The New Industrial Revolution: What Will the Job Market Look Like in the Near to Distant Future?

Although it is never wise to try to predict the future, because you just inevitably end up looking like a fool if those predictions don’t come true, there is something to be said about making well-reasoned predictions based on past history and current trends. It is precisely this second foresight that Alan S. Blinder of Princeton University engages in in his essay “Fear of Offshoring,” December 16^th, 2005. I came across this essay in my research for the last blog post, but the reasoning brought out in the paper warranted a post all of its own.  

Don’t worry, this actually isn’t another post about offshoring – well not entirely – this is a post about the future of the North American economy in a larger sense which includes some discussion of offshoring’s role in that greater picture. This discussion is actually quite prevalent because forewarned is forearmed is it not? Having an idea of the way in which the workforce will change can give us a better idea for how to equip and educate ourselves to ensure that we can participate in it.

Blinder’s essay is an investigation into shifting industrial platforms. Just as the capital “I” capital “R” Industrial Revolution (1760 - 1820/1840) saw drastic changes in industry that dramatically reshaped society, so too, argues Blinder, are we in the midst of similar changes, or as Blinder boldly proclaims, in the middle of another industrial revolution. The historicised Industrial Revolution between the 18^th and 19^th century saw a shift from the farm to the factory:

The shift off the farm was massive. It has been estimated that in 1810 some 84% of the U.S. workforce was engaged in agriculture, compared to a paltry 3% in manufacturing. By 1960, the manufacturing share had risen to almost one-quarter and the agricultural share had dwindled to just 8% (today it is under 2%).

This major shift from an agricultural lifestyle to a highly manufacturing lifestyle changed the way that people coexisted: it changed “how and where people lived, how they educated their children, the organization of business, and the forms and practices of government” (Blinder).

Blinder’ discussion about offshoring, then, is much deeper than those voicing immediate concerns about offshored manufacturing jobs that have been gone for decades now. It is a discussion about offshoring as more than “international business as usual” and as a “routine extension of the realm of international trade” (Blinder); instead, Blinder sees offshoring as a “broad, powerful, and disruptive historical force that may transform societies.”  

Before we can get into this rather large declaration, we must first further analyse the changing nature of trade. Of course international trade began before the Industrial Revolution, but it was reduced to those goods which could withstand lengthy travel on sale ships. With the rise of the steam powered engine came more convenient and faster methods of transportation: steam powered ships and trains. Faster methods of transportation increased the kinds of goods that could be traded. Trade has always been reduced to two major groups tradable and non-tradable. These distinctions haven’t changed, but the amount of tradable goods has jumped from one category to another: in short, more and more things have become tradable.

Offshoring is an extension of this increase in tradable goods: the ability to trade in labour and production. This is why some economists view offshoring as a mere extension of the realm of international trade, as was stated above. For Blinder, the discussion of offshoring is not that cut-and-dry, and he finds this view to be quite limited and underestimating the true potential of offshoring. Unlike tradable objects that can be tangibly put in a box and quantified, trade now is occurring with services that are much less tangible: “packets of digitized information can now play the role that boxes used to play, many services are now tradable and many more will surely become so” (Blinder). It is this realisation, that the “key distinction for international trade will be between services that can be delivered electronically over long distances with little or no degradation of quality, and those that cannot,” which brings Binder to his “broad historical perspective”: that we are in the midst of what he calls the Next Industrial Revolution.

This second industrial revolution that Blinder believes we are in and which is currently still in progress is the shifting dynamics of jobs once again, but this time away from manufacturing and towards services. Offshoring played a major part in this second industrial revolution, because moving manufacturing jobs overseas shifted the workforce ‘at home’: “new service sector jobs have sprouted up in far greater numbers than old manufacturing jobs have disappeared” (Blinder). Like the first industrial revolution, this second brought about drastic changes in the work forced, education system, and governance of business. It has also brought with it television and the internet, and the decline of physical labour (Blinder).  

Obviously this major shift in what North American jobs look like and the way we do business qualifies as a major industrial shift, a revolutionary one if you will, and therefore to classify this as another industrial revolution is not a far reach. Blinder doesn’t stop there, however, because it seems that things are already shifting again, and in a way that he believes will determine another overhaul in world industry and international trade. According to Blinder:

We are now, I believe, in the early stages of a Third Industrial Revolution, which has been called the Information Age. The cheap and easy flow of information around the globe has vastly expanded the scope of tradable services. And there is much, much more to come. Like the previous two industrial revolutions, the Information Age will require vast and unsettling adjustments in the way we work, the way we live, the way we educate our children, and so on.

