Network giants reject 'buy American' Obama mandate

Cisco Systems and Alcatel-Lucent want "buy American" provisions stricken from Barack Obama's $7.2bn US stimulus program to expand broadband internet access. Bloomberg has reported the networking giants have filed complaints with the federal agency overseeing broadband funds, saying a mandate for US parts would be "grossly …

[James Woods]

say wha?

"We're talking about technologies that are no longer made in the United States"

Nooooooooo, you don't say? You mean these technology companies shafted US workers and outsourced for the bottom line? I don't believe it, someone slap me.

If we were in the Bizarro World we would have child labor making cisco routers, nike shoes, and everything else, make nothing in this country, then we can just have a customer base of people that provide nothing yet seem to make a good bit of money in the process.

Is this a sign of outsourcing finally catching up with itself? I sure hope so.

[Anonymous Coward]

US labor isn't too expensive...

...it's non-US labor that's too cheap!

Companies like Cisco have killed US jobs, now they're moaning that to benefit from government money they actually have to employ Americans. The whole point of the stimulus package is that it creates work for Americans - that it rebuilds professions that the greedy management whores at Cisco have destroyed. The message Obama is trying to send to US companies is that outsourcing might save you a buck today but it's killing the US economy in the long term. That message is obviously not getting through to the amoral dollar driven logic still rampant at the network giants.

[Destroy All Monsters]

This stimulus sounds fishy

In this comment section: people who complain that "it's not made in America" but are not ready to shell out 500 USD for that small ADSL router either. Sounds like spoiled brats.

Also, how exactly are 7 billion of taxpayer dollars vectored onto "broadband" going to create jobs, or at least long-term jobs?

[Anonymous Coward]

cry me a river...

Gee, with all the counterfit cisco equipment floating around, that has wound up on US military bases, made you-know-where? Hey, I'm a greedy capitalist pig, just like the management of Cisco, but at least I won't sell out 'the west' by moving all my manufacturing, my support and a fair portion of my engineering to our potential adversaries...

[Anonymous Coward]

Oh dear

If Tata can ship a car plant, lock, stock and barrel from the UK to India then I see no reason why Cisco or Alcatel couldn't do the same for an electronics factory from China to the US. Unless they don't have the skilled engineers or even sufficient semi-skilled manual workers available to run a plant in the US any more.....

[Tony 17]

False economy

It is obviously far cheaper to produce kit in the Far East than in the West, due to lower labour costs, lower tooling charges etc etc.

So to 'stimulate growth' you are effectively talking about bribing companies to manufacture in the US. You offer them subsidies, tax breaks or whatever.

I'm no financial genius, but surely that is a false economy. You can't afford to subsidise them forever. Unless the cost of living in China/Taiwan etc overtakes that in the US you will have to go on subsidising them (at a significant ongoing cost to the American taxpayer), or you will eventually have to remove the funding. Suddenly it will then be cheaper to produce elsewhere again and in a global market multinational corporations will have to move their production, so the manufacturing industry in the US will promptly collapse again.

Surely it is better to look at what the West do well (innovation/design) and pour our money into that than chase the lost cause of manufacturing?

Who cares who makes the kit as long as it is our companies that are designing/driving it?

Like I say- I don't pretend to be an economic genius, but spending Billions of tax dollars during a recession to attempt to force ourselves back into a market we blatantly can't compete in seems a complete waste of money. Better to invest in our strengths - Stuff we already do better than anyone else.

[David 34]

Alcatel-Lucent are not a US company.

I'd just like to point out that Alcatel-Lucent is a French multinational, the Lucent bit was purchased having almost gone bust, it wasn't really a merger.

The company's incorporated in Paris.

[stc]

sad but true

it would be hilarious if we weren't stuck in the middle of it.. it is impossible to fulfill provisions of the legislation requiring american manufacture, since nothing is actually made in america any longer. glad to see this issue get a little press, but we all know they will in the end get their exemptions. after all, what choice is there? the guys from cisco and ALU arent kidding. there probably isnt a vendor in the network business that manufactures equipment in the us these days. and really, how is ALU even considered to be an american company anymore?

