Is international outsourcing ethical?

Aug. 19, 2004
The phone rang on a Thursday night. It was my boss; he wanted to meet for breakfast before work the next morning.

At breakfast, he explained that our corporate headquarters had decided to close our California manufacturing facilities. The 500+ employees who worked here would either be let go or relocated. The manufacturing operations would be moved to Georgia, South Carolina, and Hong Kong. As a selected member of the relocation team, he gave me the uncomfortable task of traveling to Hong Kong to train our replacements. The assignment: to teach the intricacies of building complex aerospace valves in a foreign language, 7,000 miles away.

A few months later between overseas trips I stopped by the “home” plant. What I saw was overwhelming and depressing. Virtually all that remained in the 100,000-sq-ft facility was my desk, surrounded by a few file boxes. Even my filing cabinets had been surplused. At that moment the loss of jobs seemed grossly unfair. However, as I look back on that event, I now understand that there are many reasons why companies are deciding to send their manufacturing overseas.

I have heard some people argue that as long as these actions are legal, they are ethical. Others argue back that these actions (by greedy companies that disrupt the economic futures of many people) are purely unethical. Based on my experience, there are several competing ethical considerations:

  1. Many companies have a values statement along the lines of “We value our employees (internal customers).”Doesn't outsourcing contradict such statements and destroy a company's credibility?
  2. International competition is forcing many companies to take extreme actions just to survive. Isn't it more ethical to save whatever U.S. jobs and profits you can, rather to completely cease operations?
  3. While current laws don't prohibit most technology transfers, outsourcing does build foreign skills and infrastructure while reducing the same in the U.S. Shouldn't we protect our manufacturing base for the purpose of national and economic security?
  4. Consumers typically benefit from the lower prices and greater variety that international sourcing provides. If we are doing something good for the masses, isn't it ethical?
  5. Some U.S. manufacturers are making adequate profits. How is it ethical for them to be so greedy that they outsource simply for the purpose of making more money?
  6. The low-income workers in other countries are people too. For the most part, we have a great abundance in the U.S., so isn't it good to provide jobs instead of financial aid?

Is there a correct answer to this ethical question? If you or someone close has lost a job to outsourcing, then you know how devastating it can be. I have observed that some outsourced individuals suffer irreparable financial difficulties. On the other hand, most were able to accept relocation or find other jobs. Some were even motivated to pursue such lifelong ambitions as starting their own businesses or changing careers.

While there are contradicting considerations, for me the ethical line in the sand is this: If a company outsources because of corporate greed and the selfishness of the top executives, then it is unethical. However, if outsourcing is done out of competitive necessity and the needs of the employees are a major consideration during the process, then indeed outsourcing may be the most ethical action that can be taken.

Kenneth Harrison,
Founder tooling4less.com

Kenneth Harrison is a manufacturing engineer experienced in international product sourcing. tooling4less.com helps companies compete in the international marketplace.

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