Blinder acknowledges that this shift will be an adjustment, but not detrimental to societal prosperity and economic development. So, ultimately his discussion of offshoring, unlike most of what is currently being circulated on the subject, is one of not fearing offshoring as an enemy to North American jobs, but rather embracing it as part of a more significant shift in human development.  Just as the first two industrial revolutions did not spell the end for agriculture or manufacturing in North America and unprecedented unemployment, neither will “massive offshoring […] produce massive unemployment” (Blinder). Blinder also suggest that we should not view offshoring as “a long-run threat to our standard of living,” but as a shift to the development of something progressive. “The world gained enormously from the first two industrial revolutions,” notes Binder, “and we are likely to do so from the third as well.”

The shifting dynamics of industry that have lead Blinder to declaring three separate industrial revolutions are as follows:

The Shifting Dynamics of Industry
First Industrial Revolution	Farm      →      Factory
Second Industrial Revolution	Manufacturing      →      Services
Third Industrial Revolution	General Services      →      Personal Services

These changes in industry dictated a “large-scale reallocation of labor” (Blinder), at first from farms to factories, then second from manufacturing to services. The shift to services was and still is dependent on three aspects, according to Blinder: 1. Rising productivity in manufacturing, 2. Change in consumer taste (preferring to spend income on restaurant meals and vacations instead of clothing and refrigerators), 3. Changes in international trade (Blinder). The final point that Blinder makes is what he also has heralded as the benchmark of the second industrial revolution: “We now import a much larger share of manufactured goods than we did, say, fifty years ago. All told, the share of manufacturing in U.S. GDP has declined from a peak of 29.5% in 1953 to just 12.7% in 2004” (Blinder). What Blinder is noting here is that the share of the American Workforce engaged in manufacturing has shrunk – more manufacturing is being done overseas, and so more manufactured goods are now being imported. Still, he is quick to point out that the number of manufacturing workers in the American workforce has “declined only modestly” and that this shift has, once again, “not led to massive unemployment” (Blinder).

The reallocation of labor that Blinder expects to see with this third industrial revolution is one from general services to personal services, as “many impersonal services are now or are destined to become tradable, just like manufactures, and thus potentially subject to offshoring” (Blinder). But just as with the first two industrial revolutions, Blinder argues that the “job categories that will move offshore as the Information Age progresses will not disappear entirely from the U.S. and other rich countries,” instead, their shares in this workforce will drastically shrink. As I stated above, the second industrial revolution saw a decrease in physical labour jobs, as manufacturing jobs were moved overseas. It has been a consensus that the jobs that were being offshored were ‘lower-labour’ or jobs that required less skills and education. The service jobs that were created in their wake were then seen as ‘high-labour’ or jobs that required special skill sets and educations. The shifting job force in the third industrial revolution will not be that easily differentiated. So being able to forearm this shift will not be a simple matter of more education. Blinder gives the example of jobs that are already being offshored that compromise the above determining factor: 

typing services (a low-skill job) and security analysis (a high-skill job) are already being delivered electronically from India – albeit on a small scale so far […]Most physicians need not fear that their jobs will be moved offshore, but radiologists are beginning to see this happening already […]The work of policemen will not be replaced by electronic delivery, but the work of some security guards will be. (My home burglar alarm is monitored from somewhere in Indiana. Why not from somewhere in India?) Janitors and crane operators are probably immune to foreign competition; accountants and computer programmers are not.

This is all well and good to say, but what does this really mean about the future of our job market? Obviously as technology improves and as developing countries modernize and progress, the line between jobs that are capable of being offshored and those that aren’t will continue to be pushed. Jobs that are already offshored include “call-centre operators, customer service and back-office jobs,” and those that are in the process of being offshored are “information technology, accounting, architecture, advanced engineering design, news reporting, stock analysis, and medical and legal services” (Roberts).

So what are classified, then, as ‘general service’ jobs and ‘personal service’ jobs? Below is a list of the current services sectors and some predictions for their economic development (to be offshored or remain onshore). Even though these still don’t offer a black and white differentiation between personal and general services, hopefully they do shed some light on the topic.

1.       Health services:  which seem destined to be delivered in person, but have already seen some offshoring potential in radiologists, laboratory testing, fiber-optic robotic surgery.

2.       Education services: also best delivered face to face, but are becoming increasingly expensive. There are also already online college and university courses, but for now it seems that high school and elementary education will remain in the personal services sector.

3.       Professional and Business services: It seems that a lot of these jobs are potentially offshorable. Future technological developments may dictate how much law and accounting stays onshore and how much comes to be delivered electronically from countries with much lower wages.

4.       Leisure and Hospitality services: although reservation clerks are and can be located anywhere, the beach boy, maid, hotel hostess, and restaurant waitress must all be physically present.

