Originally created 11/27/05

Cheap overseas work has its drawbacks



Everthere Carriers isn't the only company, big or small, wrestling with the idea to move manufacturing to China.

Economically, it just makes sense, said Jonathan Leightner, a professor of economics at Augusta State University and an expert in Asian economies.

China and many other countries have lower labor wages, which keeps costs down.

When competitors already have gone to China, sometimes it's also necessary for a company to do the same to stay in business, he said. With competitor carrier companies already in China, Everthere Carriers is "feeling the squeeze," Dr. Leightner said.

Both companies and consumers benefit from Chinese manufacturing, he said.

"U.S. consumers benefit because ultimately we can get it for a better price," he said.

The cost is the manufacturing jobs, but "dollar for dollar, we gain more than we lose from that trade," he said.

Auggie Tantillo, the executive director of the American Manufacturing Trade Action Coalition, a fair-trade lobbying group, disagrees.

"There's a bottom-line issue being overlooked," he said. "In order for someone to consume, they need to have a job. They need to have a job that allows them to purchase more than the basic necessities of clothing and shelter."

Mr. Tantillo cites long-term studies that show about a third of employees who lose manufacturing jobs won't find work, he said. Another third find lower paying jobs and only the remaining third find an equivalent, he said.

For companies considering moving manufacturing overseas, there might be other drawbacks, officials say.

Economists can't predict what will happen to China's government and economy in the next decade, Dr. Leightner said.

"Who knows what the current leadership of China is going to do?" he asked.

Although he hypothesizes that China will continue to move toward a free market and democracy, it all depends on who is in power, he said.

Transportation is costly and sometimes unreliable.

It doesn't look as though Avian flu is going to affect transportation in the United States, this year at least, but in China it's another story, Dr. Leightner said.

Understanding the culture, the communication gap and legal red tape are other variables that could hinder a successful move.

"It takes some effort," Dr. Leightner said.

Anybody who shops at a deep-discount store can understand the benefits of China, however, Dr. Leightner said.

If people purchased only "Made in America" goods, many prices, such as clothing, would go up at least tenfold, he said.

Mr. Tantillo argues that "hidden costs" are in effect now as a result of jobs moving to China and limits should be imposed to control these costs.

Reach Tony Lombardo at (706) 823-3227 or tony.lombardo@augustachronicle.com.