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Insourcing in fashion in the US elections


27-Jan-12 15:26

If you haven’t seen already, and I’m sure you have, election season in the US has begun. Republican candidates are battling it out to become the presidential nominee and take on current president Barack Obama during this year’s election. But what role will outsourcing play?

With the election season comes the traditional manifesto pledges promising the world and trying to discredit the pledges of their opponent.

 

Barack Obama has made one such pledge, which procurement teams will not be unfamiliar with, insourcing.

 

In a video posted on the internet, Obama said “You’ve heard of outsourcing; well, this is insourcing,” making reference to an unusual group of items, including a padlock, pair of socks and a candle, which the president said were examples of products had been made in the US and were examples of a growing trend of companies bringing jobs back to North America.

 

His pledge was directed at business executives urging them to increase insourcing, saying that if they did he would support them. In the federal budget there will be new tax proposals rewarding companies that insource and ending tax breaks for companies that shift jobs overseas.

 

The president also pledged to streamline government agencies which will make it easier for small-businesses to secure loans and government help with selling products overseas, which would include the creation of a new website called BusinessUSA. This website would provide information for those wishing to sell goods overseas.

 

“Instead of forcing small-business owners to navigate the six departments and agencies in the federal government that focus on business and trade, we’ll have one department,” he said.

 

Like most election promises the proof will be in the pudding, but for North American companies that were potentially looking to insource this may prove to be the nudge needed. It’s hardly likely to be the death knell for outsourcing, but if the government is placing serious incentives to shift the balance of the outsourcing equation, that’s surely going to have a reasonable impact on the decisions American companies are making.

 

Whether we’ll see some of those with legacy outsourcing contracts, those who have built much of their success around their ability to leverage cheap labour costs out of, say, China, change their approach, it’s hard to say. There are signs, but until iPhones are made in the USA, it’s hard to draw too many conclusions.

 

Businesses may turn out to be more entrenched in their outsourcing operations than Mr Obama hopes.


Tim Burt Tim Burt is Deputy Editor at Procurement Leaders. His main areas of interest are risk, global sourcing and the commodity markets on which he writes regular coverage. Follow Tim on Twitter: @tburt85

 
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