5.       Financial services: today the United States probably ‘onshores’ more financial jobs (by selling financial services to foreigners) than it offshores. But, improvements in telecommunication and rising education levels in countries like China and, especially India (where many people speak English) may change the status quo dramatically.

6.       Wholesale trade: other than the personalized retail trade, wholesale trade stands a greater potential of being offshored.

7.       Transportation: requires personal delivery.

8.       Information services: these services comprise the quintessential types of jobs that can be delivered electronically with ease. The majority of these jobs are at risk.

9.       Utilities: very susceptible to offshoring

10.   Other services: such as maintenance, laundry, etc., all require personal delivery.

Ultimately, personal services are those that “cannot be delivered electronically, or that are notably inferior when so delivered” (Blinder); these are services that either require face-to-face contact, for example your family doctor who performs your annual physicals, or wherein face-to-face contact is highly desired, for example meeting with a psychiatrist or psychologist (Blinder). It is impossible to even consider these jobs being done by a robot controlled from India. Alternatively, when you book your plane ticket online or set up a conference call, you do not require a physical person to complete these services; in this sense “distance does not degrade the quality of service” (Blinder). Obviously these are still not cut in stone, as was stated above, a lot of work for radiologists is being outsourced to specialists overseas, and it can be argued that there are psychiatric sessions that do occur over technological mediums.

So how are we really able to combat this? According to Blinder, there are no set solutions, because no one is really talking about it yet. One thing is for certain, though, it cannot be responded to by going on the defensive against offshoring, and indeed the attempt to traffic trade once it becomes the trade of digitized material will be even more difficult to police – something we can already see with the difficulty involved in trafficking pirated files such as music and videos.

Ultimately, Blinder notes that society hasn’t yet caught up from the first industrial revolution, let alone the second, and the third is not even being considered. There is still way too much attention paid to manufacturing and that which is past, instead of the present and the future of industry; it is a focus on where we have been and what we have lost instead of what we have gained and where we are going. “The societies of rich countries seem to be completely unprepared for the coming industrial transformation” says Blinder, “Our national data systems, our trade policies, our educational systems, our social welfare programs, our politics, and much more, all must adapt to the fundamental movement from impersonal to personal service jobs. None of this is happening now” (Blinder). So, first things first then, we must generate a discussion.

A few proactive measures that Blinder does suggest, however, are that we re-think and re-educated. The first response that this Third Industrial Revolution demands, according to Blinder, is that “we keep better statistical tabs on services, but that we start collecting systematic data on which service jobs are deliverable electronically over long distances and which are not.” Blinder suggests that rich countries will have to “recognize the nature of work to exploit their big natural advantage in nontradable services: being close to where the money is,” which will mean, in part, “specializing more in the delivery of services where personal presence is either imperative of highly beneficial” (Blinder). Second, Binder suggests that rich nations must “transform their educational systems so as to produce workers for the jobs that will actually exist in their societies” (Blinder). Ideally this means training more workers for personal services, but as was mentioned above…this is not a clearly defined category. For now, this means focusing on steering youth away from “tasks that are routine or routinizable” and towards work that “requires real imagination” (Blinder). Although, we can never assume that creativity will win over all, because creativity and imagination are “notoriously difficult to teach in schools” and there is wild imaginative thinking involved when considering a future where “truly creative jobs […] constitute anything close to the majority of employment” (Blinder). While those few who can be imaginative and creative will be successful, the remainder need to focus on something slightly more tangible within personal services, whatever they may be. Blinder doesn’t pretend to have all of the answers, and obviously neither do I; the intent here was to start a discussion in which other brilliant minds can participate and which will hopefully lead to some reasonable solutions.

The main flaw in Blinder’s argument about personal services, which he also fully acknowledges and points out, is the matter of Baumol’s disease – or the cost disease of personal services. This is the notion that within certain personal services, “productivity improvements are either impossible or highly undesirable” (Blinder). Ideally, if we were to think of let’s say teaching from a production point of view, the more children you place in a classroom that can benefit from a single teacher’s educational output would increase productivity. However, when it comes to this personal service, this increase in so-called productivity deteriorates educational quality; i.e. children benefit more educationally when given more specialized attention. So, the idea behind Baumol’s disease, then, is that with “little room for genuine improvement, and with the general level of real wages rising all the time, personal services are condemned to grow ever more expensive (relative to other items)” (Blinder). There is evidence of this in the rising costs of post-secondary education. As history shows, when the price of a commodity becomes too exorbitant, the demand for that commodity decreases. In this historical perspective, then, it would seem that the personal services that Blinder is basing the future of the North American economy on, may see a decrease in time with the increase in prices.  Perhaps, then, this is the first area that needs some re-thinking and adjusting.

