06 Feb 2012  Research & Ideas

Kodak: A Parable of American Competitiveness

When American companies shift pieces of their operations overseas, they run the risk of moving the expertise, innovation, and new growth opportunities just out of their reach as well, explains HBS Professor Willy Shih, who served as president of Eastman Kodak's digital imaging business for several years. Key concepts include:

  • Outsourcing ends up chipping away at America's "industrial commons"—the collective R&D, engineering, and manufacturing capabilities that are crucial to new product development.
  • If the United States wants to keep from slipping any further in its ability to compete on the industrial stage, the government must increase its support of scientific research and collaborate with the business and academic world.

 

When American companies move pieces of their operations overseas—often because manufacturing and labor costs are much cheaper—they run the risk of moving the expertise, innovation, and new growth opportunities just out of their reach as well.

Take Eastman Kodak, for example, the 120-year-old American company that filed for bankruptcy protection in January. The company developed the first digital camera in 1975. Yet Kodak was never able to ride the digital wave over the long haul, and the company's invention ironically served to thwart its success.

"Much of the camera technology was invented in the United States, but US companies gave it all up."

HBS Professor of Management Practice Willy C. Shih served as president of Kodak's Digital & Applied Imaging business through the turn of the 21st century. Shortly after starting at Kodak, he visited the company's highly automated production line and realized that all the significant pieces used to make Kodak's digital cameras—lens, shutters, electronic screen displays—were manufactured far from the factory floor in Rochester, New York, largely because American companies had ceded much of the camera-related technology to Japan years earlier.

Worse, he knew that mobile phones, which were also being made outside the United States, would start stealing business away from digital cameras.

"Much of the camera technology was invented in the United States, but US companies gave it all up," says Shih, an expert on industrial competitiveness who joined the HBS faculty in 2007. "Because of the decisions of managers in the distant past, the United States had lost its capability to make all the critical components that were needed to put together digital cameras."

Disastrous fallout

Outsourcing manufacturing operations has been occurring for decades, based on the assumption that moving grunt work overseas wouldn't affect US companies' competitive edge in the global marketplace.

But this assumption is wrong, and the fallout has been disastrous, Shih says.

In reality, developing and executing a manufacturing process often sparks ideas that lead to creation of innovative new products, Shih explains. So when American companies allow the production of high-tech products like televisions and memory chips to disappear from the local landscape, they also inadvertently risk losing expertise to produce the next generation of cutting-edge products like high-end servers and electronic paper displays for e-readers.

Outsourcing ends up chipping away at what Shih calls America's "industrial commons," the collective R&D, engineering, and manufacturing capabilities that are crucial to new product development. This concentration of expertise can be found in places like Silicon Valley, where clusters of experts and firms feed growth and spur innovation.

Much of the damage to American competitiveness in the science and technology fields has already been done. The United States has lost a great deal in the area of energy storage and green energy production, for example, including lithium ion batteries for cell phones and laptops, silicon solar cells, and power semiconductors for solar panels. As a result, Shih says, the country risks losing thin-film solar cells, the latest solar-power technology.

America's lead in the advanced rechargeable battery business also slipped through its fingers when manufacturers retreated from investing in them, choosing to focus instead on disposable batteries that had been their bread and butter. The Japanese filled the void in rechargeable battery production, leveraging their capabilities first in portable audio products, like the Walkman, then in camcorders, notebook computers, and mobile phones—and most recently in hybrid and electric vehicles.

"In an electric car, the battery is 50 percent of the bill of materials," Shih says. "We don't have the capability for making rechargeable batteries in the United States today, and that's because the decisions made by other industries let that [industrial] commons wither away."

"Companies will certainly limit their ability to innovate."

Executives who defend outsourcing argue that there aren't enough American workers with the right skills or American factories with the same speed of production found in other countries. And besides, by moving work outside the United States, they contend that enough profits can be generated to stoke innovation at home.

