A story of a crazy economy

[nadinbrzezinski]

so now we have analysts screaming that this slowdown will be unlike others

Horror of horrors one reason given... well people are not buying... and we have not figured it out yet why

Well this is a story of why we are where we are

Some years back I was pretty active in the miniature gaming industry. Hell, I even had CONTACTS in that industry... in fact I still work in the industry but now that the economy has slowed down people are shocked, I tell you, that sales have gone down

So back to the story.

This company rep was talking to me about how they were going to release this new game and produce the gaming pieces in China...

So I went... WHY? (THey used to produce in the US)

Well, because we can reduce our cost per unit by five cents (and the amount that they expected to sell, that was a hefty amount in the savings department)

So I asked, what happens when the people you are laying off cannot afford the trinkets (boy that angered him), that you are producing in China?

After he fumed a tad, he said, well we are moving away from an industrial economy and we are fine (Yep drank the kool aide)

I told him, before I left his side... just wait...

Problem is that many people in the late roaring nineties and especially early 2000 could not connect those dots

I wish I was a fly in the executive suite, where they may be discussing whether to bring their production back to the US... fuel prices and the fact that people now have to choose between their crap and food... well most of us normal people choose the food. I mean plastic does not work very well with alfredo and it has a sucky flavor.

But as the economy slows down wanna bet on how many manufacturers will start bringing their factories home? Oh and the leading edge to this IS the steel industry...

Oh and lets not go into the company that thought they could keep their prices for evah... never mind that ZInc was going through the roof due to the Chinese buying any and all zinc in sight... and the president had a Masters in Economics (which goes to prove that just because a person went to school, does not mean they aren't liable to drinking the Kool aid. Oh and yes they have had several price increases since he called me clueless on an industry list... again, another person I wish I could face and tell him... didn't I tell you you'd have to raise prices?)

We are up a shit creek without a paddle and what many of us saw coming two and three years ago... is just starting to be obvious to most. All I can tell you is batten down them hatches... it will get ugly.. But one consequence to this will be the end of globalization as intended... and that will break more than just a few eggs.

[The_Casual_Observer]

1. It was pretty obvious that all those new chinese factory towns

would require energy & shipping goods from china would also require energy. This fact was ignored for a while. There are unintended consequences of setting up a whole new industrial based country for the exploitation of cheap labor.
There is a natural balance to all things, things are being rebalanced now.

[whistle]

2. That's right because it will be an economic meltdown by design and by neglect

[napoleon_in_rags]

3. Great post. Its interesting to look at the fundamentals behind it all.

Yes, serious stresses are coming which will force big changes. But its interesting to look at the problems that are causing it down to a microcosmic level, like with the gaming company. The problem seems to come from an inability to understand the full consequences of our actions, moral and otherwise, in an interconnected technologically advanced global world. Did the bosses understand the moral consequences of their actions? Did they have a choice, or were economic pressures forcing them to go for the cheaper manufacturing? To me it clearly indicates a weakness of an open free market nation vs a nation controlled by a strong central government like China. The Chinese government manipulates their markets, as with international trade, for optimal outcomes for the nation state. We don't, thus the trade deficits.

Its seems to me that for a liberal free trade style nation to survive globalization, it requires a high degree of transparency, information access and information simplification, so that companies can make informed moral decisions and understand the consequences of their actions. Then again there is the alternative, we could always just have a communist revolution here and tell the Imperialist Chinese pigs to fuck themselves when they come to collect on the vast debt we have stacked up. :evilgrin:

[nadinbrzezinski]

6. One of those companies was (and still is) ethics challenged

and from my experience people who are ethical, until know. are the losers

We also reward those who are not ethical and break a few eggs...

And that is also a problem with our ideas of the market place

IN fact, the bushies are but an extreme of what you see across the economy

Ethics is not taught at the college level, et al

[napoleon_in_rags]

8. I see that - what's so funny here is that the losers are the winners

and the winners the losers in the big picture, as you pointed out with jobless people not being able to buy the products of the company that outsources to save a few cents.

Ethics is survival at a larger level, its just too bad so few people can see that right now.

[Tandalayo_Scheisskopf]

4. There are more stories than you can shake a stick at...

Regarding the quality of offshored IT services. Poor work product is a biggy, but another is that costs tend to balloon about 6 months to a year into a contract, all completely unavoidable circumstances, they assure the geniuses in the executive suites.

I know of one big IT project that is getting off the ground not far from me. For exactly the above reasons, and the quiet little fact that a lot of companies in the financial services sector do not want to ship their information anywhere near offshore.

Look for more of this in the days ahead.

[spag68]

5. Bad times

You are off by about 40 years. In Pittsburgh, we saw it in 68 or so when the Mellon-Scaife cabal started to close all the steel plants instead of cleaning them. At the time many of us were involved installing scrubbers and other anti-pollution equipment. Then in the blink of an eye, it stopped and they just started shutting down. Now there are clean rivers there but few jobs in steel, they said those scruffy steelworkers made to much money and so off to China and India went the jobs. Funny how Carnegie and his heirs are still killing the workers that made them rich.

[nadinbrzezinski]

7. But pay attention.. due to unforeseen costs, those steel plants

are going to come back

Not me saying it.

And yes, they hate unions, so setting unions will be a pain all over again

Globalization, that is the search for "cheaper labor" is going to go in a very different direction because of the cost of fuel and other costs

By the way, the people in Pittsburgh could not connect those dots, just as these small companies I talked about couldn't either

[4_TN_TITANS]

9. I'm already seeing signs in my industry of the balance coming back

More and more of our distributors are selling TO China because of the devalued dollar, which will bring some manufacturing back.

[nadinbrzezinski]

10. The problem is that it will come back and these folks

will do all they can to avoid unions

So that will be the next fight

But they will come back, you are right

Hell, in the Gaming Industry, the new edition of DnD was produced and printed in the US

[mdmc]

11. solidarity

:kick: