AeA official offers view on outsourcing

To the editor:

As a follow up to your recent article (“Outsourcing: The good, the bad and the inevitable,” July 9-22 NHBR), AeA, the largest high-tech association in the United States, has sent a copy of its white paper addressing the issue of outsourcing.

It was written to answer a lot of questions Washington had, and the general public had, and to try and explain the driving forces behind outsourcing. AeA does not take a position on the issue, but merely tries to convey the growing global nature of business. As new markets have opened up, like China, this trend is likely to continue.

The New Hampshire International Trade Resource Center hosted a trade trip to China this spring. They helped New Hampshire businesses gain insight into the market and potentially make some business contacts. If you are unfamiliar with the ITRC you shouldn’t be, they do great work.

I know James McKim, and agree with his theory of cost-containment. In good markets and bad, companies are goaled with reducing cost in order to increase profitability. How do you accomplish that? You go where its cheaper to produce your product. The delta between what it costs to produce a product and its sell price is greater overseas for various reasons. I don’t think it’s a worker issue.

If a company could produce its product, while remaining competitive on final price in the United States, it would. Electropac does; others would as well. Wages, benefits, insurance are all far less overseas. They all factor into final cost of the product.

As mentioned by Dartmouth’s Tuck School in your article, this is not a new idea. All the scrutiny it has recently received is new.

To view our white paper, visit aeanet.org/publications/id_offshoreoutsourcingmain.asp. I hope this helps understand the issue.

Frank Donlan
director, membership development
AeA
Woburn, Mass.