Offshore outsourcing slams industry

Real Estate Weekly, Dec 31, 2003

Overseas job outsourcing is not only leaving a trail of unemployed Americans, it's leaving behind emptier office buildings and factories--"Keeping Jobs In America," reports a new study by Pollina Corporate Real Estate, one of the nation's leading corporate site locators.

And, REITs, building owners, brokers and developers are starting to feel the pinch.

"We are losing the equivalent of one-third of the Chicago CBD every year--53 million square feet of space not occupied and approximately $1.2 billion in rent alone--due to offshore outsourcing," says Dr. Ronald R. Pollina.

"And the trend is accelerating. Approximately 8,000 industrial facilities have been closed or significantly vacated during the past three years as blue collar jobs move to China, Mexico and other low wage markets across the globe." But the most shocking conclusion of the Pollina study is that millions of Americans are unnecessarily losing their jobs to cheaper overseas competitors.

Why? Because the Federal Government and most states are not providing the training, capital investment, incentives and general positive business environment that key businesses and industries need to compete in the global marketplace.

"Don't bash China or India--they are doing their job--we are not. The fact is no one in Washington and few state officials are doing their jobs to retain high tech and manufacturing jobs," says Dr. Ronald R. Pollina, president of Chicago-based Pollina Corporate Real Estate and a prominent real estate economist who authored the study.

"State and Federal political leaders need to school themselves in what it takes for a business to survive and thrive in cutthroat global competition.

"To save US jobs, government dollars must be directed to stimulate technology investment and worker training and address the layers of Federal, state and local bureaucracy that stifle economic growth."

The Pollina study identifies state governments that are the most effective in job retention versus global competition.

Nearly four out of five U.S. states lack the right programs and assistance to retain and attract jobs, reports "Top Ten Pro-Business States, Keeping Jobs in America 2004--Why Millions May Go Jobless Because of Failing Federal and State Economic Development Efforts." The study also lists the "Top Ten Pro-Business States" that take the right measures to protect jobs.

"A company that can replace an aging factory with an efficient, automated plant is better positioned to keep its manufacturing jobs here, and the states that have provided assistance in this area have been more successful at retaining jobs for Americans," says Dr. Pollina.

"If a business weighs whether to stay or ship jobs abroad, they are going to consider a state or region's effective business tax rates, worker compensation laws, "right-to-work" laws, human resources, energy costs and infrastructure spending.

"Rather than allow a relentless march of manufacturing jobs go to China unchallenged, or let engineering, finance and service sector jobs go to India unchallenged, state and Federal officials must address these realties."

"We have identified ten states, that understand what it takes to keep jobs here and stay competitive," says Dr. Pollina addressing the reports Top Ten Pro-Business list.

"While our factory workers cannot compete with $1 an hour jobs in China and our $90,000 a year Wall Street analysts cannot compete with analysts in Madras, India making one third that amount, many jobs leaving our shores are savable, especially those in manufacturing."

The study identifies 25 factors, all controlled by state government, including taxation, human resources, and infrastructure, as well as state economic incentive programs, that can positively impact business and job development.

A leader in the corporate relocation field, Pollina Corporate Real Estate provides strategic relocation advice economic analysis and incentive negotiations for hundreds of companies throughout North America, Europe and Asia.

These ten states are setting an example that others must follow: Virginia; North Carolina; Oklahoma; Alabama; Wyoming; South Dakota; Michigan; South Carolina; Georgia; Delaware.

"Most US states are not capable of competing in the global market," says Dr. Pollina. "As a result, they lose jobs to other states and other countries."

The study gives a detailed analysis of where states and the Federal Government are coming up short in their economic development efforts while offering measures to become globally competitive.

Dr. Pollina says, "There are some other states that are making a reasonable effort to pursue jobs, but for the most part, many state economic development programs are little more than window dressing. States often create incentive programs that are exclusionary and useless and some states offer no help to retain jobs at all--these include states that are hemorrhaging jobs."

"What we are witnessing today is the hollowing out of the middle class," warns Dr. Pollina.

"And the implications for the social and economic structure of US society are quite grave. Without Federal and state intervention to save jobs, we will become a polarized, two-tier society."