Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Wed Jul 16, 2008 10:24 am Post subject: Re: We have become the bitch of China.
Nickel wrote:
Canuk wrote:
As energy costs rise higher than the labour costs (in Canada or US) the manufacturing will return and the higher wages will be absorbed since it will still be cheaper than shipping.
I'm not convinced, though, that energy costs will every outstrip labour costs in the Western world. On this continent, we've put a lot of our energy eggs in the stupid basket of 18-wheelers. But rail and especially water transport are much, much more efficient, and there are all kinds of railroads to the Pacific Ocean where ships go back and forth between here and Asia. The major cost of nearly any product (at least in the West) is the labour cost; that's why the jobs were outsourced in the first place. I think if energy costs rose so high that China's cheap labour was priced out of range, just moving things around North America itself would probably be unfeasible.
I am only in my late 30's but I remember small manufacturng plants producing for smaller local markets, for example plant's in Hamilton only makng products for the GTA and plant's in Montreal making products for Quebec - shipping costs are lower since the products are built close to the market - even further back cities often built products only for local consumption. The economy of scale expanded as the energy (and technology) allowed it to if these reverse so will the scale.
Joined: Jun 26, 2007 Posts: 1620 Location: The Canada of America
Posted: Wed Jul 16, 2008 1:06 pm Post subject: Re: We have become the bitch of China.
Canuk wrote:
I remember small manufacturng plants producing for smaller local markets, for example plant's in Hamilton only makng products for the GTA and plant's in Montreal making products for Quebec - shipping costs are lower since the products are built close to the market - even further back cities often built products only for local consumption. The economy of scale expanded as the energy (and technology) allowed it to if these reverse so will the scale.
It's a rather 19th century model, though, and it passed into history for good reasons. You mentioned, for instance, economies of scale. It's extremely inexpensive for China, with a huge population, to produce goods for markets (of which Canada itself would only be a small one), put millions of tons of freight on gigantic ocean-going container ships, and then distribute locally. So long as the cost of their labour and that highly efficient first-tier distribution model is less expensive than our labour, the local distribution costs are no-odds because they're they same for us or them, once the products are in situ. In some cases, a small local market will win... but not in most cases, which is why it's not the competitive norm today. I don't know what the breaking point cost of oil would have to be to change that, but consider that it takes a lot more oil per unit to transport a small number of goods by truck than it does to transport a large number of goods by sea, and so ironically, it's likely that the local distribution nexus would collapse due to pricing first... _________________ I can has cheezburger?
Posted: Thu Jul 17, 2008 11:38 am Post subject: Re: We have become the bitch of China.
Nickel wrote:
Canuk wrote:
I remember small manufacturng plants producing for smaller local markets, for example plant's in Hamilton only makng products for the GTA and plant's in Montreal making products for Quebec - shipping costs are lower since the products are built close to the market - even further back cities often built products only for local consumption. The economy of scale expanded as the energy (and technology) allowed it to if these reverse so will the scale.
It's a rather 19th century model, though, and it passed into history for good reasons. You mentioned, for instance, economies of scale. It's extremely inexpensive for China, with a huge population, to produce goods for markets (of which Canada itself would only be a small one), put millions of tons of freight on gigantic ocean-going container ships, and then distribute locally. So long as the cost of their labour and that highly efficient first-tier distribution model is less expensive than our labour, the local distribution costs are no-odds because they're they same for us or them, once the products are in situ. In some cases, a small local market will win... but not in most cases, which is why it's not the competitive norm today. I don't know what the breaking point cost of oil would have to be to change that, but consider that it takes a lot more oil per unit to transport a small number of goods by truck than it does to transport a large number of goods by sea, and so ironically, it's likely that the local distribution nexus would collapse due to pricing first...
For small high dollar goods the cost of transport is negligible, but for larger goods such as yard tools, BBQ's, Appliances, etc. the shipping costs can be significant and the tooling costs low. The cost of a container from China is currently $8K US - this will rise to approx. $15K US when oil hits $200 barrel. I agree that the transport cost locally is high but as capital and loabour costs become a smaller portion of the product cost it will return.
As to the 19th century model - I am only 39 and work as a mechanical/manufacturing engineer. I am in this industry and have watched as the remainder of these small factories closed up in MY working life time (last 20 years) - the pressure of ultra cheap and subsidised transport pushed them into larger plants and overseas plants. Since the public subsidises transportion infrastructure through the general tax pool via. tax breaks for vehicle/truck manufacturing, roads, sea ports and airports are paid through general and municipal revenues, etc. A full user pay system (perhaps one that factors in environmental and external costs such as policing, snow removal, etc.) would get a reversal of some of this effect especially in light of the coming high energy costs.
For example hitroically urban areas had warehouses for the local market fed by rail sidings (some still exist), these were used to supply the local markets. As the cost of transport (energy) relative to the product cost has dropped warehouses have been closed and now many companies either don't have them at all (rolling 18 wheel warehouses aka Wal-Mart) or they have one warehouse North of Toronto to service the entire Canadian market. Using low cost energy and free infrastructure the cost of the product has been lowered or kept down by pushing it onto the the general tax pool instead of being borne by the consumer of the product.