[Adam Azarchs]

"This is about creating American jobs - not Chinese jobs"

And what's wrong with creating crummy assembly-line manufacturing jobs for Chinese people as a side effect of creating skilled construction and engineering jobs for Americans?

Trade protectionism is always ugly.

[Anonymous Coward]

Scylla and Charybdis

Between a rock and a hard spot, Scylla and Charybdis, a double bind is an unpleasant but apparent outcome of specialization and globalization. It was to Odysseus, the strategist, a man with a mind of twist and turns, that the Greeks gave Archilles' armour. Homer wrote of an age when western states first began to grapple with the double binds statehood imposes. Current affairs require no less cunning and compromise. Granted there's no reason why American taxpayers should give up their tax money to generate jobs in other countries, but globalization places demands upon the economic policies of any nation and, more especially, the U.S. Perhaps deals could be cut that would see outsourced purchases compensated by ear marked purchases of made in America goods. Turning away from globalization to pursue protectionists policies is no longer an option and besides we in the west had a long run of stable, stay at home economies. We call it the Dark Ages.

Evolution speaks of descent with modification and the works of a blind watchmaker. Economics demands ascent with modification and the ability to turn on a dime to meet the needs of the times. During times of immediate demands the American system with an Executive Branch hands over much of the lead to the President, who like Odysseus has to choose between Scylla and Charybdis . I think in such times it serves to allow exceptions and even contradictions, much as the Common Law meets current demands by at times appearing self contradictory. The composer Igor Stravinsky wrote a quriky little book, titled "Poetics of Music in the Form of Six Lessons " wherein he baldly stated the right to contradict himself and, if IIRC, penned a fine little recap of the meaning of an apology. I'm not sure what, if any, right solutions there are to the current world economic slump, but it might serve to retain the right to short term, effective, seemingly, contradictory policies and to offer up true apologies for undertaken policies.

just my loose change

[Anonymous Coward]

RE: False economy

What if they decide to outsource the design and innovation too?

[Christopher Ahrens]

RE: False economy

I agree, we really should get back to being the smart guys on the block. We need to train more engineers, more scientistm more doctors. We need to undo what W did. We need to open research facilities, thats something that creates very well paying jobs, increases our overall health and will start generating more businesses from discoveries. Hell, we may even find a solution for Global Warming or all that other fluffy stuff that politicians love to tack their name onto.

[Chris Curtis]

Preserving US jobs is a bum-biter

I think the points made here are valid. US cannot manufacture for the same price as the east due to living costs. Period.

I also heard someone say the other day that the problem with what Obama is trying to do with US jobs is that if they continue down this line of staunchly insisting everything is done in America, other countries will follow suit. Once the world starts down that path the end cannot be good.

I think this is why Obama is making a mistake here. As a world leader he needs to recognise that the world is in this bad economy, not just the US. Rather than fighting to preserve a handful of jobs, why not continue to work away at the global problems, and the rest will fix itself.

[John Owens]

False economy?

It's not a false economy! The money that you are subsidising goes to keeping jobs in the west as apposed to sending more money to the East (paying for their labour). By keeping the jobs in the west you keep the money floating around the West's economy so overall you're not actually losing much. By buying cheap labour you might save a little in the short term however long term the economy will shrink.

This whole BS story that we just have to be smarter and better is rubbish, Labour sent soooo many to "University" here in the UK and all we got is a load of student debt that might never be repayed and few jobs that they're actually qualified to do as those jobs still require old university degrees. All you have to do is go into a call center and see how many graduates they employ for a job that requires no qualifications. Where are these new jobs?

Economies need to be based in manufacturing to be successful, the people who work those jobs are really the ones that create the wealth. They just don't share in it.

[elderlybloke]

America should concetrate

on what it has been doing successfully for about 50 years, producing armourements , like F15 Fighters, smart bombs , cluster bombs , attack helicopters etc for all those who can pay.

[RW]

The Cause of Outsourcing manufacturing

I've long suspected that labor costs aren't the reason. Somewhere I read that if the manufacture of Nike running shoes was repatriated to the US from wherever, the cost to make a pair of shoes would go up by some trivial sum like $1.23. Modern manufacturing is so highly automated that labor costs are hardly important anymore.

It's the absence of anti-pollution laws in much of Asia that makes them cheaper places to manufacture. If you don't have to worry about fouling the environment, the cost of building a factory is greatly reduced.

And isn't it true that semiconductor manufacturing is an especially dirty process?

[Scott 1]

@RW

This is all probably very true (about environmental regulations). I've also heard that the companies who move operations offshore do so because their taxes are much lower. I work for a small engineering firm, and our experiences seem to validate this. My boss (one of the owners) told me that we were paying something like 60% of our gross revenue out in taxes.

[Anonymous Coward]

One problem....

...for the US.

A) you either give large subs to these companies, thus increasing taxes

or

b) these companies up their prices.

However this is likely have a knock on effect.

If now that US made kit is now 25% more exepensive, people will look elsewhere, therefore demand will drop, ergo, job losses.

Also remember trade works two ways. If you start demanding that you only buy from home, then the likes of India, Pakistan, etc, may just say, "well you know that multi billion pound arms deal. go shove it, we're off to Isreal / Europe / Russia to buy our kit...."

It's a very risky business.....

[amanfromMars 1]

Strong Arms and Weak Minds do not a Nation Protect and Serve.

"Better to invest in our strengths - Stuff we already do better than anyone else." ..... By Tony 17 Posted Wednesday 10th June 2009 23:12 GMT

Would you care to venture a few, Tony 17, which would be welcomed everywhere.

There is a growing awareness that those that may be thinking to Lead Everything and the US with Economy and Labour have run out of Valid Future Ideas and that puts the Value of the Dollar at Risk of being Perceived as a Paper Tiger. And that would not be Good for the US.

Indeed, unless something Really New and Constructive happens, will Flight into other Domains and Jurisdictions and Security Swaps become a Tsunami Wave of Toxic US Waste Dumping, which will leave the Fed and WallStreet with Prime Ponzi Pariah Status.

It must surely not have escaped everyone's attention that nothing Really New and Constructive has happened to replace the Old Capitalist System which is in Financial Meltdown Paralysis, and that is a further catastrophic arrogant failure which will cost the Prime Ponzi Pimps their Fortunes and their Titanic Businesses ....... for they have not Kept Pace with Global Intelligence Requirements, thinking rather to preserve and promote a Present Crippling Advantage than Host a Beta Equitable Shared Future.

And is this tale ...... http://cryptogon.com/?p=9095 .... proof positive of the Real and Present Danger which Incumbent Failed System Chiefs, in their Monumental State of Denial, now have to deal with?

Given their Apparent Lack of Greater Awareness and Intelligence, are we to expect a Systemic Implosion and another Black Hole which will suck away their Core Wealth that was only Manufactured and Maintained with Imagination and the Control of Media and the Word.

In SMARTer Enabled Quantum Control Systems, does one need much more than just a Manufactured and Maintained Imagination, for One Deals in and with Live HyperRadioProActive DynamIQs ...... in a Much Greater InterIndependent Control of Media Processing of their Shared Words ..... thus to Present the Future as a Post Modern Current Reality Project/Civil CyberSpace Program and as a Viable and Universally Accepted and Acceptable Option to Replace any Continuity of the Past, which would not Ably Equally Server to All in the Future.

Would anyone care to Offer a Better Use One can make of the Internet and its CyberIntelAIgent Networks InterNetworking in Base Cloud Cover?

