Urban planning community

+ Reply to thread
Results 1 to 24 of 24

Thread: Outsourcing to rural America instead of overseas?

  1. #1
    Cyburbian jread's avatar
    Registered
    Nov 2004
    Location
    Austin, TX
    Posts
    739

    Outsourcing to rural America instead of overseas?

    I think it's a GREAT idea!!

    Forget India; outsource jobs to Arkansas
    One woman believes that companies can send jobs to rural areas and save just as much as they could sending them to places like India.

    By Scott Cohn
    4:26 PM EST December 16, 2004

    Kathy Brittain White is on a mission.

    White's goal is to find high-tech talent in the heartland. "I think of this as an integration of all that I am," she says.

    Why outsource to India, she's decided, when you can outsource to Arkansas?

    "I've always tried to look for solutions to difficult problems," White says. "So when all you see is we're losing jobs and there's no ready answer, I thought this was a great one."

    She was chief information officer for Cardinal Health (CAH, news, msgs), the big drug distributor, and under pressure to send computer work overseas. But recalling her roots in rural Arkansas, she knew there was a better way.

    "I guess I've always been an advocate for folks that maybe are underestimated," she says.

    So she left her job, trading the corporate jet for a rental car. With $2 million of her money, she created Rural Sourcing, an information technology contracting company that she claims can do the same work companies are sending overseas, for virtually the same price.

    "It really does come very close," she says.

    One reason is because the cost of living in Arkansas is as little as half that in the big cities. Her first Rural Sourcing center, with 15 employees, is on the campus of her alma mater, Arkansas State University in Jonesboro. She'll open two more next year, one in New Mexico and one in North Carolina.

    Outsourcing has been a particular problem in rural areas, where officials were looking to high tech jobs to make up for job losses on the farm. So people got the training, only to find the new jobs had gone overseas.

    Molly Marshall graduated near the top of her class at Arkansas State this year and wound up waiting tables -- for $2.40 an hour plus tips.

    Good money
    "It was just a tiring experience, having to go there and not doing what I really wanted to be doing," Marshall says.

    Now, her starting pay at Rural Sourcing is $20,000 a year, which is good money in Jonesboro.

    White says this isn't a charity project. She already has five companies signed up, including her old employer, Cardinal Health, and another 50 in the pipeline.

    Her efforts won't mean the end of so-called off-shoring of jobs by any means. But attorney Robert Zahler, who advises companies on outsourcing, says this will be an alternative for some clients.

    "Someone like Rural Sourcing should be able to save them somewhere between 30% or 50%, depending on what geographic market they're already in," Zahler says.

    White has big plans -- 50 Rural Sourcing offices in five years, making her company a business with a cause that just might change the rural economic landscape.
    http://moneycentral.msn.com/content/...9.asp?GT1=5847

  2. #2

    Registered
    May 1997
    Location
    Williston, VT
    Posts
    1,371
    I believe that if one looked at the data closely, one might find that there has been more outsourcing from rural areas than from urban. I even understand that factories in Mexico have been closed due to their inability to compete with the Chinese.

    I also wonder how much good it will really do rural areas to promote themselves as cheap? It has been tried before, lots and lots of manufacturing moved out of the NE US to the Midwest and South during the '60's and '70's. Did that solve rural areas' problems? I can't say it didn't help, at least in some places, but did it create a sustainable economy? No. Otherwise, Ms. White wouldn't be on this campaign.

  3. #3
    Cyburbian Cardinal's avatar
    Registered
    Aug 2001
    Location
    The Cheese State
    Posts
    9,920
    You beat me to it, Lee. Low-skilled and labor-intensive jobs flow to where the costs of doing business (inclusive of things other than wages) are the least expensive. For a long time, this meant urban to rural. Then they started to go to Mexico, Japan and other countries which are now losing jobs to the next wave of cheap counties, including Indonesia and China. The old flows will not completely stop, but they have been supplanted as the dominant trend. In addition to stories of jobs leaving Mexico, there have been stories of jobs leaving India for China. I have seen the same job move from rural Wisconsin to Taiwan, back to Wisconsin, then to Ireland.
    Anyone want to adopt a dog?