In the end, I believe that Blinder brings out some very pertinent points that should be a general topic of discussion right now. I also agree that there has been too much discussion villianizing offshoring and that in general it does not have to be viewed as “as an impending catastrophe” but instead can be seen as “a looming challenge” that will bring about exciting change; as Blinder notes, “the world as a whole cannot lose from global increases in productivity” (Blinder). Like the first Industrial Revolution, we can expect a great deal of change, which will necessitate some uncomfortable adjustments, but in the end progress is progress. If indeed Blinder is correct about this shift towards personal services, then the social change that may awaken in the wake of this third industrial revolution is one where “people skills will become more valuable than computer skills” and where “creativity will be prized” (Blinder). Indeed this shift towards an emphasis on human interaction as opposed to a technological one gives me hope that the current social state of reducing human interaction to as little as possible will actually be reversed. What a pleasant thought, that maybe in the near future we will have actual human beings answering our questions instead of some automated system. And, again, perhaps this will not change, but it’s a nice thought.   

Amanda Labelle

Sources:

Blinder, Alan S. Fear of Offshoring, Princeton University, Dec 16^th, 2005. Print (pdf)

Roberts, Dr. Craig Paul. “The Offshore Outsourcing of American Jobs: A Greater Threat Than Terrorism,”

Creators Syndicate and Global Research. 18^th of April, 2010. Web.

http://www.globalresearch.ca/the-offshore-outsourcing-of-american-jobs-a-greater-threat-than-terrorism/18725, accessed 14^th of March 2014. 

The North American Economy and the Fast Changing Economics of Corporate Globalisation: Offshoring and Outsourcing to Foreign Contractors

Is Labour Arbitrage Vanishing?

There has been extensive debate for some time now around the industrial trend for the past couple of decades of North American companies offshoring work (sending work outside of the country where the company is based), particularly manufacturing. Lately, however, the discussion has taken a hopeful turn that companies will be moving work back to North America, or what has been dubbed reshoring. The initial decision to move labour overseas had to do with Labour Arbitrage – which is taking advantage of lower wages abroad, particularly in poorer countries. Now, however, “as emerging economies boom, wages there are rising” (The Economist). Therefore, one of the determining factors favouring offshoring is quickly becoming inadmissible. According to a recent article in The Economist, the pay for factory workers in China “soared by 69% between 2005 and 2010” and have been increasing at a rapid rate of “10-20% a year,” whereas manufacturing pay in America and Europe “has barely budged” (The Economist). Although this is a step in the right direction for workers in developing countries, this is a sure sign to take a step backward from offshoring, because “the gains from labour arbitrage are starting to shrink, in some cases to the point of irrelevance” (The Economist).

Furthermore, the countries that still do offer low-wages often don’t offer the same production quality. What is more, over the past decades, the risk of business disruptions due to war or natural disaster has become a genuine concern. On top of all of this, there is also the concern with the ability to quickly respond to the demands of key markets, which the lengthy shipping time for products does not allow; something that will be touched on a little later in this post.

Finally, a major realization that many companies are coming to is that offshoring hinders the necessary hand-in-hand relationship that production and R&D hold. In the past it was believed that R&D was purely a part of the intellectual property aspect of things, and was to be done in-house in the home country. More and more, though, companies are finding that “manufacturing somewhere cheap and far away but keeping research and development at home can have a negative effect on innovation” (The Economist). There is actually so much within the production aspect that can shed light on R&D. Not to mention that if say Apple decided to change its screen design at the last minute before production, its Taiwanese production factories wouldn’t have to wake up their employees to come in in the middle of the night to change it (yes this actually happened). One answer to this dilemma would be to move the R&D too, but that can raise a very large threat of losing valuable intellectual property due to theft or imitation (The Economist). If, ultimately, the majority of production is outsourced or off-shored for North American companies, then the selling product they actually possess is their intellectual property, so that comes at too high of a cost to risk. This thought too will be discussed in deeper detail later on.

Companies Moving Back Onshore: Reshoring

The result of these changes in the economic playing-field is that some major North American companies have done the math and are noticing that offshoring isn’t benefiting like it used to, so some of them are taking an exit off of this road and venturing in a different direction or down a different path. The next step in industry prosperity and economic development must be to find a new way to reduce production costs, whether that is reshoring or coming up with another solution to the problem. The Economist lists several companies that have already brought plants and jobs back to America:

“Caterpillar, a maker of vehicles that dig, pull or plough, is shifting some of its excavator production from abroad to Texas. Sauder, an American furniture-maker, is moving production back home from low-wage countries. NCR has returned production of cash machines to Georgia [, and] Wham-O last year restored half of its Frisbee and Hula Hoop production to America from China and Mexico.”