[/dev/me]

International market-competative wages

When they talk about market competitive wages, they compare a workers salary to that of an average Chinese worker and call him expensive. But then they compare their managers salary to that of a top US manager and claim they don't earn enough.

Isn't it interesting that no one in the debate about international wage levels seems to care what an average Chinese manager earns? Or how they live. A little consistency in comparing wage charts, is all I'm saying...

OK, I'll get my coat.

[Anonymous Coward]

RE: False Economy

"It's not a false economy! The money that you are subsidising goes to keeping jobs in the west as apposed to sending more money to the East (paying for their labour). By keeping the jobs in the west you keep the money floating around the West's economy so overall you're not actually losing much."

Really? And when prices on domestic goods go up people spend their wages on cheaper imports which fucks your argument right up the ass really, doesn't it?

The real issue here is about capitalism. If you try to increase the standards of living for one set of people then all that will happen is that the standard of living will go down for others. Those others will then do jobs more cheaply than the first lot. The first lot will then lose their jobs and standards of living will go down.

Of course, none of this matters to those who own the company - they will always find a way to make (and keep) money.

The only reason we haven't seen all this happening yet is, oh wait. We have. It's why there is mass unemployment and no heavy industries or manufacturing. It's also why we have seen a terrible return to 19th century class systems - a bunch of chavs with little or no prospects (and they know it) and a bunch of jet-setting businessmen who wouldn't know hardship if it bit their cock off. Everyone else is just a worker and will be exploited in whichever way the corporations see fit.

[Number6]

Salaries

Given the going rate for tech salaries in California, it's no wonder they can't afford to produce the stuff over there. I could be earning more than twice what I get in the UK for the same work.

[Anonymous Coward]

one word...

unions.

The UK, US and Australia have unions which have the power to cripple industries: placing unrealistic demands on businesses (and going on strike when they don't get them, basically throwing their toys out of the cot) and then waving their hands in the air and blaming management when the business shuts down or shifts its manufacturing offshore.

I'm not a manager, I'm a techie and I f-ing hate unions.

Incidentally, Cisco's software is designed and published in the US; the coding is done both in the US and in Asia (you can get two or three very good Indian programmers for the cost of one good US programmer.) The hardware is made under licence in Asia. Cisco is a software company.

@the person who went on about university being a waste of time: uni is a good thing but it's not for everyone. The problem is the whole raft of useless degrees they've created: media studies; tourism management; that sort of thing. WTF are you supposed to do with one of those? Work in a call centre, I suppose.

[Anonymous Coward]

American

American Jobs for American Workers!

Sounds like the cry of another party I know round these parts.

[Ferret]

It's not really cheaper in many cases

Where I work, our voice and data infrastructure is 100% Cisco and has been for several years now. During that time, I have noticed a shift in the "country of origin" labels on our networking gear from 'Made in Mexico' to 'Made in China'. What I have not seen is this supposed drop in price. If anything, pricing on the same model devices has gone up. The savings of relocation manufacturing seems generally to go into the bottom-line profit for the company and is rarely passed on to the consumer.

Regarding the counterfeit Cisco gear floating around - how do you think the counterfeiters got their hands on the design specs for that equipment in the first place? Why, from the factory down the street, in exchange for a few paper bags full of cash. Cisco's legal dogs have a lot less bite in mainland China than they would have had if the same situation happened in the U.S.

[MarcF]

Personally...

I just can't stop laughing at the captioned photo included in this article.

[Eddy Ito]

RE: False Economy

"Economies need to be based in manufacturing to be successful, the people who work those jobs are really the ones that create the wealth."

I don't understand. Why do they "need to be based in manufacturing?" Invariably all economies are service based because people are only capable of producing a service and nothing else. I don't care if you build widgets. Building widgets is performing an action on something and that is a service to some company, the company provides a service, supplying widgets, to 'wally worldmart' and, yes, wally is performing a distribution and delivery service to the end buyer.

