER 13, 2005 (available www.cbo.gov).

Finally: See the US national debt continually updated at http://www.brillig.com/debt_clock

Ken Vlach, PhD
- Goleta, California


"China and India are not stealing our jobs or work. Our customers are sending the work that way, usually because they believe it is a sound business (read, economic) decision. It is not much different than a customer switching suppliers in town because the original supplier does not provide the product or service that the customer wants (or needs)."

I agree with you that no work is being "stolen". I have 2 gripes with this whole deal. #1. The aforementioned countries (and others) are not implementing the strict and costly environmental codes that we have to abide by in the USA. I'm betting the safety regulations in those countries are mediocre, at best. Not abiding by the regulations that we have to definitely put the American companies at a severe disadvantage. For that, I hold the Governments of those countries directly responsible. #2. My other gripe is with the American companies that either send their work offshore, or set up little satellite companies in those countries, to take advantage of the cheap labor, and aforementioned lax regulations.
I have no problem with competition between companies, both in the USA, and foreign, as long as the playing field is equal.

Marc Green
- Boise, Idaho, USA


Ted,

Even though I am an (east) Indian, I would like to give a neutral view on this issue, as we are going to face it very often.

As pointed out earlier by Willie, the so called outsourcing countries are not stealing jobs from developed countries; the products made over there are of affordable price and of acceptable quality for a given product and customer buys from them .. simple economics. It's not the same for all products; it is applicable only to certain products.

One should realize that the types of services / products that are outsourced are those that can be made by anyone (easily reproducible technology) not the hard earned technology. Hard earned technology stays where it deserves to stay and it is really up to person answering the question whether to answer or not answer (to divulge proprietary information).

Countries like India / China are just experiencing a similar situation to what US or other developed nations would have experienced 50 yrs back. New customers (mostly from US) are pushing them to new limits and they are working hard to find ways to satisfy their new customers. Just like a highschooler asking a forum the homework questions asked by their teacher, they come here and post the questions to reduce the time on the critical path. If they don't get an answer they will go find some other way to get it and eventually find that technology doesn't come cheap and end paying for it. They do this to satisfy their customer and feed their workforce.

I have worked in US companies that are selling products to China, which the Chinese company tried hard to do on their own and eventually gave up. They are good at producing parts that are labor intensive with trailing technologies (not the lead edge one).

India and China might find themselves in similar situation after 20 or 30 yrs when countries in Africa become competitive. So this kind of vicious cycle is going to continue for ever. In past century it took time for such technology to travel, now with the emergence of internet and other affordable communications, things are changing fast. As the competition gets fierce, we either keep up with it, by making us more competitive or find avenues where there is less competition. (Which most companies in US are doing ... moving easily reproducible technologies overseas and holding the less reproducible one ... leading edge technology ... in-house)

Also we have to remember that business in US is booming because people in India and China are now buying more US goods than ever. People who had tough time finding job in India 5 yrs back, have a job and it is getting affordable for them to buy things .. they are having a decent living now. Take for example a call center, these companies invest on computers and other communication machineries which comes from the US to do a US business (call center for a bank.. may be). More business is more travel ...which keeps the aviation business growing ... Boeing recently clinched a big contract with India. India doesn't make airplanes but eventually end up making them 20 yrs from now .. by that time Boeing might be working on space travel (who knows)...so long story short ... it's not between countries anymore .. it is between businesses and individuals ... as we become a part of this materialistic global village ... competition is going to be fierce and we have to be prepared to face it.

I am of Indian origin and I work in the US; every moment of my life is a competition and I have to stay ahead of my competition to get what I want ... life is not fair. It is a regular part of the things I do everyday. Be prepared and outdate yourself before someone does that to you.