Joined: Jun 26, 2007 Posts: 1620 Location: The Canada of America
Posted: Thu Jul 17, 2008 11:55 am Post subject: Re: We have become the bitch of China.
Canuk wrote:
The cost of a container from China is currently $8K US - this will rise to approx. $15K US when oil hits $200 barrel.
Very approximately, I'd say. Again, I'm dubious. $200 a barrel represents an increase of only about 40% over the current price, but $15,000 represents an increase of nearly 90% over $8,000 -- an increase that can't be accounted for in a 40% increase in fuel costs alone. I think even a 40% increase would be presuming too much, given that there are other costs involved that remain relatively constant, independent of fuel costs: the costs of paying and provisioning the crew, the cost of insurance for the ship and the cargo, port and customs costs, and so on. A rise in fuel costs inevitably implies a rise in the cost of goods, but it needs to be kept in perspective.
Canuk wrote:
For example hitroically urban areas had warehouses for the local market fed by rail sidings (some still exist), these were used to supply the local markets. As the cost of transport (energy) relative to the product cost has dropped warehouses have been closed and now many companies either don't have them at all (rolling 18 wheel warehouses aka Wal-Mart) or they have one warehouse North of Toronto to service the entire Canadian market. Using low cost energy and free infrastructure the cost of the product has been lowered or kept down by pushing it onto the the general tax pool instead of being borne by the consumer of the product.
That's true, but it doesn't necessarily follow that the manufacturing base will return... it only implies a shift in paradigm back to older models of distribution. So long as labour and Pacific transport costs undercut North American labour costs (not to mention the start-up costs of all that infrastructure -- you don't build HDTV sets in your back yard), the only money to be squeezed out here is in distribution strategies. _________________ I can has cheezburger?
Posted: Thu Jul 17, 2008 12:25 pm Post subject: Re: We have become the bitch of China.
Nickel wrote:
Canuk wrote:
The cost of a container from China is currently $8K US - this will rise to approx. $15K US when oil hits $200 barrel.
Very approximately, I'd say. Again, I'm dubious. $200 a barrel represents an increase of only about 40% over the current price, but $15,000 represents an increase of nearly 90% over $8,000 -- an increase that can't be accounted for in a 40% increase in fuel costs alone. I think even a 40% increase would be presuming too much, given that there are other costs involved that remain relatively constant, independent of fuel costs: the costs of paying and provisioning the crew, the cost of insurance for the ship and the cargo, port and customs costs, and so on. A rise in fuel costs inevitably implies a rise in the cost of goods, but it needs to be kept in perspective.
Joined: Sep 01, 2005 Posts: 276 Location: New Hampshire USA
Posted: Thu Jul 17, 2008 11:12 pm Post subject: Re: We have become the bitch of China.
Quote:
You don't want to know what the conditions of that thai processed seafood goes though. I live in the city where most of this is done and its not a picture of pristine clean environment.
Not to get off the topic of China, I wanted to add my two cents.
Quote:
Around 800 men, women and children from deeply impoverished Myanmar -- or Burma, as it used to be known -- were imprisoned in a compound behind 15 foot (4.5 metre) walls topped with razor wire and patrolled by armed guards.
The rescued workers told human rights monitors they had to work 18 hours or more a day and were paid 400 baht a month, out of which they had to buy food -- mainly rancid pork -- from the factory's owner.
Those who asked for a break had a metal rod shoved up their nostrils. Three women who asked to leave were paraded in front of the other workers, stripped naked and had their heads shaved.
Posted: Fri Jul 18, 2008 1:45 am Post subject: Re: We have become the bitch of China.
allenwrench wrote:
In Walmart today I was looking for some wild caught fish. I picked up a package of frozen Alaska salmon fillets, but when I read the label it said - "harvested in the USA and processed in China."
How messed up can we get to catch fish here and have to ship them to China to have them clean it and do god knows what to them and then ship them back?
When I was discussing this with a Walmart employee he pointed out everything I had on from head to foot and even in my pockets, arms and eyeglasses came from China. (Well, he wasn't exactly right, my underwear came from Honduras.)
I used to be proud to be an American. But we have become the bitch of China.
Lol, u are really bitch. for sure.... Maybe ur lovely underwear was made by Chinese labor. for u, nake will be better.....
The prices I quoted are taken from this article by CIBC.
I know the ratios are off but I assume that Rubin did his homework.
Yes, but again, this isn't necessarily a huge impediment. If the contents of the container are worth ten or twenty thousand dollars, $15,000 is a huge transport cost. But if the contents are worth hundreds of thousands or millions or tens of millions, it's still a minuscule fraction relative to the profits. _________________ I can has cheezburger?
