Reply to the article below, and explain why you agree this. Need reference. Around 100 Words
When it comes to contract production, most companies do not worry about the increasing unemployment rate as they are more worried about increasing company profits. However, this is a big problem since increasing the unemployment rate may not directly affect these companies, but they do suffer in the long-run as the economy is affected. When companies outsource production, their aim is to reduce the cost of production in order for their products to remain competitive in the local and international markets, improve company focus, share the risk, and world-class access capabilities. Nonetheless, in the long-term, companies will suffer due to low sales as an increase in unemployment rates negatively affects the economy by decreasing the purchasing power of its people. This means that despite the companies selling their products at a relatively lower price, a lot of potential customers cannot afford to purchase these products. It is a problem that can be experienced when contract production is done on products that require high skill sets, which are usually high paying jobs. There is also loss of innovation which also should cause companies to panic when there is contract production.
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