Even though most of these events are business driven (need and supply), you can eventually take pride for the overall improvement in the livelihood of human being. More people across the globe lead a decent life than it was 50 yrs back, they have their basic need fulfilled (Home, Shelter and food), affordable medicine, etc etc. As life gets better and better ... new needs starts popping up and this cycles continues for ever ... there is long way to go.. and no way out -- we better get used to this and let it go.

I really didn't want to write such a long essay, but it kept going once I started writing it .. maybe that's why Thomas Friedman wrote "The world is flat".

Hope we eventually come in terms with the laws of nature and try to accept it rather than fighting it.

Thanks.

Karthik Thambidurai
- Austin, Texas


It's the American way to find low overhead alternatives for it's manufacturing labor, but that business model won't last any longer than importing cheap labor did. They catch on and unionize and stuff and then start demanding whats rightfully their's, a decent wage for a days work.
There isn't any possible way for me or anyone else to put 27 years of manufacturing experience into a format like this, so I don't mind helping out someone that's looking for the system "tweek" or small bits of advice. I will continue to refuse to answer "How do I build a factory" type questions, even from US inquirers.

Sheldon Taylor
- Youngsville, North Carolina


I do agree with Marc, that there is an unfair advantage because of the great reduction in overhead cost due to environmental and safety regulations. But the same thing holds good for companies within India itself. There is a big difference in running an organized business (medium scale) and running a small scale company (Pop & Mom shop).

When companies from US setup a business in India (satellite companies), they come under lot of scrutiny by the government, the Pollution control board and the local politicians too. You have to be very careful in setting up a company as the bureaucrats and politicians around you know that you are backed by a big corporate or a wealthy overseas company. You have to make sure that you are not at fault for anything (safety or environmental), you are not going to pay fines to the government but you will end up paying hefty bribes to the bureaucrats, local politicians and union leaders... its an endless mess .. You don't want to get in there. It is always good to take better steps to exceed the environmental regulations or safety regulations in place. You will end up having a PR department advertising that you are doing more than what the government is asking you to do. I have seen companies where the PR department is the interface to Pollution control board, they want to take care of the Pollution Control personal before they could meet the engineer or make a visit to their site.

But the game in the small scale industry is different, say you own a jewelry business, you can have your own plating shop at your home or in the backyard of your business and there is no regulation for anything. They make their own chemicals (PGC) and plate gold and dump it, no one is going to question you (unless it poisons your neighbor's cow and he takes you to justice). I have seen a plating shop that runs nickel plating from a concrete tank, the owner doesn't have a clue of what is in the bath, all he knows is that you connect power it plates that it.

The fault is on the small companies that sell the plating chemistry to these folks, they have a field chemist who regularly takes samples from 50 small shops like these and keep the bath going (like adding brightener etc), they don't educate these folks. The Pollution control board doesn't have a clue about where the chemical ends, it might end up in the sewer untreated or anywhere, even the pollution control board is having tough time regulating the small shops. For instance, leather tanneries (small shops mainly) where dumping their effluent in a big unprotected lagoon which eventually spoiled the ground water in that place (20 mile radius of agricultural land). The government started taking action only after much pressure from people. It sometimes backfires, the same politicians who got bribes from you goes against you too.

So if you are a business of considerable size, exporting products, few foreigners visiting you often, then you have to be careful. There are people watching you, it might not be the government but people willing to take advantage of you. Similar thing happened to Coco-cola, there was big issue about heavy metals found in coke and the effluents from their factory (may be they didn't get in terms with the local politician).

Its not that plating business or manufacturing is moving, long before that there were several booms in India -- Leather, Textile etc had their own good time when these business were moved from US 20 30 yrs back. Now it is time for manufacturing to move and hope after 10 yrs for Hi-tech industry (semiconductor). When someone sees a lucrative business everyone jumps onto the bandwagon and get a share of the pie. But hope there will be stricter regulations and people get educated about the safety and environmental concerns and starts to implement themselves rather than government trying to police. The government sometimes is not prepared for what is coming, for the regulations to be in effect it takes while.