Until recently, Apple manufactured its products in the US, and even built its own factory. But today, iPhones, iPads, and other Apple products are made overseas, largely because a country like China is able to get the job done without the time and expense that the company would expect to incur domestically.

The problem for US policymakers and companies competing in a global marketplace is this: the trend toward outsourcing has gone beyond simple assembly-line work.

Heading upstream

As low-paying production jobs have disappeared from the United States, so too have more sophisticated, higher-paying design positions. Nearly all notebook computers, cell phones, and other handheld devices are now designed in Asia. The domestic software industry, which initially outsourced only simple code-writing projects to Indian firms, has more recently signed on with outside companies for more complex work, like designing architectural specifications.

Letting go of the design work is dangerous, Shih says, because it could block American companies' chances of designing the newest high-tech products and learning from those experiences. "Companies will certainly limit their ability to innovate," he adds.

The United States didn't always allow technological innovation to run adrift. In the post-World War II era, the country had a tradition of global leadership, spurred in the 1950s and '60s by innovation in semiconductors and in the 1960s through '80s in chip design, aeronautics, and satellite communications. Many high-tech products could only be found in the United States. These successes were due in large part to government investment in basic science research and mass production.

"During World War II, the American public believed science won the war with the atom bomb, radar, computer technology, antibiotics," Shih says. "There was a feeling that if we invest in science and technology, it would lead to jobs and prosperity, and for that, the United States was an unquestioned leader."

The government continued to feed scientific exploration with a healthy dose of funding through the 1990s, but these investments began to falter in 2003 and have remained flat or slightly lower ever since.

Government's role

If the United States wants to keep from slipping further in its ability to compete on the industrial stage, Shih says, the government must increase support of scientific research and collaborate with the business and academic world. In addition, government officials and business leaders need to map out a long-term plan focused on efforts to keep important capabilities in the United States with the idea that they might bear future innovative fruit—perhaps by attempting to correct some of the biggest challenges today, like climate change, oil dependence, and life-threatening diseases.

Outsourcing by itself is not evil, Shih says. In many cases it makes perfect sense, but "we need to be more thoughtful and take a more sensible approach."

US companies need to continue making long-term investments in R&D, and at the same time, management needs to stop "exaggerating the payoff and discounting the danger" of outsourcing production and cutting R&D, Shih says.

Shih and HBS Professor Gary P. Pisano have been studying how other countries have performed in the high-tech and science-based industries, and they believe the United States could learn some lessons from other countries that have grabbed certain industries by the horns.

In China, for example, in 1986 four Chinese academics met with government officials to develop a "wish list" of strategic capabilities for the country to focus on, with great success. Today China has captured the supply chain in the electronics industry and will be a dominant player for years to come.

Likewise, Taiwan is a relatively small country of about 23 million people, and yet it owns 70 percent of global semiconductor foundry capacity. That commons helped Taiwan to tap into the same capabilities to make it a critical player in flat-panel displays and energy-efficient lighting, all because the country was tenacious in its investment in technology.

"The United States is still the world's richest and largest economy," Shih says. "But at some point we need to have a discussion on the national agenda about what kinds of capabilities are important for the United States in the twenty-first century, and we need to invest in them. People are less convinced today that science can solve our problems, but science is crucial to the care and feeding of the [industrial] commons. By the time people figure it out, I hope it is not too late."

About the author

Dina Gerdeman is a writer based in Mansfield, Massachusetts

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Comments

    • Joe Seydl
    • Analyst, Wells Fargo

    Very nice commentary.

    I think it all really boils down to knowledge spillover effects. What's amazing, though, is that those effects are still the strongest when face-to-face interactions occur. Satellite conferencing technology has progressed so far that, in theory, people shouldn't need to live in "industrial commons" to take advantage of the associated spillover effects. And yet, those places are still where the innovation occurs.