Other businesses that have made the leap to move business back home are Google, General Electric, Ford, and Apple. But does a move back home really mean bringing jobs back home? In a small regard yes, but sadly, many predict that the offshored jobs that have been reshored will merely become automated.  

So What is this I Hear about Automation?

Companies that do bring work back to North America are often doing so with the intention to implement automation. So a return to onshore manufacturing isn’t necessarily going to boost manufacturing job availability on the home-front. For offshoring, the cautionary note was ‘don’t get into a career field that can be done by someone else, somewhere else, for cheaper.’ It seems that the new shifting industrial dynamic prompts a new cautionary adage: ‘don’t get into a career field where a machine can do your job for free.’ In his book The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future, Martin Ford predicts that “offshoring is just the precursor to automation.” In an interview about his book with Samson Okalow for Canadian Business, Martin explained his thoughts further, stating that “jobs that are being offshored are eventually going to be automated” (Oakalow). And indeed this makes sense, because offshoring was initially a response to saving in production costs, and what better way to save than to cut out the cost of labour almost completely, and is this not the determining factor rendering offshoring unprofitable anyway? An article in The Economist speaks to this very issue, noting that offshoring is on the decline because of rising labour costs, and notes that with “more automation […] labour’s share of total cost is shrinking anyway.” Martin predicts, however, that this shift to automation won’t affect the developed countries that are already outsourcing and offshoring, because the jobs here are already gone; it will instead hit developing countries hardest, those that have been benefiting significantly from offshore business. Because the rise in offshoring manufacturing created more jobs in the service sector, Martin predicts that it is only within this sector that automation will really have a disruptive impact. Ultimately, the maturation process as Martin sees it begins with jobs going offshore, and then “as technology advances, those jobs will be automated” (Okalow).   

What is Home Anyway?: Multiple Home-Based Companies to Compete for Market Demand

I said that companies needed to think of reshoring, or to consider another solution to the unprofitable offshoring problem. And indeed they have put thought into another strategy that seems to be so common-sense that they should have thought of doing this a long time ago, and indeed some companies have. It is not reshoring and automation, although that will probably occur anyway in some degree, but is rather foreign home-bases. This is not offshoring in the traditional sense, but is creating a company base within another country purposed to generate businesses within that country, targeting a specific market: it is “being ‘onshore’ in new places” (The Economist). In other words, this is a company operating within other countries for the sake of that country and the market is presents, not merely to exploit that market for cheap labour.

According to The Economist, “firms are rapidly moving away from the model of manufacturing everything in one low-cost place to supply the rest of the world.” This is because emerging countries such as China are no longer seen as “a cheap manufacturing base” but are now seen as “a huge new market” (The Economist). Increasingly, the main reason for multinational companies to move production is to be close to customers in big new markets. Working from a local-base position, they can make customized products and be able to respond more quickly to local demand.

Indeed, this is the key to being a truly international company, wading in the water of many lucrative international markets. Siemens, the German engineering firm, has been practicing this sort of internationalism all along. Their chief executive Peter Löscher noted that “the ‘home shore’ for Siemens is now as much China and India as it is Germany or America” (The Economist). He further states that “the notion of offshoring is in any case an odd one, for a truly international company” (The Economist); in other words being an international company shouldn’t be about exploiting workers in other countries for cheaper labour, but expanding the marketability of the company and its brand by accessing international markets.

Similar to Löscher, Pierre Beaudoin the chief executive of  Bombardier claims that “the firm used to focus on cost savings made by sending jobs abroad; now Bombardier is in China for the sake of China” (The Economist). To be fair, this isn’t really a new concept, it is colonization revisited. What I mean by that is that just as empires started colonies in far-off distant places to grow their empire and thus their control over larger portions of the world and foreign affairs, so too is this shift a sort of industrial colonization: the purpose of a foreign home-bases is to increase market exposure and have one’s hand in a bigger piece of the pie. Being close to emerging markets allows companies to respond to that market’s demands and cater to that market’s needs, which can only mean an increase in revenue. It is an inflow of cash from multiple markets without extensive shipping driving up costs and slowing down product delivery. So, it would seem, that foreign home-bases are a win-win.

