3/03/2005

Aerospace firms take to Offshoring

According to Chapter 7 in our Managerial Economics textbook, firms that do not look aboard for cheaper inputs face loss of competitiveness in the world markets and even in the domestic market. According to an article I found on the Network World Fusion webpage, aircraft manufacturers such as Boeing and Airbus are expecting to cut costs by sending some of their software development and engineering work offshore. With the airline industry continuing to struggle, these companies are expecting to increase cost efficiencies by 10 to 15 percent. Do you think Airbus and Boeing will save money by sending their software development programs overseas and do you think offshoring and outsourcing are smart moves for companies?

4 comments:

rico said...

If you look at the components for these planes, you will find that parts come from all over the world. The goal of a firm is to maximize profits, and if offshoring is necessary, then it is going to happen. They wouldn't be able to compete if they didn't take advantage of low cost opportunities like this.

trudy said...

With the huge increase in offshoring of jobs it is hard to say that companies are not saving money. Why else would you take the risk of sending your work somewhere that speaks a totally different language, and has a totally different culture

Nick said...

If your capital and labor are cheap why not send it somewhere else. If they can produce it cheap then the cost of flying might not keep increasing.

Dr. Tufte said...

Offshroring needs to be judged on a case by case basis. If the companies can save 10 to 15 percent in costs without losing 10 to 15 percent in production, then they are winners.