    The bigger driver is likely the effect of tacit spillovers - the knowledge that spills over in coffee shops and bars, for example - rather than formal spillover effects. This is why a vibrant social scene usually goes hand in hand with a thriving and innovative local economy.

    The government clearly has a role to play in terms of promoting basic science research and production. In my opinion, the challenges occur very early on, at the elementary and secondary education levels. We need to make students at these levels more excited about math and science. A lot of that has to do with quality teachers. For example, a large factor persuading me to major in math in college was the fact that I had such an interesting and fun 7th grade math teacher. The way to encourage similar experiences is for the government to provide stronger incentives for the teaching profession as a whole, so that more of our best minds graduating from college each year choose to become teachers as opposed to, for example, investment bankers.

     
     
     
    • Walter P. Blass
    • Visiting prof. of Mgmt, Grenoble Grad Schl of Bus

    Perhaps because of loyalty to his former employer, Prof. Shih has not spoken of the elephant in the middle of this competitiveness issue: Corporate Leadership. I've been teaching the HBS Kodak case about film vs. digital imaging for years. When push comes to shove, you have to look at the CEO, and beyond him to the Board which selected her or him. Kodak went through 5 CEO's in 30 years, none of whom were able to change the corporate culture, the isolation of Kodak in a one-company town, the refusal to change. Even George Fischer, imported from Motorola pandered to the culture by stating that " digital would not cannibalize film."

    I had a similar experience at AT&T when an ingrown management would not change despite strong signals going back to 1968, from monopoly to competitor, from wireline to broadband and cellular. Unlike IBM who brought in a rank outsider Lou Gerstner who fired 1/3 of the employees and reoriented the company, AT&T never saw the light.

    "The fault, dear Brutus, in not in our stars but in ourselves." The appeal to Government--our stars-- will be useless if corporate leadership in the U.S. doesn't grasp what prof. Christensen is trying to teach with 'Disruptive Technology."

     
     
     
    • Anonymous

    I've often wondered whether the relentless push for shareholder value has caused a short term thinking culture that looks at profit now versus sustainable solutions over the long haul. When profit righ now becomes the focus, it's far too easy to grab the lowest cost right now, while, as Willy points out, you've just started down the path of leaching out your development innovation. Willy is correct - at Kodak this is what caused a lack of valuable innovation, with the die cast over a few CEOs.

    Having said ll that, the failure of Kodak was also about failure of the current CEO and leadership team to execute on putting together a system based on a host of disparate acquisitions that ended up costing a ton but driving no profit and almost no value.

     
     
     
    • Daniel Faintuch
    • Marketing Manager, Lee Silsby

    I agree with comment #2 that Kodak had a lot more going against it than the losses that came as a result of outsourcing. Professor Shih makes a very good point regarding "industrial commons", but since outsourcing is inevitable for many industries, our main focus should be how to properly benchmark those companies that outsourced and still maintained their competitive edge, such as Apple.

     
     
     
    • Craig Julien
    • Corporate Strategy

    Each company needs to ultimately define its unique value proposition (unique, sustainable and important to the customer). For some that may include keeping manufacturing in house and in country. Apple decided that design was there value prop but they are also savvy manufacturing experts that chose to outsource. The correct blend and focus on innovation, service and cost/price should be a difficult and soul searching question for leaders. Gerstner correctly saw that the IT market was moving away from IBM's "Stack" to a stack made up of different suppliers. I would hope we can move away from what the protectionist view of what the US is good at and start to think about the patch work of knowledge, experience and wisdom that will drive the global economy of the future.

     
     
     
    • Anonymous

    One key thing that is left out of this article is that Kodak, like many other companies, suffered from a severe lack of insight on the priorities of its customers. This happened with the move away from film, which Kodak felt could never happen because the image quality would never be acceptable in digital. It's happening now in mobile. As recently as 1-2 years ago, Kodak executives were going around saying that cameras on cell phones would never be good enough to replace those on dedicated digital cameras, because the optics were not as high quality. Hogwash. Look at the percentage of photos taken now by mobile phones, where the opportunity to share images socially far outweighs the sligh advantage that higher-quality optics might bring.