  4. #4
    Cyburbian Breed's avatar
    Registered
    Nov 2004
    Location
    Not Cliff Island, Maine :(
    Posts
    589
    With that being said... if the US is going to compete, it will be in rural areas where it is cheap to live.
    Every time I look at a Yankees hat I see a swastika tilted just a little off kilter.
    Bill "Spaceman" Lee

  5. #5
    Cyburbian donk's avatar
    Registered
    Sep 2001
    Location
    skating on thin ice
    Posts
    6,958
    Having lived in a really cheap place to live (see all my threads about the "castle") that has tried to capitalize on this and a large work force I can say it has not really worked. There is an "incubator" in my previous city, but as soon as the grants / "free" time runs out the companies usually close. Combine that with the distance to major centres where relationships happen and it does not work

    Also don't forget, that for many of these "skilled" businesses you need an education. To get that education you tend to have to move/travel to a larger centre. While small towns can compete on some quality of life issues there are many they can't even touch.
    Too lazy to beat myself up for being to lazy to beat myself up for being too lazy to... well you get the point....

  6. #6
    Cyburbian
    Registered
    Sep 2004
    Location
    Cold and Wet in ND
    Posts
    181
    I don't believe Ms. White is trying to build sustainable economies in rural areas. Building sustainable economies takes more than bringing a business or two in to rural area. Rural "areas" can be regions, and throughout these regions can be several different economies, which makes if very tough to "create" an economy. I live in an extremely rural area in NE North Dakota and I believe that she is just trying to help rural areas survive. It is true that if rural areas were the answer that every corporation would be flocking to the midwest, but we know that is not the truth.

    Right now there are many rural areas that are flourishing due to the work of people like Ms. White. Rural America actually has the resources (human and financial) to support certain types of companies that afford employees in rural areas a higher standard of living than it could for employees in a city for less pay. Saying that this portrays rural areas as "cheap" really isn't fair either. It is a fact that it costs less to live, work, and play in rural areas without a declining standard of living.

    All I have to do to realize how successful rural economic development can be is to drive north 60 miles to Canada. Sky yu ma Ms. White Sky yu ma.

  7. #7
    Cyburbian jordanb's avatar
    Registered
    May 2003
    Location
    City of Low Low Wages!
    Posts
    3,236
    Yeah, industry has always gotten set up in cities and then moved out to rural areas when it no longer needed the support structures in the city to save costs.

    That started in earnest in the late 1800s and early 1900s when industries moved from large cities in the northeast and midwest to small former farm towns or company towns often not far outside those cities. So you saw company towns like Gary IN for US Steel or Pullman IL for Pullman, and ADM set up shop in Decatur IL and GM set up shop in Flint MI (for instance).

    Then in the middle of the 1900s, companies began moving from the rural midwest and northeast to the rural south to escape northern unions. Then they moved to Mexico in the 1980s and early 1990s to escape federal labor and especially environmental regulations. And now they're moving from Mexico to China because, while Mexicans are merely poor, Chinese are veritable slave labor.

    You're not going to get anywhere by trying to out-cheap China.

  8. #8
    Cyburbian boiker's avatar
    Registered
    Dec 2001
    Location
    West Valley, AZ
    Posts
    3,894
    Quote Originally posted by jordanb
    Yeah, industry has always gotten set up in cities and then moved out to rural areas when it no longer needed the support structures in the city to save costs.

    That started in earnest in the late 1800s and early 1900s when industries moved from large cities in the northeast and midwest to small former farm towns or company towns often not far outside those cities. So you saw company towns like Gary IN for US Steel or Pullman IL for Pullman, and ADM set up shop in Decatur IL and GM set up shop in Flint MI (for instance).
    Although, I know you are aware of it, simplifying it down to urban/rural cost differences is only part of it. Strategic location in respect to resources also played a huge part of it. Transportation costs were significantly more in the late 1800s and early 1900s and production had to be located in meaninful places that were close to resources and close to the applicable market. Nowadays, transportation and trade costs are so low, they have heavily skewed the maximum profit point away from resources, away from market, and maximizing on low transport costs.
    Dude, I'm cheesing so hard right now.

