Instructions: Each student will select an “Enter the World of Business” article found in the beginning of each chapter. A three-to-five page paper summarizing the article and answering questions from the end of the chapter’s “A Look Back” ENTER THE WORLD OF BUSINESS Made in America: A Source of Competitive Advantage? In the three-year period between 2010 and 2012, the United States created over a half-million new jobs in the manufacturing sector, outpacing all other advanced countries. For example, Walmart, a pioneer in outsourcing, announced plans to shift $50 billion dollars to American suppliers in 2013. At the same time, Apple, which has traditionally relied heavily on production in China, announced that it would build one of its new Mac computer lines in the U.S. Airbus also announced that it would manufacture a new fleet of planes for Jet-Blue in Alabama, and Ashley Furniture targeted North Carolina as the site for a new $80 million plant. As Paul Ashworth, Chief Economist for research firm Capital Economics, noted, “The off-shoring boom seems to have run its course.” Clearly, having once been written off for dead, U.S. manufacturing is staging a much-needed comeback. Although for most people, any kind of job creation is good job creation, there are special virtues to the creation of manufacturing jobs. For one, manufacturing represents 30% of the country’s productivity growth and every $1.00 of manufacturing activity adds $1.48 to the economy as a whole. In addition, 67% of private sector spending for research and development takes place in manufacturing companies. As Dow Chemical CEO Andrew Liveris states, “Innovation doesn’t just happen in laboratories by researchers. It happens on the factory floor. The process of making stuff helps you experiment and produce new products. If everything is made in China, people there will gain the skills knowledge and experience to innovate. And we will be left behind.” There are several forces that have combined to rekindle interest in the U.S. for organizations that used to send manufacturing jobs overseas. Part of this is attributable to low energy costs in the U.S. that resulted from the oil and gas shale boom; however, the role of human capital in this reversal is also critical. U.S. workers are still highly paid relative to workers in other countries, but in many cases, this gap is closing. Wage rates for Chinese workers have gone up 13% a year as that country has expanded, and the gap that still remains is often closed by the higher productivity rates of American workers who rely more heavily on technological advances that reduce the need for a vast army of workers. In addition, unsafe and unethical practices in some underdeveloped countries make some employers afraid of the reputational damage caused by relying on some third-world suppliers or the theft of intellectual property. The stability and tight regulation of U.S. suppliers removes these concerns, and after years of sitting on the sidelines many American workers have come back to manufacturing with a new set of skills and willingness to be flexible that cannot be matched by European competitors. Indeed, this was one of the major reasons why German-based Volkswagen and French-based Michelin decided to open new facilities in the southern U.S. rather than in their own countries. For these and a host of other reasons, as noted by Jeff Immelt, the CEO of General Electric, “We are probably the most competitive, on a global basis, that we’ve been in the past 30 years.” SOURCES: R. Foroohar and B. Shaparito, “Made in the USA,” Time Magazine, April 11, 2013, pp. 22–29; J. Bussey, “U.S. Manufacturing: Denying Naysayers,” The Wall Street Journal Online, April 19, 2012; F. Zakaria, “The Case for Making It in the USA,” Time Magazine, February 6, 2012, p. 19; and A. Ohnsman, “Surprise! Carmakers Are a Recovery Bright Spot,” Businessweek, November 7, 2011, pp. 19–20. QUESTIONS TO ANSWER A LOOK BACK Securing Talent We opened this chapter with a story of how more and more companies are shifting away from outsourcing and offshoring, and instead relying on local talent to compete in today’s fast moving economy. Still there are advantages and disadvantages with recruiting workers from different sources and we highlighted the strengths and weaknesses of alternative methods for addressing a labor shortage or a labor surplus. QUESTIONS 1.Discuss the advantages and disadvantages of hiring local workers versus off-shoring versus bringing in immigrant labor? How does the nature of the product market affect what you might do in the labor market? 2.Assume you are a well-established company facing a labor surplus in some job category. Why might it be in your best interest to use some method other than layoffs to reduce this surplus, and in what sense are your options here a function of how well you did in terms of forecasting labor demand and supply? 3.Discuss the advantages and disadvantages of promoting workers from within your own firm versus going outside the firm to bring in external hires. How does the nature of the business situation affect this decision? PLEASE REFERENCE THE BOOK: HUMAN RESOURCE MANAGEMENT, Gaining a Competitive Advantage 9 Edition
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