The Impact of Outsourcing on Ohio Jobs
More and more companies appear to be sending jobs overseas and cutting jobs here in Ohio. The practice of outsourcing appears to have picked up plenty of steam last year.
"We were making money at our factory," Joe Jeter says of his former job at Ranco. "We were profitable. But we weren't profitable enough."
For most of Joe Jeter's adult life, he earned a paycheck from Ranco Manufacturing in Plain City. He helped make heat pumps for three decades until his job became someone else's.
"There's no sense me dwelling on the fact that someone is doing my job for pennies on the dollar. I have no control over that," Jeter says.
Today, his $15 per hour is being done for less than a $1 an hour in China. Joe is one of more than 100 people who lost their jobs at the North American headquarters for Ranco. Their jobs went to China and Mexico, where labor is a lot cheaper.
At one point, it was rare for Ohio companies to outsource workers. But recent numbers tell another story. The number of Ohio jobs sent overseas hit record levels last year.
In the first quarter of 2004, roughly 11,000 people lost their jobs. Nine percent of those lost jobs were replaced by positions overseas. Three months later, of all the jobs lost by Ohio workers, 32 percent of them were replaced by foreign workers. And in the third quarter of 2004, 42 percent of the jobs lost in the state were shipped overseas.
The Economics of Outsourcing
"Hiring other people to do things is a good thing, especially when they can do it cheaper," Capital University economics professor Dr. Robert Lawson says.
Dr. Lawson believes anyone whose job doesn't require personal contact with a client could be a target for outsourcing, especially if the position is tied to a computer or a phone.
"The key for people is to have a marketable service," Dr. Lawson explains. "If you have something that no one wants to buy, you're not going to be marketable in any economy."
The Controversial Impact
In a few cases, outsourcing is fueling Ohio's economy. Doug Burnham runs Relizon -- a company that does work other companies no longer want to staff. Typical work consists of printing and data warehousing.
"Depending on the customer, it's anywhere from tens of thousands to millions of dollars that we're saving these companies," Burnham estimates.
Relizon will soon grow into a 300,000 square foot building in Grove City. But the effects of outsourcing also leave workers like Joe Jeter realizing economic development doesn't leave a lot of openings for a 50-year-old who spent his life on an assembly line.
Outsourcing in the Hotel Industry
While the impact of outsourcing in various industries raises concerns, the hotel industry has also seen its fair share of outsourcing. Many hotel chains opt to outsource certain services, such as housekeeping and laundry, to third-party companies. This allows hotels to focus on their core operations while reducing costs. However, it also means fewer job opportunities for local employees in those specific areas.