But is it Too Late?: The North American Inability to Compete and Dependence on Foreign Contractors

The real question though, is whether it may be too late for some American companies to be able to compete against their emerging counterparts. Gary Pisano of Harvard Business School notes that

even if wages in China explode, some multinationals will find it hard to bring many jobs back to America […] In some areas, such as consumer electronics, America no longer has the necessary supplier base or infrastructure. Firms did not realise when they shifted operations to low-wage countries that some moves ‘would be almost irreversible.’ (The Economist)

As can be seen by the state of American personal computing companies, there isn’t a strong enough presence and market anymore for American companies to compete with their foreign competitors. For example, “Dell shut two big American factories in 2008 and 2010 in a big shift to China, and HP now makes only a small number of business desktops at home” (The Economist). Although there was recently some excitement over a new manufacturing facility being built in Whitsett, North Carolina that will be producing personal computers at ‘home’ in America instead of overseas, this new manufacturing facility is not being built by an American company, but by the Chinese technology group, Lenovo (The Economist).  The reason that Lenovo is moving some production to America is the same as what I was just speaking about above, the shift to foreign home-bases because of the desire to be close to profitable markets. Being in the U.S., Lenovo “will be able to customise its computers for American customers and respond quickly to them. If it made them in China they would spend six weeks on a ship” (The Economist).

This is evidence that foreign companies are performing the same industrial shift to employ business branches as a home-base within a host country, allowing them to have a unique access to the market that they are trying to target. But, what if, let’s say, the U.S. no longer has a market-base for personal computers (having lost the majority of the market business to conglomerates like Lenovo) then will American companies really be able to compete?

Ultimately, if the majority of what is actually produced in America is intellectual property, brand power, and an impeccable sales and marketing force, how do we ensure the physical product? Do North American companies really have the power that they think they do, and what happens if this intellectual capital dissolves? According to Dr. Paul Craig Roberts, outsourcing is

rapidly eroding America’s superpower status. Beginning in 2002 the US began running trade deficits in advanced technology products with Asia, Mexico and Ireland. As these countries are not leaders in advanced technology, the deficits obviously stem from US offshore manufacturing. In effect, the US is giving away its technology, which is rapidly being captured, while US firms reduce themselves to a brand name with a sales force. (Roberts)

We already know that foreign competitors are imposing on the market through imitation of American designs, for example the all mighty iPhone. If the core value of a company, like Apple, is its superior product, which is in incredibly high demand (mostly motivated through a superior marketing force), what happens to that company when there are 100 more designs just like it for a fraction of the price? Obviously sales suffer, and product value decreases. As the Hira brothers (Ron and Anil) point out in their book Outsourcing America, there is “no evidence that [American companies] will be able to outcompete local Chinese and Indian companies, who are very rapidly assimilating the technology and know-how from the local US plants.” In fact, the Hira brothers point out “Indian IT companies have been consistently outcompeting their US counterparts, even in US markets” (Hira’s), so there is nothing saying that the same can’t be true of the technological market, and we are even seeing evidence of this now.

According to The Economist, American and European companies have made a mistake in outsourcing as much manufacturing as they have, because this allowed other firms “a great deal of insight into their processes” (The Economist). After all, many outsourcing contacts and former suppliers quite frequently turn into competitors. Samsung, for example, is a good reminder; Samsung was once an outsourcing partner, but is now an "electronic giant" that "dwarfs its competition" (The Economist).

Another risk is just become too dependent on foreign partners, for example, the relationship between Apple and Foxconn. A billion dollar partnership can’t be taken lightly, and there is no argument that the two companies are inextricably linked, and it has been so far a very successful partnership. However, since reports of poor working conditions for Foxconn employees surfaced, this tether may begin to closer resemble a noose. From mistreatment of employees, to workplace violence, and even under-aged labour, this controversial partnership runs the risk of creating a public distrust in the brand or a mistrust of the company. The troubles being reported with Foxconn put Apple’s reputation directly in the line of fire. When the major contribution that American companies have to offer is a brand name and intellectual property, then an advantageous relationship that suddenly becomes disadvantageous could mean a significant blow to its sales, and if it is a company less stable than Apple, it could mean a downward spiral towards the company’s dissolution.  

Amanda Labelle

Sources:

“Here, There, and Everywhere” The Economist, 19^th of Jan, 2013. Web.

http://www.economist.com/news/special-report/21569572-after-decades-sending-work-across-world-companies-are-rethinking-their-offshoring., accessed 14^th March, 2014.  

Hira, Ron and Anil Hira. Outsourcing America, American Management Association. May 13^th, 2005.

“Home or Abroad?: Herd Instinct,” The Economist, 19^th of Jan, 2013. Web.

http://www.economist.com/news/special-report/21569575-companies-need-to-think-more- carefully-about-how-they-offshore-and-outsource-herd-instinct. , accessed 14^th March, 2014.    

“Moving Back to America,” The Economist, 12^th of May, 2011. Web.

http://www.economist.com/node/18682182., accessed 14^th of March 2014.   