  9. #9
    Cyburbian jordanb's avatar
    Registered
    May 2003
    Location
    City of Low Low Wages!
    Posts
    3,236
    Yeah, that's why places like Pullman and Gary were built so close to Chicago, they had to be on the rail lines leading into it.

  10. #10
    Cyburbian Seabishop's avatar
    Registered
    Nov 2002
    Location
    USA
    Posts
    3,661
    You're not going to get anywhere by trying to out-cheap China.
    Yeah, and the most remote corner of this country still has tougher labor and environmental laws than India.

  11. #11

    Registered
    May 1997
    Location
    Williston, VT
    Posts
    1,371
    That "cheaper is better" is the biggest myth in rural economic development. I grew up in a place where that has always been the motto, and have worked with some, too. None of them have healthy economies, although some have had relatively brief moments of prosperity.

    It is true that one can have a higher standard of living for less in some rural areas, depending on how you define 'higher.' But the number of communities where that is true is quite large - affordability per se doesn't give any place a real comparative advantage. What makes the difference, if a difference can be made (and there are communities that are going to fade, no matter what one does), is local willingness to invest in the community's infrastructure (and again, this is seldom going to give a comparative advantage, by itself), education, entrepreneurship, and amenities.

  12. #12
    Cyburbian the north omaha star's avatar
    Registered
    Nov 2003
    Location
    at Babies R Us or Home Depot
    Posts
    1,260
    I think that oursourcing real jobs (not just retail) to the following places would work just as good as rural America and better than foreign countries:

    North Omaha
    Chicago's West Side
    Watts
    Anacostia
    South Bronx
    west and north Philadelphia
    east Baltimore
    Miami's Overtown and Liberty City
    the Tenderloin District in San Francisco
    East Oakland
    Detroit
    Gary, Indiana
    the immediate area around 33rd & New Jersey in Indianapolis
    Roxbury and Dorchester in Boston
    south Dallas
    Asbury Park, NJ
    Cleveland
    Jamaica, Queens' south side
    Bed-Stuy, Brooklyn
    Flint, Michigan
    Benton Harbor, Michigan
    I am recognizing that the voice inside my head
    is urging me to be myself but never follow someone else
    Because opinions are like voices we all have a different kind". --Q-Tip

  13. #13

    Registered
    Jul 2002
    Location
    Chicago, IL
    Posts
    1,548
    Isn't what this article is describing really just having jobs stop in rural areas for a few years before they actually go overseas?

    There's just so many ways I see this not being a long-term, or even medium-term, solution.

  14. #14
    Qutie right Pete-Rock. As long as America has the McMansion and two suv dream then many jobs will be cheaper overseas where the people do not have these dreams, yet. We have priced ourselves into a corner with high wages and benifits. The wages remain just behind the curve for most people in real buying power because with every wage increase there comes a price increase. If not that there comes a lifestyle increase which can be very expensive indeed. I seem to recall Lee Iacoca telling the workers at Chrysler that there would be plenty of jobs at 15.00/hr but there would be no jobs at 25.00/hr. Not sure about the exact figures but you get the picture. When wages go up, the products of those wage earners go up to provide those wages. The question is what are "they" going to do when the Indians and the Koreans and the other wage slaves get smart enough to demand a fair wage comparable to US wages and lifestyles? Could be interesting in a few years.

  15. #15

    Registered
    May 1997
    Location
    Williston, VT
    Posts
    1,371
    I am especially interested in what nighthawk has to say about this, but also others, including Cardinal.

    While I am enjoying just being an ordinary planner in a community that strongly supports planning for a while, I used to get paid to think about the future of whole regions. And the only way I can read the tea leaves (my crystal ball is cloudly and the I Ching is inscrutable), is that rural people will never have a sustainable quality of life, except as a consquence of their own actions. I think almost all of us know that the old-fashioned smokestack chasing days have actually been over for 30 years, but what I see in the economic development literature around here is that people are still living in the industrial reality, just with some new rhetoric and, at last, a recognition of that housing is actually a component of ED.

