How does Vizio keep its TV prices so low? Lots and lots of outsourcing

How does Vizio keep its TV prices so low? Lots and lots of outsourcing

Summary: The most popular HDTV manufacturer in North America, in terms of units shipped, Vizio has been extolled as a great American success story in an industry dominated by Asian companies. Considering the near total decline in the U.

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The most popular HDTV manufacturer in North America, in terms of units shipped, Vizio has been extolled as a great American success story in an industry dominated by Asian companies. Considering the near total decline in the U.S. consumer electronics industry, the company is a very notable 21st-century exception. So how has it succeeded at a time when former stalwart brands like RCA and Westinghouse grace second-tier products?

Vizio makes no secret as to how it can remain so competitive on price in a notably cutthroat industry: More than 90 percent of its workforce are outsourced workers. In fact, it only has 300 full-time employees despite having $3 billion in revenue. To its credit, Vizio does count customer-service employees among those 300, choosing to keep tech support in this country instead of shipping it overseas.

But does that make Vizio an American company worth emulating? According to a recent piece on the Bloomberg Businessweek Website from Rick Wartzman, executive director of the Drucker Institute at Claremont Graduate University, it sure is. After all, the company's bottom line isn't weighed down by "giant manufacturing facilities or pension benefits for an army of factory hands." That this army could contain Americans who are currently unemployed apparently doesn't factor into Wartzman's cost-benefit analysis.

Of course, Vizio's methods are similar to those of Apple's, another American company that relies on overseas contracts for producing its devices. And we all know the general trend is for many U.S. firms to ship work to other countries to reduce their costs. It's business as usual these days, but is a firm like Vizio really doing "wonders" (in Wartzman's words) as a U.S. company that hires as few American workers as possible in order to produce a cheaper TV?

No one denies that Vizio generally makes a good HDTV for the money, but should we be celebrating its management principles and outsourcing to achieve that goal at a time of rampant unemployment in this country? Let us know your thoughts in the Comments section.

Topics: Hardware, CXO, Mobility, Outsourcing

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  • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

    Whether you agree or not, companies are not in the business of creating jobs to keep people employed...A company only needs to employ an individual (create a job) if that job helps the company to increase it's bottom line profit. If more Americans understood the concept of "value creation", then we (as employees) would protect our jobs by ensuring that everything we do is done to ensure that our employer gets improved productivity, lower cost, and achieves some competitive advantage. Employers look to achieve 3 things...1)to achieve their objectives, 2)to minimize risk, & 3)to ensure that resources are fully utilized. If we, as employees, do not help to achieve these 3 things, then we are expendable. Recognize this and you will be able to make yourself "the only choice" for the employer to achieve their objective....Figure out how to create value and you will become non-optional and fully employed.
    RandyMichael
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      It works both ways: the only way that Vizio has been successful is to take advantage of the spending power of the American public. When that money goes away (unemployment) then so does their market. Of course, no company from the $3B Vizio to the $400B Walmart accepts any responsibility for preserving their own markets, they simply assume that they can move to new ones as the old ones dry up.
      terry flores
      • No, Vizio has been successful because their products

        are cheap.
        fr_gough
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @RandyMichael AMEN to that...Its nice to read something on ZDNET that is not dominated by trolls..
      jacjar1
      • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

        @jacjar1 - "Amen". Keep praying. One day you'll be on the wrong side of the equation as well.

        It really does work both ways. An economy is supposed to be symbiotic. Not parasitic.
        HypnoToad72
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @RandyMichael -

      And as companies make standards lower and easier, what you say becomes more of a pipe dream.

      Even the accounting industry - search on "global accounting standards".

      Economic efficiency only works in a supply-side paradigm where government(s) bail out the supply side elements. Without a demand-side to drive investment, research, and other forms of work, a supply-side cannot work on its own. Even governments run out of money and maybe we should stop giving taxpayer money to corporations that not only wipe out small business competition but to companies that offshore jobs as well.

      Everything I've said can be found in 20 seconds via quick web searching. Try it.

      Economic efficiency = an economic death thanks to excessive economic efficiency. Ironic.
      HypnoToad72
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @RandyMichael ~ Great points. Going through the year of 2008, I believe most Americans now realized how tough their life would be and how fortunate it is just to survive.
      Paul Lee
      cplee886
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @RandyMichael I agree. Lets live in a world governed by corporate interests and the seeking of profit alone. What could possibly go wrong with laissez-faire social Darwinism. As Randy well knows; you cannot have a thriving democracy without guarantee via the laws and police state we co-write, that a small group of elites whom answer to no one but their shareholders, should always benevolently hoard as much wealth as possible regardless of the health or welfare of the society they live in or the environment that they so (thank God) willingly exploit. I wonder why the "300" still live in commie America? They must be forced to live here. I'm sure they would rather live in the nirvana of, Indonesia, Sri Lanka, Vietnam, Taiwan or any other "Ayn Randian" prototypes. Funny how they choose to stay in a country that has labor laws (for now), environmental regulations (for now), publicly owned infrastructure (for now) et.al. What are they? "A bunch of tree hugging liberals." Keep drinking the Kool-aide Randy, I hope your children reap the rewards of my ideology and not yours, otherwise get used to hearing them say: Supersize that for you sir! Wash your car today Mr. CEO? Water here Boss!
      Klaatu_barada_nikto
  • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

    If it works then it works, but it is also a great example of why we are having the worst job crisis ever right now.
    Bates_
    • High American labor costs are Vizio's fault?

