IT Employment

Car industry shows hitting brakes on outsourcing is a risky business

UK and US tariffs and restrictions on offshoring will just fail...

Politicians weighing up ways to rein in offshore outsourcing and deter foreign IT workers should think again. Tariffs and restrictions of the type used in the automotive industry will just misfire, says Mark Kobayashi-Hillary.

I had never heard of Claycomo, Missouri. There are probably a lot of Americans who have never heard of it either. But it's a small town of about 1,300 people nestling on the Kansas and Missouri border, with one major claim to fame - its Ford manufacturing plant. Everyone knows the Ford Motor Company. It's one of the most famous brands in the world.

The term 'Fordism' is used by academics to describe several social theories of industrial production, particularly the idea that a worker must be paid enough to be able to buy whatever they are producing.

Ford has also been one of the favourite supply-chain studies at business schools for decades, because in the early days the company was extremely vertically integrated. In short, that means the company made its own glass, its own rubber, and its own seats - everything that went into the cars, it produced.

Core functions being distributed globally
And it's obvious that Ford has come a long way since then. The company now produces vehicles all over the world and even core functions, such as the design of future models, are distributed to locations outside the USA.

A few years ago I went to Chennai in India and I visited three different Ford facilities in, or around, the city. Manufacturing, IT and design services were all being performed right there in southern India.

But this week The Kansas City Star newspaper reported that the Ford manufacturing plant at Claycomo has brought back in-house more than 200 jobs that had been outsourced to contractors. In 2007, Ford had to make concessions to the United Auto Workers union, including a pledge to in-source jobs.

The union at the plant is rejoicing because more jobs are returning. Ford has stated that the jobs being in-sourced include seat-belt integration for the F-150 pickup, ignition-switch installation, instrument panel assembly and engine dress for building the Ford Escape and Mercury Mariner SUV.

Unsettling changes in job market
I have a lot of sympathy for anyone facing an uncertain future at work but it's not that autoworkers are special in some way and deserve more protection from unsettling changes in the jobs market than the rest of us.

The total number of jobs in production at Ford is down, because of increased plant efficiency, not outsourcing. So it seems bringing back the odd process here and there is like rearranging the deckchairs on a sinking ship.

In any case automobile production is protected through import tariffs. It's an artificial and crude...

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