Okalow, Samson. “Technology Makes Life More Efficient, But Could It Soon Take Your Job?: Too Much of

 a Good Thing,” Canadian Business, 11^th April, 2013. Web.

http://www.canadianbusiness.com/companies-and-industries/automation-makes-life-more-efficient-and-eventually-it-will-take-away-your-job/, accessed 14^th of March 2014. 

Roberts, Dr. Craig Paul. “The Offshore Outsourcing of American Jobs: A Greater Threat Than Terrorism,”

Creators Syndicate and Global Research. 18^th of April, 2010. Web.

http://www.globalresearch.ca/the-offshore-outsourcing-of-american-jobs-a-greater-threat-than-terrorism/18725, accessed 14^th of March 2014. 

What's Hot and What's Not: The Successes and the Struggles in the Current Canadian Job Market

For the current job-seeker, the slowly recovering economy can seem to be, at times, still pretty bleak. This is not the case for all areas of employment, however, as we have seen an increase in opportunities over the last year, but all in specific regions and industries.  

It’s no secret that Eastern Canada has been struggling with higher unemployment rates and the ability to create or retain jobs, and yet, just in April 2013, the Western provinces had more than 218,000 job postings, “representing more than 40% of all the job openings in the country” (Canadian Business). It would seem, then, that in order to secure employment and a decent living wage, one must venture West. The disparity between employment availability in each region is “large enough to make different parts of the country seem almost like different countries,” notes Daniel Tencer of the Huffington Post. Tencer further explains that among Canada’s smaller cities, “the unemployment rate in 2011 ranged from 4.6 per cent to 16.4 per cent,” whereas, around The Fort McMurray, Alberta, area – the centre of the oil sands – there was a significant increase in the number of jobs by “95 per cent,” and unemployment sits at “less than 5% in the province and below 4% the closer you get to the oil-rich areas near Fort McMurray” (Canadian Business). Conversely, regions such as “forestry-dependent Miramichi, New Brunswick,” ended up losing “66 per cent of its jobs” (Tencer), which not only points to regional disparities, but disparities between industries as well.

So perhaps not everyone has to move West to acquire a stable, well-paying job, but if you are going to find one in the more Eastern provinces, it will have to be in a few specific sectors. There are certain industries that are suffering still throughout all of Canada, and are expected to continue to suffer for the foreseeable future; these are accommodations and food services, public/business/finance administration, and manufacturing, to name a few. As Tencer points out, the manufacturing sector “eked out a small net job gain of 16,000 in 2011, but employment was still down by 532,000 from its peak in 2004.” To be fair though, manufacturing has been in a steady decline even before the recession, with manufacturing work being moved overseas or offshore to reduce production costs, as well as on-shore manufacturing work becoming more and more automated. This industry has seen over “8 years of decline,” and has only created “15,900 jobs” as of 2011 (Tencer), so it is not expected to see a revival any time soon.

According to Mark Brown of Canadian Business, it is ultimately those in skilled trades and hospitality that are best equipped to compete in the current job market, as “skilled trade postings were up 40%” while the “hospitality sector increased the number of help-wanted adds by 46%” as of 2011. In fact, as Brown points out, “[o]ne out of every five job postings in Canada targets skilled trades.” For example, employment in mining, oil and gas has “soared 70 per cent between 2000 and 2011,” and the construction industry “saw jobs increase 56 per cent in the same period” (Tencer). There is a huge demand for oil & gas supervisors, petroleum engineers, and chemical engineers, and anything in the oil industry pays competitively, because there is a “gap between openings and eligible candidates” which serves to drive up salaries (Canadian Business). Within construction, too, workers have seen a wage increase by “6% over the past year, which is nearly double the national average pay increase” (Canadian Business). Canadian Business compiled a list of the best or top ranking jobs in Canada, and construction managers, pipefitters and electricians are some of the top jobs on that list that offer competitive salaries.

Canadian Business’s list of top jobs in Canada was based on employment growth between 2000 and 2011. Consistent with the data they accumulated, the most rapidly expanding industries in Canada within that period were

mining and oil and gas extraction (+70.3%) and construction (+56.4%). Other leading growth industries (all service related) included professional, scientific, technical services (+39.9%), health care and social assistance (+37.9%) and real estate and leasing (+30.1%). (Tencer)

Another sector that has already seen growth and is obviously destined to see more, due to a large percent of the population that is aging (the baby boomers), is health care: “[b]y 2020, nearly 9,000 nurses with a median wage of $72,000 will be retiring annually, as the demands of an aging population become more acute” (Canadian Business). This will not only open up a significant amount of jobs in health care because of those leaving the field, but the healthcare and residential aid sectors will also see an increased need for employees to deal with the surplus of aging citizens that will need care. Healthcare, therefore, features prominently on Canadian Business’s list of top Canadian jobs.  

