Warren Buffett Proves That Insourcing In America Still Works
In his recent annual letter to Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) shareholders, billionaire investing icon Warren Buffett showed that his support for the American economy goes far beyond actively participating in its free market system.
Buffett not only invests in American companies, the companies he owns invest in America.
In recent decades, more and more American companies have started to look overseas for cheap labor and materials to try to gain an edge in the American market. When companies are scraping for every last earnings cent, it's often easy for them to look abroad for cost-cutting.
The global outsourcing market is a $100 billion-plus market, and it's growing every year. According to a 2014 study, more than 2.6 million U.S. jobs were outsourced in 2013 to countries such as India and China. Over one third of the American companies participating in the study were currently outsourcing jobs at the time.
Manufacturing is the leading economic sector for outsourcing, followed by IT Services, R&D and Distribution.
Companies listed cost-cutting as by far the top reason for their outsourcing programs.
Buffett's American Dream
In his letter, Buffett explained to shareholders his gratitude for the opportunities that America has provided for him, and he shared some statistics of his own.
In 2014, about 90 percent of the $15 billion Berkshire's subsidiaries spent on plant and equipment was spent in the United States.
"Though we will always invest abroad as well, the mother lode of opportunities runs through America. The treasures that have been uncovered up to now are dwarfed by those still untapped," Buffett wrote in the letter.
"Through dumb luck, Charlie and I were born in the United States, and we are forever grateful for the staggering advantages this accident of birth has given us."
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