Every wanted to see a Chinese production facility?

I think that's what Ed's been saying all along. If they tinker the valuation of china's currency, it might be 1.33 or so.

Game over? Ed?

Jim

================================================== please reply to: JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com ==================================================

On Mon, 13 Oct 2003 08:09:27 +0000 (UTC), DejaVU wrote something ......and in reply I say!:

WOT!? Unions in a Communist country?! What next?

Hey! I got my job back! Now. What's for dinner....?

hmmmm...The US accounts for 30% (?? maybe it's only 20%, ot does not matter) of the world's resource consumption, with about 5% of the population. Imagine something like 20% of the population doing the same.

If you get in there and raise the standard of living to anything lke the US (and Oz!) standard, along with the resource consumption that this causes, you get your job back and, for a short while, enough resources. If you _don't get in there and do it, then it will take a little longer for the resource problem to bite, and you won't have your job....

****************************************************************************************** Whenever you have to prove to yourself that you are not something, you probably are.

Nick White --- HEAD:Hertz Music Please remove ns from my header address to reply via email !!

On Sun, 12 Oct 2003 21:30:12 GMT, Carl Byrns wrote something ......and in reply I say!:

No he's not. Something 1 foot tall, growing at a foot per minute, is faster growing than something ten feet tall, growing at 1 inch per minute.

You are asking US workers to work at $0.80/hour? These days, that's all that counts? hmmmm..yes, mit probably does. You expect Chinese workers to keep that up when they see the money rolling in? They live under an almost totalitarian state, and will have a hard time fighting it. Do you want a totalitarian state in the US?

Don't forget humanititarian behaviour in all of this Carl.

****************************************************************************************** Whenever you have to prove to yourself that you are not something, you probably are.

Nick White --- HEAD:Hertz Music Please remove ns from my header address to reply via email !!

The purpose of a government is to protect its citizens. Eventually it has to do that, or it will cease to exist, its citizens will have lost their investments, the leaders will be terminated and who benefits from that?

Ed Patterson

I just told you why. The US had no effective economic competition at the end of WWII. US companies could sell everything they could make. They didn't have to care much about costs or quality. If the unions wanted more money, fine, they gave it to them to keep the wheels turning and the profits rolling in. The US was top of the heap, the men in the grey flannel suits had the world by the tail and could do no wrong. Coca Colonialism was in full swing, and there was little the rest of the world could do about it.

The Red Menace also fueled the fire. The taxpayer would fork over inordinate amounts of money to defend against it, and government borrowed even more. Huge industries, which would have otherwise withered at the end of the war, fed off that paranoia and bellied up to the federal trough to feed. All that money circulated through the economy, driving it even further and faster.

I'll supply you with a few illustrative numbers since you asked.

Numbers: The US GNP was $70 billion in 1939, but rose to $174 billion by 1948. That was fueled mostly by federal spending and federal borrowing for the war effort. US budget, $43 billion in 1940, climbed to $98 billion by 1945. Also rationing ended in 1948 and pent up consumer demand was unleased. The GNP shot up to $400 billion by 1952.

But realize that numbers are only a part of economics. Psychology plays at least as large a part in economic behavior as the numbers.

What we had post-war was a classic demand pull situation. Demand was so large it could not be satisfied, even by factories running 3 shifts. That changed the psychology of the market from the pre-war depression era maliase to a go for broke optimism which caused people to spend and spend and spend, borrow, borrow, and borrow, then spend, spend, spend some more.

But of course it couldn't last. Eventually all those 20 year bonds started maturing, commercial loans started coming due, etc, and the government's response was to run the printing presses night and day, generating a roaring inflation which reached double digits in the 1970s.

Also, the rest of the world rebuilt. US businesses no longer faced meager competition. People who had suffered the brunt of war and were hungrier than those in the US were willing to work harder for less money, and they had brand new state of the art plants to do it in (often built with US aid money). Finally, even previously peasant economies began to industrialize in earnest, and thus we have the Asian Tigers, China, and coming soon, India.

The US was still top of the heap, but by a much smaller margin, and its businesses started to have to be more efficient to compete for a piece of the action, which means increased productivity, which means reduced employment for a given level of output.

Today the world is a much more competitive place than it was in Eisenhower America. Demand pull is no longer the driver it was in the 50s and 60s. People and businesses are starting to realize that unlimited growth won't continue to pull the economy. Debt service now takes a huge chunk of the federal budget, and total debt, government, commercial, and consumer, has soared to levels where there is no realistic hope that it can ever be paid off.

People and companies are learning that they have to scratch harder for the dollars that are out there, because others in the world are willing, and now able, to do so too.

