The LA Times outlines what happens when a major manufacturer of advanced technology, offshore outsources for cheap labor. Guess what? Their entire design and process turns into a disaster. Such is the tale of Boeing:
Sure, it's immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don't think it through, is that it can wreck your business and cost you a bundle.
Case in point: Boeing Co. and its 787 Dreamliner.
The next-generation airliner is billions of dollars over budget and about three years late.; the first paying passengers won't be boarding until this fall, if then. Some of the delay stems from the plane's advances in design, engineering and material, which made it harder to build. A two-month machinists strike in 2008 didn't help.
But much of the blame belongs to the company's quantum leap in farming out the design and manufacture of crucial components to suppliers around the nation and in foreign countries such as Italy, Sweden, China, and South Korea. Boeing's dream was to save money. The reality is that it would have been cheaper to keep a lot of this work in-house.
The 787 has more foreign-made content — 30% — than any other Boeing plane, according to the Society of Professional Engineering Employees in Aerospace, the union representing Boeing engineers. That compares with just over 5% in the company's workhorse 747 airliner.
Boeing's goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits.
The drawbacks of this approach emerged early. Some of the pieces manufactured by far-flung suppliers didn't fit together. Some subcontractors couldn't meet their output quotas, creating huge production logjams when critical parts weren't available in the necessary sequence.
Rather than follow its old model of providing parts subcontractors with detailed blueprints created at home, Boeing gave suppliers less detailed specifications and required them to create their own blueprints.
Some then farmed out their engineering to their own subcontractors, Mike Bair, the former head of the 787 program, said at a meeting of business leaders in Washington state in 2007. That further reduced Boeing's ability to supervise design and manufacture. At least one major supplier didn't even have an engineering department when it won its contract, according to an analysis of the 787 by the European consortium Airbus, Boeing's top global competitor.
Amazing, so much is the push to screw over your employees Boeing didn't even bother to check if there was any engineer before awarding a contract. Their best people told them it would cost more, yet executives didn't care. Such is the herd behavior and mindset of executives, even ones whose business is advanced technology.
Boeing isn't the one corporation sold a bill of goods thinking labor arbitrage will save them a bundle.
Offshore outsourcing outright failure rate is over 50%. Additionally often there are no costs savings and statistics are hidden, mainly due to the offshore outsourcers themselves wanting to continue to obtain contracts. For example, one of the worst outsourcer IBM, was just warned by Texas on their repeated failure to deliver on a contract. IBM has fired thousands of American engineers, software engineers, scientists and offshore outsourced to India, China as well as imported foreign guest workers.