My-Corp, Inc.: Ethical implications of offshoring from the view of the Financial Manager

Chrissy S.

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My-Corp, Inc.: Ethical implications of offshoring from the view of the Financial Manager

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Abstract

Not long ago, offshoring was uncommon for companies. Today, however, it is becoming a more commonplace practice: as prices for manufacturing rise in the US; shipping these operations overseas becomes more appealing. If we talk about offshoring we can separate the practice in two distinctive types of offshoring: Offshoring Blue Collar Jobs and offshoring White Collar jobs. Blue Collar jobs are basically all jobs which historically have required the person to wear a uniform (which were often blue). A Blue Collar worker is a person working manual labor and is usually paid hourly. Manufacturing Jobs are usually referred to as Blue Collar jobs and can include unskilled or skilled labor. On the other hand White Collar jobs can be any job which is not considered a Blue Collar Job and usually does not include manual labor. White Collar Worker most often receives their income in the form of salary. Examples of White Collar Jobs include Sales, Managerial and Clerical Jobs. Offshoring can refer to moving jobs to companies already in existence in another country, or can refer to a company building facilities in their own name overseas.

Introduction
Advantages of offshoring
1. The lower overhead that results in reduced prices
2. Developing the economy of less wealthy nations
3. Simplicity, asset protection and anonymity
Negative points in offshoring
1. The closing of manufacturing plants in the states and lost jobs
2. The phantom GDP
3. The 2006 annual report of the Pollina Corporate Real Estate
Reputable safety and quality standards
Conclusion
Work cited

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[...] There are 12 distinctive guidelines of moving jobs oversea as stated in an article on the Ethical Corporation website: BT's set of 12 guidelines for ethical offshoring Consult with affected stakeholders before making a decision to offshore. Clearly articulate policy and be honest and transparent about company decisions. Limit or avoid involuntary redundancy. Invest in retraining and skill development for affected employees. Work with communities to help find ways to fill the gaps created by offshoring. Work with suppliers in the recipient country to develop best practice and CSR awareness. [...]

[...] Also in the same article mentioned is part of a survey from the National Public Radio in 2006 stating that offshoring and job loss is the number one concern of Americans, ahead of the Iraq war and Immigration. It is not ethical to let experienced workers go who have responsibilities and obligations, if they were hired with any reasonable expectation of job security. Not simply for profits, at least. Other negative impacts on offshoring include the so called “phantom GDP”. [...]

[...] Last but not least I would like close my analyses of Ethical Implication of offshoring manufacturing jobs oversea with part of an article Adam Smith wrote in the “Wealth of Nations” in 1776: is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy . If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” Work Cited APA Art, Pine and Brendan Murray. [...]

[...] will review the ethical considerations of these factors for those in the organization charged with making the decision to offshore or not. Many other companies have used offshoring before. One example is the Hooker Furniture Corp., which saved between 20% to 25% in manufacturing costs by offshoring their manufacturing jobs overseas in the beginning of the 21st century (Michael Mandel, 2007). Another company practicing offshoring is Continental AG, a large tire and automotive-components manufacturer based in Hannover, Germany. In 2005 the company was close to being taken over when CEO Manfred Wennemer decided to offshore many of their production to low-labor and low-cost countries including Brazil, China and the Slovakia. [...]

[...] One of our examples from earlier, the Hooker Furniture Corp, Inc. might have saved costs on manufacturing, but also meant the closing of their manufacturing plant in Roanoke, Va. in mid 2006 and let more than the 225 of their employees go (Hooker Furniture, 1). An article in Business Week” published in June 2007 states that Hooker Furniture had to close their last manufacturing plant in Martinsville, Virginia due to their offshoring which they started in 2000. The 2006 annual report of the Pollina Corporate Real Estate states that about 8,500 manufacturing plants close each year in the United Sates due to offshoring. [...]

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