Global Outsourcing in the Textile Industry

4083 WordsApr 13, 200917 Pages
Introduction Look at the clothing tag on your shirt. Where was it made? Most likely, the shirt was manufactured outside of the United States. This can be explained by two words. Global outsourcing. Global outsourcing has been a hot topic concerning many Americans since the early 1990’s. Businesses are always deciding whether or not to take on this great challenge. This trend can be seen in the textile and apparel industry, companies have moved mass amounts of production overseas. Although it seems all companies in the textile and apparel industry are transferring their production to other countries, it is not essential for a business to outsource in order to be competitive. Throughout the history of outsourcing, arguments both for…show more content…
Textile and apparel companies see many advantages to outsourcing their manufacturing. The number one reason a company usually outsources is to lower their costs. Outsourcing allows companies to obtain a technically skilled, multilingual, and inexpensive workforce. A company can hire an engineer in India for $10,000 a year, whereas in the United States an engineer would cost $60,000 '' 90,000 a year.[8] This is a huge cost saving that can lead to huge profits. From this profit, a company can do many things. Companies claim they can increase the number of jobs back home with this saved money. The company that hired that engineer in India now has enough money to hire higher-paid Americans in the United States.[9] So conceivably, proponents are arguing that with the loss of one menial job comes a more prestigious job in the home country. This is the idea of comparative advantage. This idea is a great, but not much demonstration of this concept has yet been seen. Yet, still the cost savings help. In addition, a company that saves greatly on costs can now offer its product at a lower price. By being able to offer lower prices, companies can find a niche in the market. Take for example the SMaL camera. It was designed by a professor at MIT. They manufactured the camera in China, which allowed them to sell the cameras for less than $100. These cameras were
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