My personal experience in India, I was trying to set-up zero discharge systems in companies that I worked -- trying to treat everything before it got out of the system and still our PR department had to "take care" of the Pollution Control Board engineers. In US there are plating shops that looks 30 yrs back in time (dripping tanks, solutions on the floor, wooden palette as walking platforms, etc) and there are shops that are world class (not only by looks, but by standards).

My point, it finally vests on the type of person -- there are companies in India that are really concerned about environment and safety and there are companies that give a damn about it. It all comes from customers, if they demand it they will get it.

Sorry once again for such a long posting ... I am just trying my best to show the real picture of what is happening in developing nations. This forum has to exist, I don't see myself as a foreigner when I visit finishing.com, if I knew the answer I try to answer it right away. My feeling is that once people get educated, it will make a difference. That's the reason it is good to have a knowledge base like this forum, where people can refer and correct themselves if they are doing something wrong (technically and morally .. like spoiling the environment).

Thanks

Karthik Thambidurai
- Austin, Texas


As a followup: it wasn't so much the sending of parts to China for plating that I was objecting to, it was the mindless doing so.

Management philosophies come and go; they become "in" without careful examination; later they are gone, but not before they leave scars on the economy.

- Everyone my age knows of "Management by Objectives" -- how widely and uncritically it was accepted, how "de rigueur" it instantly became, how some employers would fire you if you did not embrace and swear allegiance to it ... and how many tremendous ideas, good managers, and formerly great companies it killed off.

- As another example, I don't think it's an exaggeration to say that the growth of the Japanese auto industry, and the downfall of the US auto industry was caused by adoption of mindless cost reduction programs. "If GM can save 1/10 of a cent on each fastener" sounded good; but the result was cars like the Vega and Pinto, and the consequent demand for reliable Japanese cars.

- Now it is "de rigueur" to "have it made in China". But in many cases, as exemplified by this very thread, there is zero economy in doing so -- it's just trendiness combined with a blindness to actual costs. So when we are destroying our manufacturing industry partially due to mindless accounting practices and trendiness, that's something we should be trying to fight -- not because it helps others, but because it is so wasteful to be trendy and ignorant.

Ted Mooney, P.E.
finishing.com Inc. - Brick, NJ


I am really late on this thread....BUT.. I am in direct competition with foreign outsourcing, being in the surgical steel body jewelry industry.

My customers are well aware that the foreign products are made using child and slave labour, with no attention to environmental concerns. The metals used are rarely "surgical steel" and opens the door to bait and switch tactics. I have seen photos of machinists actually chained to lathes. The cost of outsourcing is the integrity of the human race as a whole.

My clients are buying my products from me at 10 times the foreign wholesale price because of these factors.
My customers know I use ASTM certified materials and procedures, and know I do not use slave or child labour.

If profit is the motivation for all this outsourcing, why am I able to charge 10 times more than foreign companies, and get the business? Because the high quality product speaks for itself, and clients have trust that I will not provide profit directly to foreign markets and devalue our currency, thus increasing the longevity of businesses in our own marketplace.

Thanks for letting me rant! Buy North American!

Jeff Swayze
- Kelowna, B.C., Canada


Since when is this a political forum.

The name of the web site is "finishing.com" not "debate your political opinion.com"

Thomas L
- MPLS, Minnesota USA


All things in moderation, Thomas. When an eight hundred pound gorilla enters a conference room, the conference can hopefully continue, but it is not inappropriate to acknowledge his entrance. Although 99+ percent of the threads here are free of politics, this site is a private, capitalist effort which won't survive if our supporting advertisers don't survive, and we've recently lost dozens of them to shop closures. To expect them and us to just go silently into the night would be asking too much.