      Care to explain that?
      fr_gough
      • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

        @fr_gough - it's all relative.

        But as I'm not Bates, but I'll not interfere. But the truth is out there.
        HypnoToad72
  • They do whatever they need to succeed

    I doubt they hire "as few American workers as possible". Instead, they do whatever they need to succeed.

    You & I wish they would hire more unemployed American workers, but it's not our business. As another option, we could start our own TV manufacturing operation and hire whomever we want. However, our new venture would need a lot of government funding (to replace lack of profits in a tough market).

    I wonder how many unemployed Americans are being hired by Vizio's competitors this year.
    SlimSam
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @SlimSam - how many companeis make TVs?

      Dynex and Insignia are made by the same manufacturer.

      Store-brand herb racks sold at target and Walmart are identical, apart from the brand name. I doubt factories are giving the same schematics to everyone else.

      Holmes and Samsung plop their brand names on the same fan chassis and I doubt there are a bazillion factories all playing "price cut wars" (which turn into "wage cut wars" as well)
      HypnoToad72
  • It's a Chinese rebrander

    Looks to me like they buy in Chinesekit and rebrand them as Vizio. 300 is about right for a pure sales operation.<br><br>So by 'outsource' they mean 'buy from others'.


    (added) Oh and before this they were selling computers in Thailand, and I don't think they either designed, made, or otherwise any of that kit either. Well only in the sense that they wrote a spec of what they wanted then ordered it.
    guihombre
  • A message to all the republicans out there

    Repuiblicans keep touting tax cuts for "job-creators" but the fact is companies and executives are more and more just keeping that extra money. Technology and out-sourcing makes hiring US workers cumbersome and expensive. We all like cheap TVs, but if you don't have a job, even the cheap TVs are out of reach.

    The downward spiral begins as the wealth gap increases. Today you get cheap TVs so tomorrow the billionaires can exit the country with their billions leaving the wasteland behind. Yes, most "common" folks vote republican even though it hurts them financially.
    A Gray
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @A Gray Go hug a tree you liberal hippy!
      wb-Hou
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @A Gray I'm an Independent but unlike wb-Hou, I think your question deserves a serious answer.

      You mentioned "...keeping that extra money." I'm always amused at those who think they can or even should determine what money one earns is "extra money." The reason for lower taxes is not only to encourage job creators, most of whom are not large corporations, but to minimize the government taking money out of the private sector.

      Those who believe that any government is better at deploying capital and creating jobs than the private sector, reveal themselves as Socialists. Look at the countries practicing Socialism; they are not doing well at all. Socialism, Statism, Socialized Democracy or whatever you call it is not the point.

      Take a look at the countries that are actually doing well these days. The commonalities between them are that they are business friendly and have low tax rates. Like it or not, that's what works.
      MikeyrInFL
    • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

      @A Gray
      Thank you A Gray. So sorry the rest are anti-
      American and don't even realize it.
      waltermas@...
  • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

    This country needs to stop feeding the Unions and doling out pensions for workers. Why don't pensions go away and people contribute to a 401k like the rest of us. I'm fed up with pensions, unions, and they're constant draining and sucking on the teet of the american private sector!
    wb-Hou
  • RE: How does Vizio keep its TV prices so low? Lots and lots of outsourcing.

    This is the result of us participating in the so-called world economy, also known as "Globilzation". Great for a small minority in the U.S. who are able to use this system to their advantage, but terrible for all the rest of us. As a country we have 6% percent of the world's population and consume 25% of what the world produces. How long can that go on? The problem is that we don't produce much that we can send overseas in exchange for all the products they send us. The difference between what they send us and what we send them is a negative balance of payments and has caused large part of the 14 $trillion we owe. A real problem. We either have to drastically reduce our standard of living and work for a lot less and the Asian factory workers have demand a much higher wage so that we meet somewhere in the middle. The only other solution is that we go back to the way things worked in the early 1900's and become totally protectionist. Consume only those things here that we make here. No chance of that happening! So where are we? As far as my eye can see, "Up the creek without a paddle!" So.....this problem is going to take a generation or two to be solved as our culture and society adapts and changes. There are no fast fixes!
    ragrx