     
     
     
    • Sean Tao
    • Consultant, Tao Consulting

    When Wall Street is always looking for the short term profit every quarter, how can American executives plan for the long term . Aside from a lack of sound digital strategy , Kodak was always scrambling to prove that their " reorganisational plan " was a sound one during their quarterly earning call. Without a clear vision and strong leadership , Kodak was bound to fail .

     
     
     
    • Anonymous

    The day that the new CEO announced that he was going into the printer business in a big name all I could think of was that he was a fool. HP is a formidable rival in the printer industry and Perez had no new technology to offer. So, why didn't the board intevene at that time?When the VP of product design Paul Porter died prematurely, I called to talk with them about replacing him. He was very innovative, hired motivated superstars and inspired great design and innovation in digital cameras. (Some people do prefer them over shooting with their phones.) No, the marketing people told me, they planned to promote someone from within. Well it was not a special inspiring person that they promoted. Paul would have figured out what detours to make to innovate in digital cameras. But it doesn't seem like Kodak was filled with innovative people in the last 5 years. The blind leading the blind.

     
     
     
    • Bob Vass
    • Consultant

    Some very useful comments here, most with a large grain of truth in them. Is it possible to read across from a single large company failure to national failings ? Perhaps not, but if it encourages debate, then worthwhile ! I am based in the UK, and make similar comments about the failure of our education system to stimulate interest in mathematics, sciences and technologies. There is a media bias to arts and away from 'hard facts', coupled with an increasing belief in non-science, such as our national health service funding of homeopathic treatments, despite the wealth of contrary evidence. Rational enquiry and the pursuit of scientific method don't seem to be able to generate the interest that they deserve, despite what these have yielded. A generation of politicians who value opinion and prejudice over evidence and fact bear a large share of whatever opprobium is going the rounds. In the UK we have a culture of 'political correctness' that validates any crackpot opinion as equal to the outcome of good science. I know that in a representative democracy the ignorant deserves that his voice be heard, but not so that it drowns the rational man. Not all ideas are equal, some are more equal than others, and so deserve precedence. If we had a better educated population, and a broader understanding of the foundations of science and technology, then surely the debate would take place at a higher level ? When I see the cramming that my Singaporean and Hong Kong acquaintances inflict on their children I do worry, but too little is perhaps worse than too much in this arena; at least results seem to indicate as much.

     
     
     
    • Efrain Rosas
    • Consultant

    I think Prof. Shih underestimates the positive effect that outsourced processes have on productivity and of course on earnings. The problem is American companies outsource processes without establishing a real link with their counterparts. American enterprises are becoming just buyers of electronic parts. A real link with their outsourcing counterparts would prevent not only that knowledge lag noted by Prof. Shih but also problems such as exploitaiton of workers producing American goods in Asia. The value of the outsourced products traded by American companies is rather large to give them the right to supervise processes and to have insiders who facilitate knowledge transfer from abroad to America.

     
     
     
    • Karyn Trader-Leigh
    • VP Board, Brained Lives Stem Mentoring, Braided Lives Stem Mentoring Initiative

    Tragic that we have commoditzed and outsourced our industrial base. We continue to face the resultant economic tsunami as it affects high end and low end livelihoods, and offers an impoverished prospectus for future generations. Perhaps we can revive our industrial commons by focusing on STEM literacy for all of the nations children, making sure teachers can deliver this education, and industry invests in bankrupt schools systems. This is a strategic capabilities requirement for economic, industrial and defense eminence necessary for the future. Dr. Karyn Trader-Leigh

     
     
     
    • Adam Salmen
    • Industrial Marketing Manager, Bayer Material Science

    I am a product of this movement. I wanted to be involved in the production of real goods, and thus had to move to China from the United States. Here there is opportunity to get involved with creating the next car (my current project) or designing the next cell phone. I know many foreigners here who moved here to become part of the next generation of industrialism. Here, I feel that I can truly create anything. I just wish I could be around my fellow countrymen to do so.

