Well, hell. Might as well just cash in your chips now. Take a quick
vacation, and then head for your local crematorium.
Sheesh, George. You really need to get out more:-)
Somehow methinks supply and demand will take care of itself.
On Wed, 15 Jun 2005 07:36:34 -0700, F.George wrote:
Thank you, Chicken Little.
Odd, that's not what my crystal ball tells me. ;-)
And that "trade deficit" is the stupidest boogeyman ever perpetrated -
well, at least up in the top five stupid boogeymen - since the
nervous nellies found out that it's a scary buzzword.
Do you even have any idea what a "trade deficit" _is_? It means
we have two billion dollars more per day to spend on their crap
than they have to spend on our crap. That means WE ARE TWO BILLION
DOLLARS RICHER THAN THEY ARE!!!!! PER DAY!!!!!!!!!!
You have a significant "trade deficit" with the grocery store.
How much do you spend there? Maybe $100.00/week? That's a ONE
HUNDRED DOLLARS PER WEEK TRADE DEFICIT with the grocery store.
They don't buy anything from you, do they?
And imagine your employer's trade deficit with _you_! He buys
your labor for, what, $50K, $100K/year? How much stuff do you
buy from him? Your EMPLOYER HAS A SERIOUS TRADE DEFICIT WITH
"Trade Deficit". Pfaugh!
Greetings and Salutations....
On Wed, 15 Jun 2005 17:29:43 GMT, Richard the Dreaded Libertarian
Hum...so you DON'T think it is a problem that America
is losing the knowledge, skills and tools to manufacture
even the basic tools we need to keep society going and the
infrastructure kept up?
While your point may have some validity here, the
major difference is that the money in your examples is
circulating INSIDE the USA. The dollars spent in a
foreign market are dollars that are taken out of the
As an analogy, if dollars are the life-blood
of the economy, foreign trade is like cutting an
Now...The fact of the matter is that SOME of
those dollars DO come back in, but, since it is a
DEFICIT, far more are going out than are coming in.
Those dollars have to be replaced in the economy
somehow. One "bad" way is to simply print more
money. While this gets more bucks in circulation,
it also cuts down on the value of each dollar.
We have to remember that the world economy
is more like a war than a cheerful family gathering.
All the countries in the world are jockeying to
gain advantage over the other countries, and, one
way to do that is to drain the cash of one country.
America, although economically large, is
not infinite, and, if we believed we were, we would
be fools. The fact that the dollar has dropped
in relative value on the world market is proof that
the deficits are having their desired effects. Also,
remember that the growing European Union can (and
perhaps already has) become a larger economic power
Finally, there is the basic problem that
the world, in general, is not a friendly place.
Countries that were our friends are now our
enemies; countries that were our enemies are
now our friends; The only lesson we can
learn from this is that this is likely to
happen again, so, to end up totally dependent
on another country for our major manufacturing
is a stupid thing to do.
Especially one with which we have such a long standing distrust. Pssst,
by the way, everyone, they're still run by communists. Wasn't that the
reason we fought a "war" against the Soviet Union as well as boycotting
all trade with Cuba for half a century? Not to mention, OK I'll mention
them anyway - Korea and Vietnam? To stop the scourge of Communism?
Free trade. There are highly regarded experts from both ends of the
political spectrum who say it's necessary.
They all have jobs in the service sector and are relatively immune from
foreign competition themselves.
===========================================This may have been true at the higher levels at one time but with
telecommuting service sector jobs are also rapidly disappearing.
For example many low to mid level accounting jobs such as tax
returns are now done overseas. Where the jobs cannot be done
externally H1B visas allow worker importation.
I didn't intend to lead that point to a discussion of how vulnerable service
sector jobs are, because, as you say, that situation in general is changing
With tongue in cheek, I was suggesting that US government economists, so
far, aren't showing much worry about having their *own* jobs outsourced to
However, given that the ideological posture of our current administration
seems to have no throttle and a seemingly unlimited fuel tank, they may give
that one a try, as well.
When I owned half of an injection molder we never lost a job we wanted to
Asia, not once. In fact, the first big tooling/molding package we nailed
down was something running in Malaysia. One project that was bid around the
world was commercial binary syringe assemblies for tooth whitening gel. The
quantities were 20 million units per month to start. You probably know the
company we did this for. If you have a Hot Springs Spa, 90 percent of the
molded parts are from my tools running in the United States. Carlsbad to be
precise. I could go on here at some length as 100 million dollars per year
in molded product is a lot of product. That isn't my point.
In each and every case the costs of making product were lower when customers
did business with us than if they made there purchase overseas. We were
shipping parts on several jobs to China as a matter of fact.
This is the important part - in no year between 1991 and 2002 did the
company's net after tax margin fall below 18 percent of gross revenues -
never, not once, period. It was almost embarrassing and we did not have a
single product of our own.
If Detroit or Windsor can't stay busy or if GM files it won't be because
they couldn't get the answer right. It will be because they kept asking the
wrong damned question.
John R. Carroll
Machining Solution Software, Inc.
And are you talking about a solution for 10% of the market, or are you
claiming you have a general question and a general solution for it?
Because we can always make a positive anecdote of the virtues of 10%, if we
neglect the fact that an economy is all 100%, and that the consequences of
what happens to the other 90% eventually catches up with all of us.