Gary

I build die cast dies for both China and Mexico. The full burden rate(labor

+overhead)at the Mexico die caster is $3.48 per hour,the China die caster is $1.42 U.S. dollarsThe mexcio die caster is screaming over loss of work to China They are also seeing cast and trim type die casting coming back to the states due to cost The work they can keep has a lot of vlue added work done in order to get to the $3.48 figure Ray Mueller

BULLSHIT Ray Mueller

AND BULLSHIT AGAIN Ray Mueller

How are you going to overcome such a huge difference in wages? Build a wall _around_ China? If the US decides to restrict trade with China, so what? Will every other market instantly cease to exist? Of course not. Canada, Mexico, and Europe won't stop buying Chinese, will they?

As far as free trade goes, you cannot find an example where a protected market flourished. Doesn't happen. Can't happen. I can find some outstanding examples where a protected market failed in a major way. The best would be the former Soviet Union with Brazil a close second. Or Cuba, which was going to be a gross exporter by

1962, IIRC.

Trade barriers are a slow, certain death.

Ed, the only thing that sells is price. Bang for the buck. Bottom line.

That's not a glib statement- there are many on this NG who realize that one $200 US built power tool is worth more than three $49.95 Chinese ones.

On the flip side of that, there are many on this NG who would buy one $49.95 Chinese tool if they knew that it would most likely only be used once or twice, or was going to used where it would be damaged. Dropping a HF belt sander in the lake doesn't hurt as bad as dropping a Milwaukee. That's just plain sense.

The only way for the US to lower price is to contain labor costs and increase quality _and_ output. That ain't gonna happen with organized labor in the driver's seat. We've both seen by example US unionized workers close a plant rather than accept a no-pay raise contract. Just like lemmings jumping off a cliff.

-Carl

True story: I worked in a section of the plant where there are some truly huge power-lifted garage doors. On one cold (below zero) day, one the door motors popped a circuit breaker. Of course, the door was open. Being new, I walked over to the electric panel and was about to reset the breaker when one of the other guys knocked my hand away. He said that we had to call an electrician. We did so, and then everyone (about 8 guys) went where it was warm and waited for two hours for a sparky to show up and flip the breaker.

You probably haven't ever worked in a convention center- the electricians charge (no pun intended) anywhere from $40 to $100 to plug in an extension cord or appliance like a computer. This rule seems to be kind of flexible. My employer spends about 40 grand at one yearly trade show (taking up about quarter of the floor space) and the sparkies don't say shit about how many outlets we use. The single booth vendors aren't so lucky.

Smart thinking.

1989 to 1991 and I won't name the plant because I know some folks who work there and things haven't changed at all.

In fact, their biggest customer- a US car company- dropped them and started importing from Europe and Japan. The layoffs started the next day.

-Carl

I liked to add the following: Not only did all of the above conditions exist, but the US had at that point a state-of-the-art manufacturing base and transportation system (railroads) that had been both funded by war bucks and been brought to a high rate of production by war demands.

None of this is fuzzball theory-the difference in ton-miles any given railroad posted pre and post war is staggering, but the example most often given is the Pennsylvania Rail Road alone moved as much material in 1942 as every US road _combined_ did in 1939.

-Carl

Umm, but who's gonna be buying all this stuff, if wages and employment is down? My guess is that the manufacturers are betting on a given US market for goods, and that market is going to start shrinking.

Jim

================================================== please reply to: JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com ==================================================

There is a big difference between this story, and your first example of a plant being shut down all day because someone changed a light bulb. And understandable too, when you start allowing any employee access to electrical panels (even for something as simple as resetting a breaker) you are treading on dangerous ground with not the union but with your workmans comp carrier, the company safety policy and probably OSHA as well. Let an employee open an electrical panel, and you better be paying the electricians WC rate on that employee and he had better have been trained on the precautions and hazards of doing so cause if some non electrician dummy sticks his hand in there and gets a big zap, the employer is guilty of WC fraud. And probably an OSHA violation. And, the claim won't be paid. And the employee can sue. Sometimes there are reasons for seemingly stupid rules and policies that employees don't understand. A bit off the topic but true.

JTMcC.

Those burden rates are in the same ballpark I've heard, Ray.

BTW, one of the molder/moldmaker operations in China that we talked about in an article earlier this year was full of new Charmilles CNC EDMs, and had about 80 Krauss-Maffel molding presses, half of them with robotic unloaders. Not bad, huh? Have you ever seen a molder with 80 Krauss-Maffels in the US? I haven't. That would be one heck of a slick operation over here. It's one heck of a slick operation in China, too, I suppose. And it's enough to squelch any ideas that they're behind the curve in machine technology.

Charmilles builds those EDM machines in China, BTW. A Charmilles exec in the US says they're about as good as the ones they sell here.

Ed Huntress

That sounds like typical union rhetoric. What if the light bulb could only be reached by a ladder? Does that make it a union job because an untrained worker could fall off the ladder?

