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Jul 01, 2004 - 01:45 PM

Arnold's Campaign for Fantastic Jobs...Abroad?

by Doug Heller
"We have to make sure everyone in California has a fantastic job," Arnold proclaimed last year. He even made phone calls to California executives asking them personally to keep their business and workers in California. But, to paraphrase the old adage, you are who you eat with. It seems that California's CEO has ignored his own advice and has turned to the business strategies of those who have sat with him for fundraising dinners. Major Schwarzenegger donors like Hewlett-Packard ($271,200) and Anheuser-Busch ($250,000) have been criticized for firing Americans and sending their jobs abroad. In that spirit, with a contract he signed last week, the gov may have undercut his message to the business world that California is teeming with efficient and creative employees and one of his central themes about keeping jobs in California.

The recent contract with American Management Systems has that company using "strategic sourcing tools" to lower the cost government spends purchasing goods and services. "We will save millions of dollars just by being smarter about how we buy things," Arnold said. But, according to a report in Political Pulse, American Management Systems is one of the world's largest outsourcing firms. It is not even American. It's part of a Canadian firm called CGI-AMS, which specializes in the "offshoring" of work to countries with lower labor costs like Poland and India.

The payment structure for CGI-AMS -- the firm gets a percentage of savings created -- also cuts in two different directions. The firm has an incentive to lower taxpayer expenditures because it makes more money by saving money. But, like any such arrangement, it also creates an incentive to cut corners, ignore standards, and search for goods and services based on price rather than quality. By entrusting the state checkbook to a company located in another country that scours the world for the cheapest goods and services, the gov sends a troubling message about the products and workers of California.

The question for Arnold is: What is the cost of creating these taxpayer savings? Could it be those fantastic jobs?

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