Group 111 – Sophia – Pros & Cons

Globalization is a worldwide set of phonomenons that create more and more links between economies. Countries, companies and employees play all a role in this game. But this acceleration of interactions does not imply a homogeneous development neither stability for all the stakeholders. Seeing that, there are obviously winners and losers. What are the pros and cons of globalization?

Liberalization is a key lever for progress and growth. The figures prove that global poverty is reducing. Plus, emerging countries have more and more access to technologies, which is conducive to their economic development. However, it makes it ever harder for laggards to catch up. Companies that are not efficient enough have little chance to resist fierce competition, and jobs can be vanished.

What with human flows between countries and virtual interactions on the web, cultures are more and more interconnected, and physical boundaries collapse gradually. Data transmissions have never been so fast and so easy through the Internet. As a result, we get access to information from the whole world. The flip side of the situation is that it can lead to conflicts of all types. For instance, several extremist Islamist groups struggle against the American softpower.

Consumers in both developed and developing countries benefit from a rising number of technologies in all sectors – transports, energy, communication, media to name but a few. Eeconomically and socially speaking, this is one aspect which is at the core of development. Is this model viable in the long term nonetheless? We are living in a finished world, and so global growth is naturally limited. States, companies and people should take these limits into account, and take steps to preserve resources.

It is now easier to set up a business. Business development is supported by government in many countries, and managers have now a lot of tools to launch a new product or to provide a service cost-effectively.
However, the global financial system has been really deregulated. Not only have financial crisis gone widespread, but they have also become more frequent and more harmful since the late seventies. They easily affect the businnes’ health in the short time, especially at the local scale.

All things considered, globalization is a great source of opportunities, but players should take it up with a vision of sustainable development in order to both limit and offset its disadvanges.

Group 111 – Sophia – Why multinationals aren’t adding U.S. jobs?

NOTE: The issue is not symptomatic of the only American society. More generally, developed countries, like France for example, already entered in the same process, with its multinational companies faced to struggle their workforce in the home country, but as the same time even more new jobs abroad. But is it really also a matter of skill level that makes jobs insecure? For people, mobility could be the answer. High-skilled people keep leaving their home countries to find better work opportunities, sometimes even in terms of wages.

Howard R. Gold, Special for USA TODAY5:45 a.m. EDT September 28, 2014

On Monday the U.S. Treasury Department announced a crackdown on tax inversions, where multinational companies move their headquarters abroad to pay lower corporate taxes.

But tax inversions are just a symptom of a much bigger problem. Large, publicly traded multinational companies like IBM, Pfizer, and Hewlett-Packard aren’t growing much in the USA, and yet are pressured to boost their shareholders’ return.

So, even as employers have created nearly 10 million U.S. jobs over the last 4 ½ years, giant multinationals haven’t added many.

In fact, new data from the Commerce Department’s Bureau of Economic Analysis (BEA) show that multinational companies, which account for one out of every five U.S. private-sector jobs, reduced their U.S. employment by 875,000 from 1999 through 2012 while adding 4.2 million jobs abroad.

By contrast, in the 1990s they hired 4.4 million Americans and 2.7 million people in other countries.

Here’s what some U.S.-based multinationals are doing:

• Heavy-equipment maker Caterpillar, based in Peoria, Ill., has cut about 2,800 jobs in the U.S. since 2008 while hiring over 8,000 people in the Asia Pacific region. Caterpillar gets two-thirds of its revenues from outside the U.S., and Asia Pacific sales have grown nearly 40% since 2008. Caterpillar declined comment.

• IBM has reduced its U.S. workforce from 105,000 in 2009 to 83,000 now, estimated Alliance@IBM of the Communications Workers of America, which is trying to organize U.S. IBM employees. (For competitive reasons, IBM no longer discloses its U.S. employment.) In 2012, Computerworld reported that IBM had 112,000 workers in India, up from 6,000 in 2002. An IBM spokesman said its global workforce has remained stable for the past three years and “at any given time we have about 3,000 job openings to support our strategic initiatives.”

• Cisco Systems’ U.S. workforce has remained steady since 2009, while it added 8,000 jobs abroad. It now has about half of its sales and employees in the U.S. In 2013, CEO John Chambers told CNBC, “…I

In terms of future growth, unless tax policy changes, you will see (hiring) occur outside the U.S.” Cisco said in an emailed statement it will continue to hire and invest in the U.S. and elsewhere as it adjusts workforce to new opportunities.

John Challenger, chief executive officer of Challenger, Gray & Christmas, a Chicago-based outplacement firm, said large multinationals move jobs overseas because they need to manufacture and sell products in countries like India and China, which have two to three times the USA’s GDP growth.

Plus, Challenger said, “The lower-skilled and semi-skilled jobs are much more subject to globalization and automation than the higher-skilled jobs.”

Multinationals, however, have been slashing higher-skilled jobs as well.

In general, multinationals pay 25% above the national average compensation, according to a 2012 study in the Harvard Business Review.

Because most giant multinationals are public companies, they’re under pressure from Wall Street, hedge funds, and activist investors.

“The power of financial markets and shareholder pressures are driving short-term decisions,” said Rosemary Batt, a professor at the ILR School at Cornell University, who along with Eileen Appelbaum wrote a recent book, Private Equity at Work.

(Of the companies mentioned, all except Caterpillar have seen their stocks lag the Standard & Poor’s 500 index over the past five years, so keeping U.S. headcount down hasn’t helped them outperform.)

“Since the financial crisis, public companies have accelerated their investment in labor-saving technologies, driving efficiencies in the U.S.,” she explained.

Pressure to boost shareholder return also pushes big public companies to lay off U.S. workers, add them overseas, and relocate to cut their taxes, she said.

What they all have in common is a laser focus on the bottom line. That’s why nearly half of all Americans don’t believe the recession is over and many don’t think their jobs are secure.

NOTE: The issue is not symptomatic of the only American society. More generally, developed countries, like France for example, already entered in the same process, with its multinational companies faced to struggle their workforce in the

 

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