Name:   MAJ USA RET - Subject:   Outsourcing is a Business Decision. Date:   7/16/2012 5:11:11 PM

A person (or persons) risks their personal capital to make a profit.  Employees reap the benefit of have a job based on someone’s investment.

When the business needs a widget or a service… you look around for a widget vendor who makes a quality widget for a reasonable price. If widgets are of equal quality, you go for the lower price.  If widgets are of equal price, you go for the better quality. (This explanation is not intended for intelligent folks… sorry.)

If you completely buy into that “buy American” idealism… you may end up with a higher priced widget of equal or lower quality.  (This is a culture issue which I will not get into in this essay.)  What if there are no “best value” widgets made in America?

The prevailing union argument is that you should raise the price or lower the profit margin to cover the extra expense for the American made widget.

If I’m an investor, I am not going to appreciate your volunteering my principle for your idealistic but poor business decisions.  Maybe… likely… I’ll find a better place to put my money.  Investors do that you know… that’s what brokers are for.

If you raise the price, you run off your customers.  At least you will whack a nick into their loyalty.

(A little tug at your memory:  1981; Chrysler K-Car versus Toyota Camry.)

Suppose you insist on this NO OUTSOURCING business strategy. Customers stop buying your product because it costs too much… or it is junk.  Your investors have taken enough losses… they have lost their confidence in you.

Then along comes a group of guys… with money.  They say, “Look, your business can recover… actually, you can really make some money at this.  IF you follow our business model and advice, THEN we will lend you the money to turn things around.  Our money, plus a reasonable share of the profit, is due in full, at the end of five years.  If you do not pay us back, the business is OURS… and you walk.”

a) You take their money and their advice and you… and they… and your employees… prosper. (a la Bain Capital)

b) You DON’T take their money and they walk away.  You and your employees go down the tubes. (American Motors)

Make America an offer: “You make this Widget… to these standards… for a competitive price… AND WE’LL BUY AMERICAN.”