Here's another: At another car parts plant, a machine I helped build needed to have a

24 volt solenoid replaced.

The union rules required: A representitive from the company that built the machine. That was a good friend of mine.

An electrician to unplug the machine from the wall and disconnect and reconnect the dangerous 24 volt wires to the solenoid.

A plumber to cycle the disconnect and then remove and reattach the dangerous 10 psi flex air line to the solenoid.

A mechanic to unscrew and screw two 10-32 socket head cap screws holding the solenoid to the valve bank. He also removed the solenoid, but could have requested a laborer to do that.

A foreman to ensure everything was done in a safe manner.

The plant manager. No one knows why he was there, but rules are rules.

Six guys to stretch a five minute one man job into an hour.

That happened at General Motor's Fisher Guide plant in Syracuse, New York. GM closed the plant about a year later, saying the building cost too much to heat and light. Privately, the real reason was labor expense was higher than other similar GM plants.

-Carl

If it makes you happy, call it protectionism. Most people would say it's protectionism only if it limits imports in some way. Offsets don't limit imports. They just require an equal amount of imports at the other end.

BTW, the 100% figure probably wouldn't be necessary. Just enough to take the edge off of the enormous trade deficit probably would do the job -- maybe

50 - 70%, tops. This is in contrast to the offsets we face when we sell airplanes abroad. We often have to take OVER 100% offsets on those deals.

An interesting aside: those offsets never show up in our trade balance figures for aircraft. They show up somewhere else, in the categories in which we had to take the offset trade -- it can be steel, or cars, or consumer electronics, or whatever. So the supposed "beneficial" trade balance we get from aircraft sales is a crock of bull. We actually wind up running a trade deficit as a result of nearly every airplane that Boeing sells.

Not true. You should look into the way the Japanese market worked during the '60s through the mid-'90s. They were heavily protected from imports, but, domestically, their companies competed like cats and dogs. That's how they developed products for export, in fact. They were honed in the domestic market first, and all of the fat was squeezed out of the costs before they made their export assaults. Until their crony banking system and cultural aversion to consumer spending bit them in the rear, they used that system to wrench themselves from peasantry to world domination in many categories of manufactured goods, in just a few decades.

No, efficiency has nothing whatsoever to do with it when you have workers who earn 80 cents/hour. Then it's just cost, not efficiency. Don't confuse the two. You can be the low-cost producer even if your efficiency sucks, when you pay your workers less than a dollar an hour.

This is unmitigated bullshit. Even the most sanguine of the free-traders, Milton Friedman, says you have to let the dollar float downward to make the adjustment. That's how goods and value "seek their own levels." In the case of China (a situation old Milton never anticipated when he wrote the modern free-trade theories that have our policy makers so entranced), that would mean the utter collapse of our capital account, and an almost certain economic depression. Work out the numbers and see for yourself.

They've really got you well trained, Gary. To quote former U.S. Trade Representative Mickey Kantor again, there is no such thing as free trade. You're building your ideas on a myth that never existed and that probably never will.

Come on down out of the clouds and tell us what the 500,000 - 800,000 workers who have already been "displaced" (what a nice metaphor for "thrown out of work") by trade deficits should do about it. Then tell them and a couple of million others what they'll be doing when Ford and GM increase their imports of Chinese auto parts from $2.3 billion this year, to around $25 billion by 2007 and $30 billion by 2010. That's what they're planning to do, openly and explicitly.

Ed Huntress

Something you lads always forget to mention. Please add to you lineny above..the percentage of the worlds goods provided by the US with that

30% consumption figure.

Gunner

"You cannot invade the mainland United States. There would be a rifle behind each blade of grass." --Japanese Admiral Isoroku Yamamoto

Bullshit. During the raygun reign of ruin, the auto industry got NO wage increase, NO increase of benefits, and made major concessions on seniority and overtime. In return the fuckups that run the company took bonus money. Strange how an eye can be blind when you don't WANT to see. Just like Lee Iacocca getting concessions from the Chrysler workers, then when things turned around he was going to give bonus money to the managers until he was reminded that the concessions were a loan, not a gift. Look at the latest investigations into the NYSE, several retirees getting millions, far more than they have any right to expect, far more than any one man is worth. Nothing but a semi- legal or maybe illegal form of ripoff. I'm quite sure Worldcom and Enron weren't caused by unions, just by educated criminals with huge ego's. Kalifonicate power shortage? Now seems like it was manipulated in corporate boardrooms. Seems like most of the criminals aren't in prison, they're in corporate offices. Then explain to me why the president of Case, when they existed, got millions in bonus every year, even though he ran the company into the ground. (He got booted out too, but what the hell would that mean to him?)

Seems you're slipping deeper and deeper into it. The Canadian dollar has floated since 1970. See

BTW, the value of the Canadian dollar at noon today was 76 cents.

Gary