    If my friends and family in the US had access to the manufacturers, moulders, printers, and assembly lines that I do here, we would surely be turning out the coolest next generations of products. I think the 3d printing revolution in the US could still keep us moving in the right direction.

    I hope someday my skills developed in creating the next generation of technology can find a home back in the US... until then, Ill be working on my chopstick skills...

     
     
     
    • Anonymous

    I wonder how much our North American standard of living stands in the way of these kinds of activities staying at "home". When you have to pay a N.A. worker 5 to 10 times the wage that is paid to a worker in countries like China and India, it's no wonder that companies look to have their products manufactured off shore. If we were willing to lower our standard of living, we might be able to afford to keep more of this kind of work local.

     
     
     
    • Anonymous

    I understand the wish to maximize profit for the quarter and year, but do not understand the outsourcing of manufacturing which provides partners and individuals with key technology and intellectual property that is often misappropriated. The efforts to outsource, must include more efforts on protecting technology and intellectual property.

    Also, there should be more investment incentive as part of US Government policy to keep jobs here in the US.

     
     
     
    • Sundar Ramanathan
    • Senior Manager, Capgemini

    The relation between Technology SHIFT to Industry Shift with PEOPLE and Inverntion/Innovation Geographies & Politics is very interesting. Can we see the trace of AMPEX and the VCR - Consumer Electronics shift to ASIA? We cannot have it both ways with Labor arbitrage & Innovation/Invention going away along ith IP - as products and services become cheaper and affordable! And sometimes people wonder, if jobs are lost at this rate in Developed economies, who will be queuing up to buy Gizmos? Global Economics and national/patronized patriotic controlled Economic growths in Consumer MARKETS are withering away fast! Politics is at work again on how to bring back some controls! Management ought to help this indutrial and technical shifts taking place - mere Fear psychosis won't get anywhere.

     
     
     
    • Gerald Paolilli
    • Member, Paolilli, Jarek & Der Ananian, LLC

    There is nothing novel about this story which hasn't happened sometime before. if one looks at the industrial revolution in New England during the late 19th and early 20th century, it is observed that when the textile industry, based upon technical innovations made by Francis Cabot Lowell and Nathan Appleton using underlying U.K. technology, the New England textile and U.S. industrial revolution exceeded all others. It shouldn't surprise anyone that exporting knowledge and skills will eventually come at an unwelcome cost.

     
     
     
    • Anonymous

    This is an interesting post albeit the topic of an earlier HBR article by Professors Pisano and Shih, both of whom are also involved along with several other HBS faculty in the 'American Competitiveness Project'. So I look forward to more this issue. However I have a few comments/observations: 1. Outsourcing and other decisions are made by firms, so how is policy going to influence the value-chain location decisions of firms? 2. Comparisons with China are not very useful because what works in China is not going to work in the U.S. and due to differences in the political system may not be acceptable in the U.S. 3. This piece, like the earlier HBR piece articulates the problem and tries to indicate why it's important for the U.S. to do some manufacturing, but it is weak on policy implications. One has to move beyond investment in education and math and science education - this seems to be standard 'policy package' we hear about from various sources including the NSF. The fact however is (h/t Amar Bhide) that in relative terms Americas share in S&T education has been declining since the 1970s, yet America continues to be a technological leader. Mike Porter has been on T.V. suggesting that the U.S. lacks. a national economic strategy, yet I am certain (almost!) that Pisano, Porter and Shih would not go so far as to recommend industrial policy or industrial targeting - that is the what the Chinese and many of their East Asian neighbours do. The Council on Competitiveness has also asked President Obama to "bring manufacturing back" - the big policy question is how are we going to do that? I hope to hear more about policy.

