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Globalization and the Labor Market

Globalization and the Labor Market. Central Workforce Alliance San Antonio, Texas February 18, 2003 Richard Froeschle, Director Career Development Resources(CDR) rich@cdr.state.tx.us (512) 491-4941. Defining Globalization.

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Globalization and the Labor Market

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  1. Globalization and the Labor Market Central Workforce Alliance San Antonio, Texas February 18, 2003 Richard Froeschle, Director Career Development Resources(CDR) rich@cdr.state.tx.us (512) 491-4941

  2. Defining Globalization “The inexorable integration of markets, nation-states, and technologies to a degree never witnessed before—in 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

  3. The New Rules of Globalization

  4. The New Rules of Globalization (continued)

  5. 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.

  6. 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%

  7. How Globalization Impacts the Labor Market—The 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

  8. 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

  9. 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

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

  11. 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!

  12. 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) Texas Industries Adding the Most Jobs1999-2002

  13. 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 Texas Industries Losing the Most Jobs 1999-2002

  14. 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%

  15. The Workplace of the Future... The factory of the future has just one man and one dog. The man’s job is to feed the dog. The dog’s job is to keep the man from touching the equipment.

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