The global marketplace is apparently not a friendly place for labor. One statistic from Numberof.net puts the number of U.S. jobs shipped overseas in 2009 at more than 2 million, as companies look to save costs by utilizing cheaper labor rates in other countries.
For Americans it is easy to get caught up in the phenomenon as only being a U.S. problem, but as an Associated Press report indicates, Nokia has announced it will reduce its workforce at three plants by 4,000 employees to move assembly operations from Europe to Asia. The AP report also indicates this shift is on top of a 10,000 job shift from the previous year, which means outsourcing for cheap labor is pretty typical in the modern business world.
However, the companies involved in the manufacturing and assembly of devices could have put too many of their eggs in one basket. A Fox News report puts the price of gas at $5 per gallon by the end of 2012. High gas affects everything, including the cost of shipping those goods assembled for less in Asia.
Those goods, be it cellphones, iPods or toys, still have to reach consumers, which means the company is on the hook for that high transportation cost, which, as a report from Energy Bulletin indicates, could erode the cost savings of having the operation in Asia in the first place.
Basically, in their search for lower operating costs, companies like Nokia could find themselves longing to bring the manufacturing process back to the regions it abandoned for cheaper labor. Sure, many components are still manufactured in Asia and prices could always be raised to cover the shipping charges. Still, the end result is less of a profit, and raising prices is almost never a good idea. Ask Netflix how that worked out.
Source: Yahoo
