The sum impact of Ohio's legislative actions on offshoring may be minor, but the political noise and worry they are creating is something else.
The government of India saw a $2,000 H-1B fee increase recently approved by Congress and signed by the president as a direct attack on its domestic IT industry. That move, coupled with the possibility that comprehensive immigration reform might hinder access to visas, has clearly raised alarm bells overseas.
India's commerce and industry minister, Anand Sharma, recently told local news media outlets that he "definitely" plans to raise the Ohio ban when he meets with U.S. Trade Representative Ron Kirk tomorrow, according to The Economic Times.
The trade talks are a prelude to Obama's planned visit to India in November.
While concern in India grows, U.S. Secretary of State Hillary Clinton this month sought to tamp down the rhetoric, stressing the strong ties between the two nations. "President Obama will use his visit in November to take our relationship to the next level," Clinton said in a speech earlier this month.
At a briefing following Clinton's talk, Philip Crowley, an assistant secretary in the State Department, was asked to reconcile Clinton's call for partnership with India with anti-offshoring actions like Ohio's ban. Crowley sidestepped the question: "We will have issues that crop up from time to time, and we are in an effective dialog to resolve those issues."
In Ohio, the "next level" in India-U.S. relations may mean something entirely different from what Clinton envisions. The main reason for that stems from the state's job losses, especially in the manufacturing sector.
In Ohio, the number of manufacturing jobs declined by almost 20 percent from December 2007 through April of this year, according to the Federal Reserve Bank of Cleveland. Nationwide, that decline was 15 percent. But Ohio is now adding manufacturing jobs, and by April it was leading all states in gains, accounting for 22 percent of the national increase, according to the Fed.
Ohio was hit hard because its manufacturing base was built around durable goods -- appliances, autos and machinery -- according to Lockwood Reynolds, an assistant professor of economics at Kent State University in Ohio. As manufacturing gains have been seen nationally, the trend has been magnified in Ohio, he said.
Those gains appear to be driven by employment in the manufacturing of fabricated metals, transportation equipment and motor vehicles, which Ohio may rely more on than other states, said Reynolds, who doesn't believe that anger over outsourcing is unique to Ohio.
"But it might be slightly more concentrated here than in some other states," he said.
The decline of manufacturing in Ohio and elsewhere affects more than jobs; it affects IT as well. "Manufacturing is extremely important because that is where the bulk of the research and development is," said Harold 'Hal' Williams, an economics professor emeritus at Kent State.
Manufacturers are increasingly relying on high-performance computing systems to develop products. These systems can simulate how products might perform as conditions change, and they eliminate the need for continuous prototype-building, thus speeding time to market and product development. The Ohio Supercomputer Center's Blue Collar Computing program in Columbus has been on the leading edge in the U.S. to provide high-performance computing resources to manufacturers.
"If we are going to maintain a strong competitive position internationally, we've got to have firms that are doing a lot of research and development," said Williams.
Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His email address is firstname.lastname@example.org.
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