    So, what I see for rural areas is this: you have to make the assets you have work for you. That means taking agriculture back from the corporate world (also the forest products industry), making tourism sustainable, and encouraging every good local entrepreneurial idea. If people want a broader statement of this, they can check out Chapter 4 of the book Karen and I wrte, but basically I think it means that you can never win in the global economy unless you build your local economy first - a lot of people don't like this and give me a lot of static about not building an economy by "taking in our own laundry," but as near as I can tell the small towns that do work on their terms (to the extent that is possible in this world) are places that do exactly that.

  16. #16
    Cyburbian Cardinal's avatar
    Registered
    Aug 2001
    Location
    The Cheese State
    Posts
    9,920
    Lee's answer is more or less hte same as my own. Build your strength from within. Too often, the towns that attempt to become prosperous by bringing in outside people or capital end up losing out, as tourists overrun their city and drive up prices forcing out the locals, or industry offers low wages and has few ties to the community.

    There are parts of the hinterland that are depopulating and will continue to do so. I don't see much value in fighting this, and I think the best economic development strategies would focus on easing the abandonment. On the other hand, there are some outstanding economic opportunities that can create wealth in rural places. While agriculture is not typically a lucrative field, creative farmers can make good profits. Wisconsin farmers who established a cheese co-op are now receiving seven times the going price for their raw milk, because they pooled their resources to find a way to add value, locally, to their product. There are emerging markets for organics and for native plants. A handful of farmers realize this and are stepping in to fill the demand for these higher-value products. (The City of Madison is currently organizing a local produce initiative to have a year-round farmers market and establish a buying consortium so that schools, hospitals, groceries and restaurants are buying locally-grown products.) At the opposite end of the spectrum, there will be a need for places and people to produce the ultimate GMO, biopharmaceuticals.

    Industrial growth has fueled the economies of many rural communities for the last twenty years. Cheap land and labor attracted the factories. With changes in our economy, this is no longer enough. US-based businesses cannot compete on being cheap. They will compete on skill, talent, technology and automation. These tend to favor urban areas more than rural.
    Anyone want to adopt a dog?

  17. #17

    Registered
    Jul 2002
    Location
    Chicago, IL
    Posts
    1,548
    Quote Originally posted by Cardinal
    Lee's answer is more or less hte same as my own. Build your strength from within. Too often, the towns that attempt to become prosperous by bringing in outside people or capital end up losing out, as tourists overrun their city and drive up prices forcing out the locals, or industry offers low wages and has few ties to the community.

    There are parts of the hinterland that are depopulating and will continue to do so. I don't see much value in fighting this, and I think the best economic development strategies would focus on easing the abandonment. On the other hand, there are some outstanding economic opportunities that can create wealth in rural places. While agriculture is not typically a lucrative field, creative farmers can make good profits. Wisconsin farmers who established a cheese co-op are now receiving seven times the going price for their raw milk, because they pooled their resources to find a way to add value, locally, to their product. There are emerging markets for organics and for native plants. A handful of farmers realize this and are stepping in to fill the demand for these higher-value products. (The City of Madison is currently organizing a local produce initiative to have a year-round farmers market and establish a buying consortium so that schools, hospitals, groceries and restaurants are buying locally-grown products.) At the opposite end of the spectrum, there will be a need for places and people to produce the ultimate GMO, biopharmaceuticals.

    Industrial growth has fueled the economies of many rural communities for the last twenty years. Cheap land and labor attracted the factories. With changes in our economy, this is no longer enough. US-based businesses cannot compete on being cheap. They will compete on skill, talent, technology and automation. These tend to favor urban areas more than rural.
    Cardinal, I agree with your perspective on this. Rural communities will have to rebuild from within, and use their unique resources to generate wealth again. I recently heard on NPR that a dairy farmer in upstate New York stumbled on a market for un-pasteurized milk and established a co-op for this in New York City. I wouldn't necessarily recommend this, but this is the kind of creative thinking that will bring money back to rural areas.

    Incidentally, I think the same applies for tough urban areas. Chasing the next factory has not worked and will never work for cities. There is wealth to be created from within, but we must find the means, method and muscle to carry it out.

