Saturday, November 13, 2004

Sink or Schwinn?

Bicycle maker Schwinn, unable to compete with Chinese imports, went bankrupt in 1993 and now exists only as a brand label affixed to bikes imported from Asia and sold in stores like Wal-Mart.

This Economist article discusses outsourcing's effects on European vs US firms. The rigid European labor market makes redeployment of surplus workers more difficult than in the US. The following graph, based on research from McKinsey, shows that while both Germany and the US benefit from cost savings from outsourcing, inefficiency in redeploying surplus labor keeps the overall benefit to Germany from being positive, whereas it is slightly so in the US. (Positive economic impact per dollar of outsourcing exceeds one dollar here, but not in Germany.)

1 comment:

Mohammad Barkeshli said...

sad information indeed! liked ur blog. give me a visit.

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