In the light of the disintegrated manufacturing sector employment in recent years, the impact of outsourcing and in sourcing on the American economy has become a focus of public debate and anxiety. In sourcing and Outsourcing has resulted in rapid structural changes to the industries of the world especially the service sector, and not only in the influx of manufacturing jobs but also has caused white-collar jobs to move to overseas market. Outsourcing is, whereby companies are moving their business or a business unit outside their geographical operating area in order to gain from the price differential in the region. Whereas in sourcing is accepting another company or business unit within our operational region.
Many countries including United States have been concerned about the effect of globalization and its impact on the labor market. The effect on the labor market can be categorized in two ways, firstly the effect of an increased number of immigrants, legal or otherwise have flooded into U.S market. Secondly, the increased number of international outsourcing, especially if labor-intensive business units are shifted to developing or third world countries. The manufacturers in order to gain advantage of low wage and less regulatory control in the less developed countries are relocating their businesses to these areas.
Moreover, the U.S. automobile manufacturers are claiming to produce “relevant products,” however, these automobile manufacturers have been struggling for quite sometime with massive costs of production. Contrary to this their foreign competitors make automobile at a much lower cost. Moreover, to add to the high production cost most of the companies are also required paying out heavy amounts in ballooning workers pension and their health care costs.
Moreover, these manufacturers are also competing with the currency exploitation by their competitor countries, which include China, Japan and Korea..................