Consider this, it is very likely that no one person knows how to make a good cup of tea. If one person does know how that would make them a farmer who can boil water, right? It would also mean they are a mason who can build the kiln the leaves were dried in and the ceramic cup was fired in. Lets not forget being a potter and a miner to acquire the materials to form the cup. Was it heated in a metal kettle, over an open flame perhaps? Where did the water come from, from a rain barrel or the faucet? Not so easy that cup of tea. But who cares, the "manufacturer" says it was "made in America," whatever that means.

[Anonymous Coward]

Its more than just labor...

Did you ever consider the chemical waste products involved in electronics manufacturing?

In the US you have very strict EPA guidelines and laws about protecting the environment.

Now lets look at Asia Pac. Which countries have laws that even close to those of the US?

How much do you think it adds to the cost of manufacturing components, safety equipment, medical lawsuits, etc ... There's your real cost.

If it were labor, you can bet that you'd see more robotics on the assembly line...

[Anonymous Coward]

Made in China

There was a short film that someone made and put on You Tube, which made a very good point while simultaniously deriding the Christian faith in the US.

The point was that all the Christian bits and pieces that they buy in the US shops to put around their homes, churches, etc. are all made in China, with all the polotical and religious implications thereof.

The fact is, however, that everything I've bought from China that hasn't got a non-Chinese company behind it, has been of really poor quality.

[Anonymous Coward]

Makes sense...

When a countries network infrastructure is largely based by equipment manufactured by a Chinese company with close links to the Military (like us in the UK) it ain't good for national security.

[WhatWasThat?]

Exactly: False. Economy.

What we are seeing is exactly the way the system works. There are people who are maintaining their standard of living and in fact, increasing it. Meanwhile everyone else is left holding the bag... and finding themselves in debt.

Outsourcing is just simply stripmining labour in yet another place it is not illegal yet.

Want more information?

http://www.johntaylorgatto.com/chapters/

Very good, detailed, and logical explanation of why we are where we are and how we got there.

http://www.thezeitgeistmovement.com/

Watch the second movie - Addendum. The first one was mostly flash to get people's attention. The second movie details how the "economy" is supposed to work under a central banking system - badly.

[Anonymous Coward]

@ Its more than just labor...

That's right and just another reason that globalization is a bad idea. Any country that wants to sell products to another country should have to meet the ecological standards, labour laws, and wages at least at a minimum of the country to which the product/service is being exported.

[Anonymous Coward]

Clarification

It is not that Cisco won't make full assemblies in the US --- they can't. Their stuff is assembled from sub-assemblies and components form multiple sources that they are likely not even fully aware of.

[Charles Manning]

Stimulate for the long term

When you generate stimulation packages you should stimulate in a way that provides long-term growth and advancement. Stimulation is a kick-start and the industry needs to be able to sustain itself after the stimulus is removed.

Building bridges and dams during the Great Depression improved infrastructure for the future with payback over many years.

The network stimulation is pointless for two reasons:

1) Network kit goes obsolete so fast that it won't help in the next boom.

2) Why stimulate made in US network kit? Building network kit in the US is not sustainable and as soon as subsidies are removed you'd just be left with a wrecked industry.

[David 141]

Wall off the US

Maybe they someone just build a great wall to keep all the foreigners out (or keep the Americans in, depending on your point of view).

[Anonymous Coward]

1930 Redux

The "buy American" provisions in the Stimulus act are today's version of the Smoot-Hawley Tariff, a major contributor to the deepening and lengthening of the Depression of the 30's.

Apparently, members of Obama's brain trust missed class the day that particular fiasco was discussed.

[Anonymous Coward]

Sha la la la

In the UK Gorden Brown said "British Jobs for British workers."

Then Europe pissed on him from a height and its now the catchphrase of of the racist, facist party called the BNP.

Same for Americans I guess. GO FACISUM SAYS USA!

(Plus the reason communists sucked was because of all the protectionisum and refusing to trade with other countries.)