Clair Brown

Offshoring in the Semiconductor Industry: Historical Perspectives

Semiconductor design is a frequently-cited example of the new wave of offshoring and foreign-outsourcing of service sector jobs. It is certainly a concern to U.S. design engineers themselves. In addition to the current wave of white-collar outsourcing, the industry also has a rich experience with offshoring of manufacturing activity. Semiconductor companies were among the first to invest in offshore facilities to manufacture goods for imports back to the U.S. A brief review of these earlier manufacturing experiences and their impact on the fortunes of the domestic industry and its workers can help to illuminate the current debates over offshoring in services. Because meaningful data about the impact of the offshoring of chip design (and even manufacturing) are limited, we rely on a more qualitative analysis for our key points. We have conducted dozens of interviews with engineers and managers at numerous semiconductor and related companies in the United States, Asia, and Europe over the past six years. Our research also incorporates the rich store of publicly available information in trade journals and company reports. This paper describes the two previous stages of offshoring semiconductor assembly jobs and of outsourcing semiconductor manufacturing and the impact they had on the U.S. semiconductor industry. We argue that the initial concern about losing domestic jobs in both stages turned out to be unfounded as the industry used the situation to its competitive advantage by becoming cost competitive (assembly stage) and by developing the fabless sector (manufacturing stage). We then analyze the on-going stage of offshoring design jobs, and compare this stage to the two that came before in order to explore the possible impact on domestic jobs and the U.S. semiconductor industry. We begin in section one with a brief description of the stages of semiconductor production and our analytical framework. Section two looks at the offshoring of assembly jobs, and section three analyzes the foreign outsourcing of manufacturing. Section four explores the offshoring of design jobs, and concludes with a discussion of what this means for the U.S.

When Does Union-Management Cooperation Work? A Look at NUMMI and GM-Van Nuys

Spurred by the Japanese model, the U.S. automobile industry has been restructuring its industrial relations practices along lines that aim to build upon union-management cooperation. This new organization of work changes local work rules by replacing numerous detailed job classifications with only one to three broad classifications. Team work, job rotation, and continuous improvement programs are introduced to replace direct supervision as the mechanism for obtaining high productivity and quality. Greater employee involvement in decision making is supposed to improve worker satisfaction and increase productivity. This article examines the advantages and problems of implementing union-management cooperation by comparing the experiences of the NUMMI (Toyota-General Motors joint venture) automobile assembly plant in Fremont, CA, with that of the GM plant in Van Nuys, CA. The article identifies the factors that facilitated cooperation in one case (NUMMI) and that seemed to block it in the other (GM-Van Nuys) and discusses the policy instruments that might enhance coooperative outcomes.

Becoming a high-performance work organization: the role of security, employee involvement and training

We discuss an emerging employment system characterized by a high degree of employment security with flexible job assignments, employee involvement in problem solving and continuous improvement, and continuous training of employees. We call this model the SET system (for Security, Employee involvement and Training) and examine case studies of five U.S. firms that are attempting to establish or maintain a SET system. We find that SET systems are difficult to implement in a gradual and partial manner. The three elements of SET reinforce one another and firms that are successful in adopting SET have made an investment to implement all three SET elements simultaneously.

Employment Practices and Semiconductor Manufacturing Performance

This article analyzes the factors contributing to superior manufacturing performance in the semiconductor industry. Through an analysis of firm-level data from the United States, Asia, and Europe, we explore the relationship between firm performance along quality and quantity dimensions and three components of the employment system: skill development, employee participation in problem solving, and employee collaboration. We find that manufacturing success is related to the introduction of new production technology and the involvement of all occupations in problem solving under the leadership of engineers, who play a key (and growing) role in this high-tech industry. We find that the operators and technicians play a smaller role in creating high-performing semiconductor factories than has been found in studies of more traditional factories, such as automobiles and steel.

The Impact of Technological Change on Work and Wages

This review begins with a discussion of how technology affects wage structures. The literature reviewed is divided into two segments - studies of the impact of technological change on wages (and growing inequality), productivity, and employment and studies of the interrelationship of technology, human resource systems, and labor productivity. We conclude with suggestions for future research topics. Overall, we find that technological change accounts for only part of the changing wage structure in the United States, whereas changes in institutional forces that affect the creation of industry rents and the distribution of rents are also an important factor.

Labor in the era of globalization

The third quarter of the twentieth century was a golden age for labor in the advanced industrial countries, characterized by rising incomes, relatively egalitarian wage structures, and reasonable levels of job security. The subsequent quarter-century has seen less positive performance along a number of these dimensions. This period has instead been marked by rapid globalization of economic activity that has brought increased insecurity to workers. The contributors to this volume distinguish four explanations for this historic shift. These include 1) rapid development of new technologies; 2) global competition for both business and labor; 3) deregulation of industry with more reliance on markets; and 4) increased immigration of workers, especially unskilled workers, from developing countries. In addition to analyzing the causes of these trends, the contributors also investigate important consequences, ranging from changes in collective bargaining and employment relations to family formation decisions and incarceration policy.

Technical Change, Wages, And Employment In Semiconductor Manufacturing

Using case study data gathered between 1993 and 1996, the authors investigate how automation of information handling and materials handling affected employment distribution, skill acquisition, work activities, and compensation in 23 semiconductor plants in four countries. Information handling automation is skill-biased technical change, which leads to use of relatively more technicians and engineers. In the sample studied, it widened the skill gap across occupations, and coincided with higher initial wages for all employees and shorter career ladders for engineers. Materials handling automation also widened the skill gap, but coincided with employment of relatively more operators and with lower pay across all occupations. Although technological change widened the skill gap between occupations and was biased toward employment of high-skill workers in the sample, the authors do not find that it led to increased wage inequality in the semiconductor plants they examine.

American Standards of Living, 1918-1988.

1. Economic Growth, Living Standards and Social Welfare. 2. Modelling and Measuring the Standard of Living. 3. Consuming the Products of Mechanization, 1918. 4. Living in the Midst of Depression, 1935. 5. Entering the Age of Affluence, 1950. 6. Reaching Economic Supremacy, 1973. 7. Living with Technological Change and Economic Stagnation, 1988. 8. Conclusion. Appendix. Index.

Developing Skills and Pay through Career Ladders: Lessons from Japanese and U.S. Companies

U.S. companies9 adaptations of Japanese training practices typically have been concerned with increasing formal classroom training for incumbent workers. Research in large companies in Japan and the U.S. indicates that Japanese training systems primarily take the form of structured on-the-job training, embedded in long career ladders that simultaneously increase skill and pay for Japanese workers over their careers. Meanwhile, training in U.S. companies tends to be informal and sporadic and is embedded in short job ladders. U.S. firms can improve the efficiency of their training for non-exempt employees by providing structured on-the-job-training and creating career ladders that improve skills and pay over their employees9 tenure. Such reforms can increase productivity, lengthen careers and increase pay for front-line workers without relying upon employment security policies or massive increases in firm or government expenditures.

Workers' Views of the Impact of Trade on Jobs

Although public policy is influenced by the perception that workers worry about the impact of trade on their jobs, there is little empirical evidence on what shapes such views. This paper uses new data to examine how workers’ perceptions of the impact of trade are related to their career paths, job characteristics, and local labor market conditions. Surprisingly, given prior literature, we find that workers’ perceptions primarily reflect local labor market conditions and education rather than labor market experiences or job characteristics.