  18. #18
    Cyburbian Breed's avatar
    Registered
    Nov 2004
    Location
    Not Cliff Island, Maine :(
    Posts
    589
    Quote Originally posted by nighthawk1959
    The question is what are "they" going to do when the Indians and the Koreans and the other wage slaves get smart enough to demand a fair wage comparable to US wages and lifestyles? Could be interesting in a few years.
    Until places like India, China, Korea, etc get real free speech and/or a real democratic process, it will be impossible to compete across the board. Ultimately, if they have these two, quality of life will increase. As quality of life increases, so will wages. Large contrasts in quality of life create these hotbeds of industrial growth. If the gap is sustained, the outsourcing problem will continue.
    Every time I look at a Yankees hat I see a swastika tilted just a little off kilter.
    Bill "Spaceman" Lee

  19. #19
    Cyburbian Breed's avatar
    Registered
    Nov 2004
    Location
    Not Cliff Island, Maine :(
    Posts
    589
    Quote Originally posted by Cardinal
    Lee's answer is more or less hte same as my own. Build your strength from within. Too often, the towns that attempt to become prosperous by bringing in outside people or capital end up losing out, as tourists overrun their city and drive up prices forcing out the locals, or industry offers low wages and has few ties to the community.
    Of course, if someone could reliably inspire economic development from within, they could rule the world. The best answer to every economic development problem is to develop from within... but the problem is that this is often much more difficult than attracting it from the outside, I think.
    Every time I look at a Yankees hat I see a swastika tilted just a little off kilter.
    Bill "Spaceman" Lee

  20. #20

    Registered
    Jul 2002
    Location
    Chicago, IL
    Posts
    1,548
    Quote Originally posted by Breed
    Of course, if someone could reliably inspire economic development from within, they could rule the world. The best answer to every economic development problem is to develop from within... but the problem is that this is often much more difficult than attracting it from the outside, I think.
    There's no real gain to our society overall if we're just attracting development from outside, if "outside" just means from the next town, next county or next state. One locale is a winner, the other a loser.

    If we're going to continue to grow economically, we have to foster that kind of growth.

  21. #21
    Cyburbian Cardinal's avatar
    Registered
    Aug 2001
    Location
    The Cheese State
    Posts
    9,920
    Quote Originally posted by pete-rock
    There's no real gain to our society overall if we're just attracting development from outside, if "outside" just means from the next town, next county or next state. One locale is a winner, the other a loser.

    If we're going to continue to grow economically, we have to foster that kind of growth.
    To build on this idea and put it in clear perspective, is it really economic development to place a new Walgreens or General Dollar in a poor rural community or urban neighborhood? Most of the jobs do not pay well and when people buy from those stores, they export wealth. That is especially true when, as is often the case, these stores get subsidies to go to those places. It would take the same effort to give that subsidy to a local entrepreneur, but people are more willing to hand over public capital to a faceless corporation than they are to a neighbor.
    Anyone want to adopt a dog?

  22. #22
    Cyburbian the north omaha star's avatar
    Registered
    Nov 2003
    Location
    at Babies R Us or Home Depot
    Posts
    1,260
    Quote Originally posted by Cardinal
    To build on this idea and put it in clear perspective, is it really economic development to place a new Walgreens or General Dollar in a poor rural community or urban neighborhood? Most of the jobs do not pay well and when people buy from those stores, they export wealth. That is especially true when, as is often the case, these stores get subsidies to go to those places. It would take the same effort to give that subsidy to a local entrepreneur, but people are more willing to hand over public capital to a faceless corporation than they are to a neighbor.

    To place a Walgreens in a poor rural or poor urban neighborhood is not econ. devleopment. In my opinion, economic development has a ripple effect beyond the immediate vicinity of the store. If that same Walgreens was packaged with a full-service bank, a full-service grocery store, maybe a discount dept. store like Target and other amenities, I would call it econ. development.
    I am recognizing that the voice inside my head
    is urging me to be myself but never follow someone else
    Because opinions are like voices we all have a different kind". --Q-Tip

  23. #23
    Cyburbian Breed's avatar
    Registered
    Nov 2004
    Location
    Not Cliff Island, Maine :(
    Posts
    589
    Quote Originally posted by pete-rock
    There's no real gain to our society overall if we're just attracting development from outside, if "outside" just means from the next town, next county or next state. One locale is a winner, the other a loser.