This site receives twenty times more questions than I as site operator could ever possibly research and answer. It only works because we have about 150 to 200 "regulars" who volunteer their effort several times a month and even every day, with very little thanks. This site is leavened with a little politics, a little humor, a little current events, a little griping, a little off-topic banter, and a lot of heartfelt thanks from me, to try to make their visits less boring and more rewarding for them. The formula has worked for 20 years without getting out of hand. It'll be alright.

Ted Mooney, P.E.
finishing.com Inc. - Brick, NJ


In response :
Hi,

I've just started enjoying over a week visiting this website - finishing.com and started building up a very good opinion about the site but unfortunately scrolling through some of its past letters like [this one] I am very disappointed. It just started with a question from a Chinese on Black anodising and eventually resulted into this kind of debate - it's a shame. The whole concept of this forum is destroyed it seems.
I'm sure Mr. Editor will look into this matter very seriously and will protect its original mission.

Thanks,

Srimay Basu
- Dubai, U.A.E.


Hello Srimay, thank you for visiting! I've participated in countless forums since the mid '80s and have seen many forums ruined by vitriolic postings -- so I completely understand your concern. But if you feel that a free forum of 60,000 threads has been "destroyed" by a thread or two you don't care for, maybe you are being a little too demanding.

Please participate for a few months before deciding that the "whole concept of this forum" and "its original mission" has been compromised. I've lived and breathed this forum night and day for 20+ years and, with no disrespect, have come to recognize some things that a reader who only discovered the site last week might not yet appreciate.

If readers were paying by the hour for access to answers from experts, your point would be correct -- but this is NOT a consulting service! Rather it's a place where hundreds of knowledgeable metal finishing professionals from around the world come for the camaraderie and, in the process, share a bit of their priceless knowledge. Forbid them from expressing their opinions, and they'll simply go somewhere else where they feel welcome as a whole person rather than as technical chattel to be exploited for free, for the benefit of others, per someone else's "rules". Asking for free help is fine; micro-managing how the responders must deliver it to you ... not so much :-)


Well said, Ted!

Marc Green
- Boise, Id USA


On the inept accounting/ false economy issue again:

I'm not a fancy Ethan Allen furniture guy -- my last dining room table and chairs was from J C Penny some years back. It proved very satisfactory, so we ordered from Penny again. The truck arrives this afternoon and the chairs are unassembled (apparently it's prohibitive to ship assembled chairs from China). So the delivery service assembles them and 5 of the 6 "rock" ludicrously -- one leg shorter than the other by up to a half inch (as assembled).

I've wasted an hour and a half of a workday while they assemble, and they've wasted an hour and a half. Now my wife is wasting time on the phone, as is the J C Penny rep, because they've got to take it back. If they don't give us 100 percent credit then we and they and Mastercard have to waste more time as we refuse payment. And if they do take it back, they've got zero income to cover shipment both ways, assembly charges, lost customer service and sales rep time, etc.

And no matter how it comes out I'll never again buy furniture from Penny. And no one in authority at Penny will ever know. All they'll know is that they got it cheap with the help of Chinese labor so they "made a big profit" :-)

Ted Mooney, P.E.
finishing.com Inc. - Brick, NJ


As a matter of principle, I don't respond to inquiries from low wage countries. That's my miniscule effort to help protect American jobs. If my non-response causes even one day's delay for a third world shop solving a problem, good. It's MY knowledge, acquired over many years, and I won't use it to help export American jobs. America has been good to me, has provided me with freedom and a good life. China hasn't. I owe the USA much and China nothing.

In a way it's a penance. Long ago, when I was much younger, and less politically aware, I took a job as part of a team relocating 25,000 US jobs to Taiwan. It was exciting and fun and paid well. That project, of which I was a tiny part, displaced 25,000 Americans. Sure, it would have been done without my participation, but I wish now I had not been part of it.

Elections are coming in the Fall. Spend your precious votes wisely. Most of the world has no votes to spend.

Jeffrey Holmes
Molecular Technology - Spartanburg, SC USA


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