     
     
     
    • B K Sharma
    • consultant, mangalam consulting

    You can not have it both ways. If America wants to outsource grunt work then it must continue to invest and lead in cutting edge technologies. Secondly it must not be fogotton that even here thirdworld manpower has been a great help. Its law of jungle the best must prevail. So tighten the belt and slog.

     
     
     
    • James W. Eyres
    • Retired Banker

    Kodak is just the latest in a long series of companies that enjoyed long growth and profitability from then-innovative and well-marketed products. But they failed to respond to changing technology and paid the Darwinian price. Other examples: Ace Buggy Whip, Packard-Bell Radio, Polaroid, Keuffel&Esser (slide-rules), and perhaps Xerox.

    If companies cannot reinvent themselves then they will be driven out of the market. Some such as 3M and General Electric (who started with sandpaper and light bulbs respectively) do make the reinvention so it can be done.

     
     
     
    • Anonymous

    Listen to Prof Shih observation and advice ; No it is not too late for US.

     
     
     
    • Anonymous

    THere need for everyone to protect their position. In ideal world outsourcing and many management principles sounds fantastic. US made the mistake of interpreting world scenerio in their own way and which slowly converting hard working people into complacent lot. The manufacturing has to be brought back to US failing whole world will suffer as rest of the world donot have open culture like US. Considering the very high cost in US, how it will happen has to be seen but govt support will definitely needed.

     
     
     
    • Taylor
    • Business Student

    This article mentions some very important information about outsourcing and innovation. It seems that outsourcing has and still is becoming more and more popular because it is cheaper to attain products and services in other countries than it would be in the United States. Sure this is a great idea to save money but are we really helping ourselves or just hurting ourselves? The more the United States outsources, the more we are losing in the game of business. Yes, we are saving money and attaining products/services cheaper than in the United States but we are also losing the upper hand on some products/technology/services because we are outsourcing to other countries. By losing the upper hand, we are also losing our innovative ideas, which is an essential in progressing in today's world. Innovation leads to success and progress. Outsourcing leads to sending our ideas/services/products to other countries. This allows other cou ntries to learn and become stronger. It also allows us to lose focus on new products, technology, and services because we are not surrounded by them every day. In the end, outsourcing leads to our innovation making its way to other countries because we are taking our ideas/services/products to other countries to save money. How can we expect to learn more and "innovate" when we are doing less in our own country? This sentence is very interesting to me and made me think. "Executives who defend outsourcing argue that there aren't enough American workers with the right skills or American factories with the same speed of production found in other countries," (Gerdeman). How can anyone think we would have workers or factories as good as other countries when we outsource? The more we outsource the more we will not have the type of workers or factories we need to succeed because the American people are not use to it. The more we do not outsource however, the more people can build up their skills and achieve the work that other countries provide.
    In all, I would like to see the United States step up and do less outsourcing and start making more products in the United States. I would like the United States to get their sense of pride back and start seeing "Made in the U.S.A." on products instead of "Made in (insert country here)." Innovation is the key to success and I'm afraid we are losing our innovation and will be left in the dust due to outsourcing.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    Whether outsourcing jobs/functions oversees is in US interests depends on various factors and the answer would not be the same for all types of industries. In general, however, cost/benefit could be rule of the thumb. Basic small labour-intensive jobs get carried out with less investment in some countries. These do not require specialised skills and can be undertaken easily. The locals do not transfer any special technology and hence there is no knowledge loss. But, it would not be in US interests to outsource critical design or similar jobs which need to be managed from within. R&D and innovation are necessary for improvements for which the locals' acumen has to be taken care of and further developed. After all, US must have such concerns in order to retain its name as a manufacturer of high quality products.