    If we're going to continue to grow economically, we have to foster that kind of growth.
    One problem is that if you only rely on internal economic growth, it may not come. A small town of 5,000 people is not likely to spur the development of a grocery store, department store, restauarants, etc all from inside the city. When a developer comes to the town, local residents view it as an upgrade from driving to a large city to shop or eat. Something I heard often during our Wal-Mart stuff... Would you rather shop 5 minutes away or 30 minutes away?

    Quote Originally posted by Cardinal
    To build on this idea and put it in clear perspective, is it really economic development to place a new Walgreens or General Dollar in a poor rural community or urban neighborhood? Most of the jobs do not pay well and when people buy from those stores, they export wealth. That is especially true when, as is often the case, these stores get subsidies to go to those places. It would take the same effort to give that subsidy to a local entrepreneur, but people are more willing to hand over public capital to a faceless corporation than they are to a neighbor.
    Because internal growth is so much more valuable to a community than external growth, government needs to be more willing to help local businesses than they are to help foreign ones.

    Quote Originally posted by the north omaha star
    To place a Walgreens in a poor rural or poor urban neighborhood is not econ. devleopment. In my opinion, economic development has a ripple effect beyond the immediate vicinity of the store. If that same Walgreens was packaged with a full-service bank, a full-service grocery store, maybe a discount dept. store like Target and other amenities, I would call it econ. development.
    To some degree then, bringing in a Wal-Mart could be viewed as a viable economic development strategy. Once a Wal-Mart appears, other businesses follow.
    Every time I look at a Yankees hat I see a swastika tilted just a little off kilter.
    Bill "Spaceman" Lee

  24. #24
         
    Registered
    Feb 2005
    Location
    Vanderhoof British Columbia, Canada
    Posts
    80
    Quote Originally posted by Planner22
    I don't believe Ms. White is trying to build sustainable economies in rural areas. Building sustainable economies takes more than bringing a business or two in to rural area. Rural "areas" can be regions, and throughout these regions can be several different economies, which makes if very tough to "create" an economy. I live in an extremely rural area in NE North Dakota and I believe that she is just trying to help rural areas survive. It is true that if rural areas were the answer that every corporation would be flocking to the midwest, but we know that is not the truth.

    Right now there are many rural areas that are flourishing due to the work of people like Ms. White. Rural America actually has the resources (human and financial) to support certain types of companies that afford employees in rural areas a higher standard of living than it could for employees in a city for less pay. Saying that this portrays rural areas as "cheap" really isn't fair either. It is a fact that it costs less to live, work, and play in rural areas without a declining standard of living.

    All I have to do to realize how successful rural economic development can be is to drive north 60 miles to Canada. Sky yu ma Ms. White Sky yu ma.
    Rural Canadian communities have been told long ago to stop chasing smokestacks and large corporate employers--- a fall out from NAFTA in the eighties.. The fedral government adopted a concept of community economic development based on the premise the grass root population will figure out how to make a living given a bit of nuturing.. In the western provinces they set up a program called Community Futures, NGOs governed by local volunteer boards
    who are contracted to act basically as agents for Industry Canada.

    In my view, rural communities need to network with communities of similar size to build industries in the appropriate scale. As far as competing with corporations that outsource and their products, it can be done.....

+ Reply to thread

More at Cyburbia

  1. Replies: 1
    Last post: 13 Feb 2006, 3:42 PM
  2. Drive through windows and outsourcing
    Design, Space, and Place
    Replies: 1
    Last post: 17 Aug 2005, 6:56 PM
  3. Replies: 22
    Last post: 04 Feb 2005, 8:38 PM
  4. Replies: 10
    Last post: 11 Oct 2004, 5:13 PM
  5. Replies: 4
    Last post: 27 Oct 1999, 1:13 PM