Sooner or later, you have to answer the question of how you compete with 80
cents/hour wages, when technology and business expertise can be packaged
into shipping containers and sent to Bangalore or Shanghai just as easily as
to Cleveland, and that clever ideas, hard work, and insight are distributed
quite evenly around the world.
It isn't a claim Ed, it is a proven philosophy and business model. It will
work wherever you choose to run it if the infrastructure is in place.
Focusing on wages is exactly the wrong thing to do. I paid the tool room
guys a five dollar premium to the market, provided excellent medical
benefits, paid time off, and contributed the legal maximum to our 401K for
every employee at the time that was 4 to 1.
You are closer to the mark with the clever ideas part however and I agree
that no one group has a lock on that.
If you think that GM is tanking because of their labor contracts or pension
obligations you are just plain wrong. They suck hind tit because their
business model if for shit.
John R. Carroll
Machining Solution Software, Inc.
Proven for what percentage of the economy? Are you suggesting this is a
general model that will sustain our economy as a whole? If so, how would you
apply it to, say, the manufacturing of shirts? What philosophy and business
model will let you make shirts at a price/quality tradeoff that competes
with rural China or Bangladesh? Child labor could help, I suppose...
Your $5 premium probably was around 20% of 40% of your costs: as a round
approximation, perhaps 8% of your cost of production, based on
tooling-industry rules of thumb.
When you're up against 80 cents/hour, how do you account for the 96%
disadvantage? Do you think that improved efficiencies in general (not just
yours, but those of the economy as a whole) can cover 96% differences? Any
model that I know of, that points in that possible direction, is based on
getting rid of all of those people you employ and adopting the values and
standards of the Third World.
And then business in general winds up hoist on its own petard.
So you're saying they can absorb $1,500/car just by having a better business
model than Toyota or Hyundai? And then, after gaining a $1,500/car advantage
over them simply through smarter organization, that they can maintain that
advantage in a viciously competitive global market?
These are all fine assertions, John, but I'd like to see the specifics.
Frankly, I don't believe you can "business-model" your way to success when
you have the kind of legacy overhead that GM has. That is, unless your
business model is based on moving all of your manufacturing offshore and
abandoning your legacy entitlements to the federal government.
No, they can do that by properly understanding and then delivering to their
market. This is what they are utterly failing to do.
The difference in price between a Hyundai built in Arkansas and a GM product
built anywhere is much more than 1,500 dollars.
As a percentage it's about half.
They do not gain any advantage with a reduced price and shouldn't try. Good
value is critical in purchasing but you are talking about racing to the
bottom and that is the stupidest thing I have seen in recent times. It does
Just the opposite in most respects. You are smarter than this Ed.
I am unable to continue this for the rest of today but I will.
I read what you have written about global markets and manufacturing. The
questions and their answer are largely contained in your own work and the
underlying research behind it. The need to present fresh facts doesn't
exist. There aren't really many fresh facts regardless. A fresh perspective
is the key, as I said. You answered, intelligently I might add, the wrong
question. Your work revolves around looking like a top notch vendor. This is
certainly necessary but it is also the WRONG WRONG WRONG perspective.
I get paid big bucks for this Ed and have yet to see anyone who will truly
embrace what I provide as a service fail to flourish . I also have enough
confidence in the results that I only take equity. I also, except once and
not directly, don't do "turn arounds". My advice under the turn around
scenario has consistently been "Get Out and do it Now".
The five dollar ratio to costs was 6 percent and we knew that percentage
John R. Carroll
Machining Solution Software, Inc.
Hyundai understands the market pretty well, too. In fact, I bought one last
September, after trying out all of the Japanese and American competition.
The Europeans offer no competition in that market. Any European car that's
technically competitive costs $10,000 more, at the minimum. My Hyundai
Sonata is a hell of a car for the money, and 'way ahead of anything
comparably priced -- in other words, anything in that market.
The next day I bought a Ford Focus ZX3. It's another good car for the buck,
although the bottom-end Civics probably are better overall. I just liked the
handling and performance; with its 2.3-liter engine, it will stomp any
Civic. <g> I consider it a good buy, though, and not bad for an American car
What does work? Are you suggesting that GM can dope out the market better
than Toyota, Honda, Nissan, Audi, etc.? How would they do that? Are they
I don't think they're smarter. Since all of those foreign car makers have
good American marketing people to serve the US market, I don't think GM has
any greater knowledge of the market or greater insights into what people
So, what's left?
I thought I was until I spent a year of research in preparation for the
5,000 word articles I wrote about China trade a couple of years ago. Now I
realize we're living on a heap of wishful thinking and baloney.
Any advantages we have are going away very quickly. In fact, our
multinationals are shipping the advantages offshore as fast as they can. I'm
waiting for the Milton Friedman dollar devaluation, but there will be hell
to pay if and when it happens. The recent devaluation ain't it.
When you get some time, John, it would be good to hear more about what
you're saying. It's one of the most important issues in metalworking today,
if not THE most important issue.
Well, 8% was reasonably close, then. d8-)
============Right on!!!!! You also need to include Ford. A major
contributing factor is that they can't decide if they are banks
or car companies. They also seem to have forgotten than you
can't milk a "cash cow" if it is dead.....
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