     
     
     
    • Anil Sharma
    • Professor, Amity Business School

    It's the same as the life cycle stages in a business enterprise It's a stage in the social life cycle of the US It has peaked out, but to create another peak it has to kickstart another upward trend The US has the accumulated capability of its people to come out of this mess. US would need the combined strength and will of its polity,scientists, financiers,social workers, and the general piblic to come out of the present predicament. More socially responsible projects (not philanthropy) are needed Create an environment for small businesses to flourish Encourage people to create small businesses instead of everyone trying to become Microsoft or Apple or GE Sustaining the kind of lifestyle US has, is not possible for businesses as margins have thinned to very low levels That is why cos have and are moving out of US The problem is generated in (by) the US and can be solved in (by) the US.

     
     
     
    • Audrey
    • Business Student

    We live in a world where innovation is key for success. Whether it's restaurants, clothing, cars, or cameras, a company must be innovative and progressive in order to succeed. In the camera industry, the development of smart phones with cameras really changed what the consumer was looking for.

    Personally, I am a hobbyist photographer and I love working with film and digital cameras. However, times have changed and camera apps have replaced darkrooms and bulky camera lenses. When it comes to innovation in the photography market, a product must be unique in order to stand out and succeed. Polaroid has a product called the POGO printer that will print pictures via bluetooth. It's approximately the size of an ipod and prints pictures in ten seconds by using heat activated color crystals instead of ink (Zink paper). Not only did Polaroid create a unique product, but the process of printing pictures with color crystals instead of ink is a step forward as well.

    I agree that there are a lot of positives that go along with outsourcing products. However, I would feel much better purchasing and supporting products that were manufactured on American soil. I attended a baseball game on the fourth of July this past summer and miniature american flags were handed out at the gates. I looked closely at mine and sure enough, there was a little gold sticker on it that read, "Made in China." Not only have we outsourced our jobs, but we have outsourced our pride as well.

     
     
     
    • Mariah
    • Business Student

    As a photographer and an American, I find it somewhat sad that we have fallen behind in the game of technology. When we were ahead of the game were we too stubborn and confident to realize that things would change? I can't imagine living in an industrialized nation as America once was. Not that long ago one could work in a factory and make enough money to support a full family. Today this is far from the case. If only businesses in America had stuck to wanting to be the best country in technology and innovation. Then I believe that things would be much different than they are now. They would be better and less scary for both the workers and students in the USA. Although I understand the reasoning for outsourcing, that doesn't mean I think that it is right. 8.3 percent of Americans are jobless and another large percent are genuinely overworked and underpaid. How many factories or companies would we need to bring back overseas for this 8.3 percent to fall to 2 or 3 percent? It would be interesting to think about how much China benefits from us sending work to them. Compared to how much money we owe them from loans and our national debt. One thing I would really like to see would be other countries outsourcing to us. If America is the best at making one thing, and Japan is the best at making another, and so on. Then how much would the world benefit if we all outsourced to one another for the greater good? Especially if the best of the best from around the world were helping with the field of their expertise.

     
     
     
    • Kayla D.
    • business student

    I can understand why they company chose to outsource and recieve products madef from overseas. Its much cheaper then what we would have to pay workers here in the united states. I believe that the biggest problem was that Kodak wasn't able to keep up with modern technology. I'm not sure if they weren't able to keep up or did they think that America wouldn't advance in their technology. They believed that we would basically always need them because the idea of a camera phone wouldn't make it because they camera would never be clear or efficent enough and people would essentially have to resort back to Kodak. They obviously were way off with this idea because camera phones are the source of most pictures that are taken today.

