Globalization and the Labor Market

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Globalization and the Labor Market

• Central Workforce Alliance
• San Antonio, Texas
• February 18, 2003
• Richard Froeschle, Director
• Career Development Resources(CDR)
• rich_at_cdr.state.tx.us
• [phone]

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Defining Globalization

• The inexorable integration of markets,
  nation-states, and technologies to a degree never
  witnessed beforein a way that is enabling
  individuals, corporations and nation-states to
  reach around the world farther, faster, deeper
  and cheaper than ever before.
• Thomas Friedman, The Lexus and the Olive Tree

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(No Transcript)
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The New Rules of Globalization
Characteristic Cold War Period Globalization
Born in 1945 after the end of WWII. Lasted almost 45 years 1989 after the fall of the Berlin Wall.
Friends and Neighbors Allies vs. enemies divisions and walls Everyone is a competitor
Defining Document The Treatywith whom are you aligned? The Dealwith whom are you doing business?
Technology Symbol The hotline connecting the two superpower nations The Internet-- nobody in charge and everyone is connected
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The New Rules of Globalization (continued)
Characteristic Cold War Period Globalization
World Economic System Capitalism, socialism, communism, and autocracies Free market capitalism based on comparative advantage
Cultural Impacts Discrete ethnic or regional cultures and tradition. Past take precedence Cultural melding. Future takes precedence. Innovation over tradition
Defining Power Structure of Nation-States Fixed borders allied with either the U.S., USSR Government authority balanced by financial markets, individuals
Reigning Economist J. M. Keynesposits strong role for government J. Schumpetercapital move free and at will creative destruction
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Globalization of the U.S. Economy

• Total World Gross National Income (Product) 2001
  31,500,012 million
•  
• United States Gross National Product 2001
  9,900,724 million
•  
• The FACT is that the United States economy
  represents 31.4 percent of the World Economy.
•  
• The REALITY is that the top 20 richest countries
  represent 85 percent of the World Economy and the
  top 10 richest account for 74 percent.
•  

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Top 10 Richest World Economies 2001(in
millions)

• United States 9,900,724 31.4
• Japan 4,574,164 45.9
• Germany 1,947,951 52.1
• United Kingdom 1,451,442 56.7
• France 1,377,389 61.1
• China 1,130,984 64.7
• Italy 1,123,478 68.3
• Canada 661,881 70.4
• Spain 586,874 72.2
• Mexico 550,456 74.0

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How Globalization Impacts the Labor MarketThe
Basics

• Globalization new digital technology opens
  producer/consumer markets around the world
• Increased customer access to producers leads to
  global price competition, driving employer need
  for greater productivity, lower prices
• Increased price competition leads to cost
  containment pressures
• Cost containments leads employers to new supply
  chain practices, concerns over labor costs,
  alternative labor options

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Impacts of Globalization on Consumers

• Broader access to a wider variety of products and
  services than neighborhood offers
• Greater vendor diversity leads to better buying
  opportunities, lower prices eg. comparison
  shopping via Internet
• Lost allegiance to domestic producers what about
  the union label or U.S. TVs??
• More volatile labor market with stronger
  competition from global labor supply

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Impacts of Globalization on Business

• Businesses with global reach access more
  customers and get exposed in new markets
• Businesses with regional niche lose local
  customers to a global market place
• Business is exposed to supply chain opportunities
  to acquire lower cost inputs
• Business is exposed to new labor supply options
  foreign affiliates, H1B, global outsourcing

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An Integrated Corporate WorldPercent of 2000
Revenue Outside U.S.

• Texaco 65.9
• IBM 57.9
• Motorola 52.5
• Johnson/Johnson 38.2
• John Deere 25.1
• Colgate 69.4
• Nike 50.3
• Hasbro 36.0

• YUM Brands Inc. 34.5
• General Motors 26.2
• Ford 30.4
• Boeing 34.3
• Intel 58.8
• Coca Cola 61.0
• Federal Express 29.9
• Emerson Electric 40.0

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Industry Growth Potential in a Global Economy

• To whom does the industry sell and are those
  sectors expanding?
• Is their cost structure competitive? e.g. are
  labor costs globally competitive relative to
  value added?
• Do they have Positive Pricing Power in their
  marketplace? PPP results in higher profits!

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Texas Industries Adding the Most Jobs 1999-2002

• Absolute Growth
• Educational Services
• Food Services/Drinking Places
• Ambulatory Health Care Services
• Professional and Technical Services
• Local Government
• Specialty Trade Contractors
• General Merchandise Stores
• Hospitals
• Heavy and Civil Construction
• Motor Vehicle and Parts Dealers

• Percent Change
• Warehousing and Storage
• Management of Companies
• Financial Investment
• Heavy and Civil Construction
• Support Activities for Mining
• Ambulatory Health Care Services
• Utilities
• General Merchandise Stores
• Educational Services
• Motor Vehicles/Parts Dealers
• (NAICS codes)

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Texas Industries Losing the Most Jobs 1999-2002

• Absolute Change
• Agriculture/Forestry Support
• Computer/Electronic Manuf.
• Apparel Manufacturing
• Transportation Equip Manuf.
• Fabricated Metal Manuf.
• Chemical Manuf.
• Oil Gas Extraction
• Food Beverage Stores
• Administrative Support Services
• Federal Government
• (NAICS codes)

• Percent Change
• Agriculture/Forestry Support
• Apparel Manufacturing
• Computer/Electronic Manuf.
• Transportation Equip Manuf.
• Wood Product Manuf.
• Misc. Manufacturing
• Printing and Related Support
• Oil Gas Extraction
• Electrical Equipment and Appliances
• Paper Manufacturing

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Texas Exports 2001

• Computer/Electronics 25.7 billion 27.0
• Chemicals 14.6 billion 15.4
• Machinery, ex. Electrical 12.8 billion 13.5
• Transportation Equipt 11.3 billion 11.8
• Electrical Components 4.8 billion 5.1
• Petroleum Products 3.7 billion 3.9
• Fabricated Metals 3.2 billion 3.4
• Plastic Rubber Prod 2.8 billion 2.9
• Food Kindred 2.6 billion 2.7
• Primary Metal Manuf. 2.1 billion 2.2
• Agricultural Products 1.9 billion 2.0

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The Workplace of the Future...

• The factory of the future has just one man and
  one dog. The mans job is to feed the dog. The
  dogs job is to keep the man from touching the
  equipment.