Entrepreneur Forum with Congressman Maurice Hinchey and Thoughts on Outsourcing

I had the opportunity to meet with Congressman Hinchey (D-NY) last week at a Finger Lakes Entrepreneur Forum (FLEF).  A large portion of the conversation had to do with  a favorite topic of politicians: outsourcing.  He spoke of the challenges unemployment represents to families, the inherent problems with having a work force that doesn't include a significant manufacturing sector, and connected that to examples around upstate NY.  A pretty typical political opening on the topic,but thankfully this meeting was organized as a roundtable giving my fellow entrepreneurs (read: fellow loudmouths) an equal opportunity to talk.

One professional echoed the concerns of the congressman and further explained the logistical difficulty moving labor off-shore creates.  His example was that there used to be multiple sources for quick jobs or orders of 1,000 – 10,000 pieces per year.  A relationship would be developed and the flexibility start-ups need would be satisfied.  However now there is no flexibility, no relationship, and orders of 10,000 units per year is a drop in the bucket for most manufacturers.

He then brought up the very valid point that most of the companies involved with FLEF include a step somewhere in their business plan that states

"...Manufacturing will scale with significant cost savings thanks to volume and off-shore production/procurement..." 

The congressman didn't really have anything specific to say about this interesting situation.  Not wanting to let this one go I picked up where my colleague left off, asking:

“Recognizing the situation that was just described as a significant cause of outsourcing, if you had all of the power in the government yourself, what could be done to prevent the loss of American jobs?”

The response I got wasn't as specific as I had hoped, and he mentioned that difficult decisions have to be made by those that are deciding to engage in offshore work.  Since I wasn't exactly sure what he meant by that, I pressed the issue further.  I went on to offer an example from my own experience:

“I had to select a PCB from either China at $3 per board or the USA for $18 per board.  Clearly in that situation the answer isn't to simply spend the money on the local supplier and eat the $15 cost increase.  Is there another option other than making the clear financial savings represented by the Chinese supplier?“

Again I didn't get a solid answer from my question, but in his defense I don't think anyone could answer a question like that on the spot.  However it did open up a larger discussion about how important those outsourced jobs are, and if the American society can still thrive if we were to focus less on mass manufacturing.  We even went so far as to talk about the possibility of having the more skilled jobs such as R&D sent overseas.  The conversation was very interesting and even spilled out into the hall once our time had run out.

This made me want to open the questions I posed to the congressman for comments here.  I would be interested if anyone has an answer to them:

1. Recognizing the  growth plans of many small companies is a significant cause of outsourcing, if you had all of the power in the government yourself, what could be done to prevent the loss of American jobs?

2. I had to select a PCB from either China at $3 per board or the USA for $18 per board.  Clearly in that situation the answer isn't to simply spend the money on the local supplier and eat the $15 cost increase.  Is there another option other than making the clear financial savings represented by the Chinese supplier?

3. Are you concerned about the outsourcing of skilled labor like R&D, and if so, what specific measures would you like to see the government take to prevent the loss of skilled jobs?

What do you think?  Tell us in the comments section!  Who knows, maybe the politicians will read your comment and give you one of those red phones like NASA gets!