By Tom Still
MADISON – The increasingly curious exchange between
incumbent Gov. Scott Walker and challenger Mary Burke over the “outsourcing” of
jobs illustrates how political campaigns and economic realities seldom mesh.
Outsourcing is not a four-letter word. It is a part of how
many companies – large or small, foreign or domestic – do business in the
modern world.
If you’re a small business owner in Wisconsin and you’re not
quite ready to hire that next full-time employee, you might “outsource” some
work to a consultant. That consultant may or may not become your employee in
time, but the initial consulting approach gives both parties a chance to see
how the relationship works.
If you’re a large company executive hoping to crack into an
emerging market in China, India or Brazil, an option you must consider is
opening a production facility close to the source. That need not threaten
production at home – you don’t want to jeopardize your U.S. markets – but it
means adding production capacity elsewhere to control costs and open new sales
channels.
Outsourcing has become an issue in the governor’s race
because Republican Walker has gone after Democrat Burke over the supposed outsourcing
of jobs by Trek, the Waterloo-based bicycle manufacturer. Founded by Burke’s
father, Richard, and now led by her brother, John, Trek employs about 1,000
people in Wisconsin and another 800 abroad. It cranks out high-quality bikes in
Wisconsin as well as Germany, Holland and China – precisely because Trek wants
to be close to those markets, too.
Burke has chastised the Walker administration because the
Wisconsin Economic Development Corp. awarded tax credits in 2011 and 2012 to
two companies, Eaton Corp. and Plexus Corp., which later outsourced jobs
abroad. Eaton is a global firm based in Dublin, Ireland, and it operates a
plant in Pewaukee. Plexus is based in Neenah and operates in markets across the
world.
The political strategists will continue to slug it out over
the details of what happened at Trek, Plexus and Eaton, but they do so at the
peril of ignoring a much bigger picture voters deserve to understand.
Wisconsin represents roughly 2 percent of the U.S. economy
and a fraction of a world economy that is growing relative to the United
States, thanks to the emergence of a middle class in countries that previously
had little ability to buy American goods and services.
For Wisconsin to prosper, it cannot possibly sell everything
it produces – on its farms, in its forests, in its factories or through its
high-tech firms – at home. It must market and sell goods and services to a
$72-trillion global economy.
The United States has the largest gross domestic product in
the world, but countries such as China, Brazil and India are moving up the top
10 list. Economic growth rates for the world have been estimated at 3.6 percent
for 2014, compared with 2.8 percent for the United States and 5.1 percent for
developing countries.
Foreign direct investment is also vital to Wisconsin. Three
years ago, the University of Wisconsin System organized a Task Force on
Internationalization and Economic Development to take stock of the state’s
global assets – and how the university could help leverage them. The report
concluded there were 470 foreign-owned operations in Wisconsin at the time,
representing 27 countries, with jobs and plants in 51 of the state’s 72
counties. In additions, hundreds of Wisconsin-owned companies do business
overseas.
Globalization has become a two-way street. The economies of
the United States and Wisconsin are increasingly intertwined with those beyond
our borders. An emerging flip side of global outsourcing is “reshoring,” in
which companies bring back jobs and production to the United States due to
rising labor and transportation costs, regulatory problems and political
instability.
Narrowly drawn political debates can appeal to voters whose
values predispose them to believe the worst about an issue. But politics should
be about bringing out the best in people and the election-year discourse, which
is a unique platform for talking about major challenges.
In this case, that means stepping back and recognizing the
Wisconsin economy is tied to global trends that are too large to ignore or wish
away. Better yet, the debate should embrace those new realities in a way that
helps the state and its citizens prosper.
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