Canada's Best Jobs 2013 Ranking: Canadian Business 

Overall Rank	Job	Growth in # of employees (2006-2012	Change in salary (2006-2012)	Projected job openings for every person looking in 2020	Median annual salary (2012)
1	Oil & gas drilling supervisor	44%	39%	2.3	$74,880
2	Head nurse & heath-care manager	58%	24%	1.23	$74,880
3	Petroleum engineer	75%	17%	1.02	$93,517
4	Electrical & telecommunications contractor	87%	28%	1.09	$72,800
5	School principal & administrator	9%	25%	1.23	$90,002
6	Lawyer	33%	14%	1.19	$79,997
7	Real estate & financial manager	47%	15%	1.07	$79,872
8	Senior government manager	4%	23%	1.15	$95,992
9	Chemical engineer	46%	20%	0.82	$78,000
10	Aerospace engineer	49%	11%	1.02	$75,005
11	Audiologist & speech-language pathologist	29%	21%	0.93	$77,813
12	Natural & applied science researcher	73%	25%	0.8	$73,590
13	Construction manager	39%	21%	0.94	$72,800
14	Police officer	25%	21%	1.05	$72,800
15	Financial administrator	13%	22%	0.92	$79,997
16	Registered nurse	10%	24%	1.23	$72,072
17	Sales & marketing manager	–4%	20%	1.15	$75,005
18	Dental hygienist	30%	12%	1.2	$69,992
19	Civil engineer	38%	13%	0.82	$76,960
20	Industrial technician	13%	28%	1.02	$74,381
21	Metal-forming contractor & supervisor	41%	32%	1.09	$65,874
22	Transportation manager	31%	17%	0.94	$72,800
23	Pipefitting contractor & supervisor	46%	19%	1.09	$66,560
24	Utilities manager	3%	17%	0.91	########
25	Software engineer	34%	8%	0.77	$79,997
26	Occupational therapist	34%	21%	0.93	$72,738
27	Pharmacist	12%	21%	0.71	$95,680
28	Computer engineer	19%	14%	1.02	$75,005
29	Psychologist	–9%	25%	1.04	$77,709
30	School and guidance counsellor	29%	32%	1.04	$69,326
31	Electrician	100%	22%	0.91	$69,493
32	Economic analyst (government)	–15%	16%	0.96	########
33	Geologist, geochemist & geophysicist	9%	34%	0.7	$89,440
34	Petroleum, gas & chemical process operator	5%	28%	1.16	$69,992
35	Health & occupation inspector	37%	15%	1.09	$66,560
36	Human-resources manager	9%	14%	0.92	$79,997
37	Mechanical engineer	33%	17%	0.82	$72,800
38	University professor	22%	19%	0.54	$81,994
39	Pilot	0%	25%	1.56	$69,846
40	Engineering manager	–20%	9%	1.06	$87,131
41	Secondary school teacher	3%	24%	1.04	$74,152
42	Railway & transportation supervisor	34%	38%	1.32	$60,320
43	Mining supervisor	18%	23%	2.3	$64,480
44	College instructor	21%	12%	1.45	$66,560
45	Urban planner	26%	16%	0.91	$72,530
46	Banking & credit manager	10%	13%	1.07	$72,530
47	Health-policy researcher	124%	19%	0.8	$67,205
48	Construction inspector	42%	13%	0.91	$62,400
49	Power system operator	–6%	11%	0.78	$70,720
50	Probation & parole officer	11%	13%	0.96	$71,094

Methodology

We used Statistics Canada data on employment and wages, including jobs that had experienced employment growth between 2006 and 2012 and had a median salary of $60,000 or more and at least 5,000 employed individuals. Rankings are based on four criteria: job growth, median compensation (based on a 40-hour work week) in 2012, the change in median compensation from 2006 to 2012, and the projected demand for those jobs using data from Human Resources and Skills Development Canada. The final rank is based on a weighting of 25% to job growth, 25% to projected job demand, 40% to median wage and 10% to change in compensation. A few broad nonspecific categories were eliminated.

Sources:

“Canada’s Best Jobs 2013,” Canadian Business. CB Staff writers: Mark Brown, Sarah Marmak, Jeff Beer, Joe Castaldo, John Lorinc, Alexandra Posadzki, Tim Shufelt, and Richard Warnica, April 12^th 2013.

“Canada Job Market Exhibits Enormous Disparities, People Patterns Report Says,” Huffington Post Daniel Tencer, September 5^th 2012.

“Here’s Where Canada’s Biggest Job Growth Will Be in 2014,” Canadian Business, Mark Brown., December 6^th 2013. 

Amanda Labelle