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When Should a Company Manufacture Abroad?
Buffa, Elwood S., and Alexander E. Bogardy
2/2  (Winter 1960): 16-27

The article presents a comparison of the U. S. and European wages, costs and productivity that explains how and when it can be profitable for a U. S. business to manufacture abroad and why it is still often more profitable to manufacture at home. The article indicates the basic reason for the price difference was that the European worker is paid "approximately one-third the rate of the equivalent U. S. skilled workers." The article summarized the potential danger of accepting such a bid as, one to national security in case of breakdown of such equipment during wartime, gradual disintegration of the country's production facilities, the loss of jobs to the U.S. labor and the effect on tax revenue due to loss of wages, which must be made up from some other source. This article points out that not only are wages low in the foreign countries, but that productive efficiency is rapidly rising. Whole industries abroad have been rebuilt, practically from the ground up, Italy's auto industry is almost brand new. So is the steel industry in France and West Germany. Japan and Italy have made great strides in constructing modem plants for producing chemicals and machinery.

 

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