Joined: Jun 26, 2007 Posts: 1620 Location: The Canada of America
Posted: Sun Jul 20, 2008 7:14 am Post subject: Re: We have become the bitch of China.
To the tune of "What a Friend We Have in Jesus"
We've become the bitch of China
The neo-cons will have a cow
They thought it just meant giant profits
And not The Thoughts of Chairman Mao
Back in the 90s when they laid us all off,
They thought they'd never see the day
There was no need to invade us,
'Cause Wal-mart sucked it all away.
We've become the bitch of China
Each day, they make another deal
For oil and natural resources
They need for economic weal.
The craft and industry we once claimed as ours,
A nod, a wink and they were gone.
Time for us to all learn Mandarin
The king in turn becomes the pawn. _________________ I can has cheezburger?
The prices I quoted are taken from this article by CIBC.
I know the ratios are off but I assume that Rubin did his homework.
Yes, but again, this isn't necessarily a huge impediment. If the contents of the container are worth ten or twenty thousand dollars, $15,000 is a huge transport cost. But if the contents are worth hundreds of thousands or millions or tens of millions, it's still a minuscule fraction relative to the profits.
If a container is dimensionally 8 x 8'6" x 20 (interior standard size) this would equate roughly for example to $62.50 per BBQ and more for household appliances in shipping costs. Since the savings in labour to move the production overseas was less than $50.00 the savings is lost When a BBQ sells wholesale for approx $150.00 this is a significant percentage. I'm sure that small items lie Ipod's or CPU's will be OK but the larger items will no longer be cost effective to build in China or SE Asia and ship overseas.
Joined: Jun 26, 2007 Posts: 1620 Location: The Canada of America
Posted: Mon Jul 21, 2008 6:20 am Post subject: Re: We have become the bitch of China.
Canuk wrote:
If a container is dimensionally 8 x 8'6" x 20 (interior standard size) this would equate roughly for example to $62.50 per BBQ and more for household appliances in shipping costs. Since the savings in labour to move the production overseas was less than $50.00 the savings is lost When a BBQ sells wholesale for approx $150.00 this is a significant percentage. I'm sure that small items lie Ipod's or CPU's will be OK but the larger items will no longer be cost effective to build in China or SE Asia and ship overseas.
Yeah, some, that's what I'm saying. It's not an absolute; it depends on what you're making and shipping. But the sad fact is, it's much better to be the manufacturer of iPods than BBQs, and small, high-priced technological devices remain the ones with the highest labour costs and the lowest transportation costs per unit. So again, I'm not convinced that that even $200 a barrel oil is going to turn us back into Pleasantville, 1955 again. When I start seeing TV sets manufactured in North America again... _________________ I can has cheezburger?
Posted: Tue Jul 22, 2008 10:04 am Post subject: Re: We have become the bitch of China.
Denny wrote:
allenwrench wrote:
When I was discussing this with a Walmart employee he pointed out everything I had on from head to foot and even in my pockets, arms and eyeglasses came from China. (Well, he wasn't exactly right, my underwear came from Honduras.)
I have heard that the U.S. only manufactures 4% of its apparel today. Wouldn't it be the ultimate of irony for the globalists, if a war broke out and America could not even outfit its armed forces in uniforms? How messed up is that?
Yes and I have looked at the tags of my clothes and the ones that are made of synthetic materials are normally american made, so what's up with that? You just can't get an american made cotton shirt anymore can you?
There are whole movements to boycott walmart for this very reason, i try to avoid them anyway, their prices on food are really not that great compared to grocery store sales anyway.
I do have a sam's card that i got before i learned the evils of walmart, but i plan on cancelling it next month and just going when they have their free trial days a few days a year and stocking up on goods then.
Posted: Tue Jul 22, 2008 9:24 pm Post subject: Re: We have become the bitch of China.
MidwesternMom wrote:
There are whole movements to boycott walmart for this very reason, i try to avoid them anyway, their prices on food are really not that great compared to grocery store sales anyway.
I do have a sam's card that i got before i learned the evils of walmart, but i plan on cancelling it next month and just going when they have their free trial days a few days a year and stocking up on goods then.
I personally love when people complain about the lack of good jobs and still shop at Wally World. The connection that they are putting themselves or people they know out of work by shopping there does not get made. Lots of good companies like Rubbermaid and Levi's have stopped manufacturing here due to the downward cost pressure exerted by Wal-Mart.
Clothes from cotton made in Canada and the US are still around but you have to look - for example the Price Club/Costco (don't know if they are in US) carried a line of Canadian made jeans - (they are competition to Sams). Smaller stores and independants are more likely to carry the old fashioned brands that are still made here though more money than the Wal brands.
Posted: Mon Jul 28, 2008 3:34 pm Post subject: Re: We have become the bitch of China.
China didn't make us her bitch, we thought we were getting over on
her and volunteered for the role. Quick profits and cheap consumer
prices and next thing you know, we were proud of our choke chains and barking for extra treats.
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