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Free Market Project

2/24/2006 9:59:27 AM

Updated 02/22/06

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Times Brings Balance to Outsourcing Coverage
The insourcing side of the story shows how imported auto industry plants bring 60,000 jobs to U.S.

by Megan Alvarez
June 22
, 2005

     The New York Times is not known for their balanced news coverage of American business, but thats exactly what they delivered with their June 22, 2005, story on the auto industry. Reporter Micheline Maynard detailed the often-overlooked story of how the U.S is attracting jobs from overseas.

     Foreign automakers are adding jobs in the United States at a rapid pace. Instead of delivering another story about outsourcing of jobs from U.S. manufacturers to other countries, Maynards front-page article covered the increasing investment of foreign automakers in the U.S. and the jobs they are creating.

     The story made it clear that the U.S. is gaining jobs from foreign automakers, which now have a total of 13 factories located in eight different states. According to Maynard, a quarter of all cars and trucks built in the U.S. 1.4 million are foreign brands made in factories owned by foreign companies. This is up 18 percent from 2000. She also pointed out that the plants alone employ 60,000 people, and that doesnt include jobs created at companies that supply the assembly plants.

     This is the flip side of the stories about job losses at the Big Three auto manufacturers. Just five pages into the Business section, the Times reported that Ford is going to cut 5 percent of its white-collar jobs in North America. Maynard reported in her article that GM plans to cut 25,000 of its workers by 2008.

     That raised the question of why American car companies are declining while their foreign counterparts are expanding. Maynard explained that the free market is the cause. Foreign companies have not been buried beneath impossible union contracts with overwhelming benefit packages. According to the article, actual salaries were only slightly lower at the new plants. When health care and other benefits were taken into account, union workers earned about $55 an hour, nearly 15 percent more than nonunion workers.

     Toyotas nonunion workers were also more productive. The nonunion workers kept the plants operating at 107 percent capacity, while GMs plants only operated at 75 percent. The productivity of nonunion workers has led many foreign owned companies to locate in the South, where many states do not require workers to unionize.

     In the midst of almost-daily headlines about outsourcing and its supposed effects on the American economy, Maynards story was a rare reminder of the positive impact of insourcing.


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