     
     
     
    • Nathan
    • Business student

    Professor Shih chose an excellent topic and company to do this paper on. Kodak is kind of at the heart of every American it is tragic that they are going bankrupt. Outsourcing on the one hand is a huge problem that we are currently facing on the other hand I understand how it can be seen as a blessing. That being said I believe that a lot of the problems we are facing here in the United States could be solved if we as a nation were to bring a lot of the jobs that are now being sent oversees back to America. An example of this is the major problem of unemployment. Why are so many people unemployed? The reason is that a lot of jobs are sent oversees. We indirectly employ a lot of the people in other countries. If we would bring some of those jobs back to the states we would see a rise in employment and obviously as a side effect of that we would see a decline in the unemployment. Companies could also see a rise in sales, wit h more people working more people would have money thus they would be able to spend money on more things. By having more people employed there less unemployment checks going out, less unemployed insurance, etc. All of this is money that is leaving the governments hands and due to unemployment they are receiving less taxes, which is making the working class pay more taxes. Solve unemployment have more people paying taxes (cut government spending) and you get lowering our national debt and the government may actually be able to make some money for the nation again. Speaking of the national debt more companies in the US creating products that other companies may want would create a need for those countries to come to us for exports from us. This would again create more income for the nation, but not only for just the nation it would create more income for the companies creating and trying to sell these products, wouldn't that be amazing.
    So in order for this happen companies to start bringing the manufacturing back to the states. In order for that happen in certain industries means that the US needs to really get on the ball doing some research and development in order to create the parts that would be needed to manufacture some of the products that are currently being produced outside the US. Once we have the capabilities to be able to produce the products we need the plants to be able to manufacture. Then the employees, then to stop buying as much from oversees. Then we can get our economy back on track and begin to get some respect from these other countries.

     
     
     
    • Brandon
    • Business Student

    The article brings up a valid argument in an attempt to virtually save American-made products. Outsourcing, while a good business strategy, is proven by the article to be destructive to the American workforce. It has begun to take away expertise from the US and instill it in other countries that are willing to produce at a cheaper rate. Products that were once the prides of America (automobiles, technology, ect) are being outsourced and ultimately taken away.

    The article makes a heavy statement saying that the US is losing its hope that "science can solve our problems." In reality, science and innovation is the reason we are where we are today. Innovation and new sciences have allowed people to live longer than ever, manufacture products more efficiently than ever, and live more nourishing. If government agencies don't enforce the need for strong research and development programs, our place as the world's "richest and largest economy" will soon be surpassed.

    The US cannot forget the roots that brought the country to its fame. Innovation beyond any other country's potential allowed the US to thrive. The government needs to encourage the production of US products to boost the economy and help save the jobs of many Americans.

     
     
     
    • Courtney

    America use to be known for having faster and greater technology advances in the world. The digital camera was just one example of this. Kodak kept their business is the United States while others outsourced to different countries. Yes outsourcing allows cheaper and faster production rates but it's actually ruining the economy. Giving away products that could easily be produced in the U.S. might be considered a good "business move" but in reality it's just hurting the future of the U.S.'s technology. Many times people in America have great ideas and inventions but they allow other countries to produce the products .Taking away from the credit that should be given to U.S. inventers. The job market has also decreased because we are giving jobs to people in other countries instead of helping our neighbors that could have a job if we didn't outsource as much. In the past science has been very crucial. It showed strength and intelligence. Countries raced to be "the best." Outsourcing limits our society and the excitement that use to be shared when we were competing with other countries. We now in a way are dropping out of the science and technology race just to make a quick buck. If this trend continues many countries will pass everything that the United States has worked hard for.

    Business Student Courtney

     
     
     
    • Anonymous

    I understand the wish to maximize profit for the quarter and year, but do not understand the outsourcing of manufacturing which provides partners and individuals with key technology and intellectual property that is often misappropriated. The efforts to outsource, must include more efforts on protecting technology and intellectual property.

    Also, there should be more investment incentive as part of US Government policy to keep jobs here in the US.

    waqar

     
     
     
    • Unto Toivainen
    • Graduate student, Lappeenranta University of Technology

    This is not surprising because Doing = learning.

    You can observe similar thing in almost every organization: the further you go up in organization the less there is understanding what it takes to do something.

    This is effect is amplified by the fact that business leaders are more and more from law and business schools (at least in Finland) ... so we have more visions, more generic strategies, more excels, more powerpoints but less understanding what it takes to really produce something.