Alas, Tim, the world is not quite so black and white as you see it.
Everything doesn't have to be either ultra high end or cheap crap.

And, when you're buying something that's supposed to have some fairly
decent level of quality that no longer does (e.g. Delta, made in
China), but they still want their premium price (though not the $ of
the ultra high end stuff, but not cheap), it's problematic.

GMs problems, even from a cursory look-see appear to go well beyond
those #^%*$ unions.

We're not living inside a computer w/it's limitations to 1 and 0.

Renata


On Wed, 20 Aug 2008 15:11:38 -0500, Tim Daneliuk
wrote:

Frank Boettcher wrote:
On Wed, 20 Aug 2008 11:58:13 -0500, Tim Daneliuk
wrote:
SNIP


Wow, what a shock, free markets actually work??? The anti-globalist,
anti-trade sentiment one frequently hears (especially here) is
foolish. The Chinese/Indian/Sri Lankan/Taiwanese... "cheap" labor
advantage was/is temporary. As these nations continue to participate
in global markets and thereby become more wealthy, their average
salaries will - in currency adjusted terms - start to converge to be
around the same as everyone else's. Sooner or later, people working in
market economies want the same things the wealthy Westerners do - a
nice car, a house, air conditioning, an education, etc. Wage inflation
has already hit Indian IT outsourcing and it is inevitable in China's
manufacturing sector. The only thing that can stop it is violent
suppression by their government (possible) or an invasion by a foreign
power (unlikely).

Tim, I agree in principle but the reality is it is very difficult to
bring anything back. When a successful and efficient manufacturing
facility is closed in favor of moving offshore, many times the state
of depreciation expense amortization and the present value of the
tooling is such that, if lost, it is rare to be able of afford to come
back, at least within a generation.

I was successful for many reasons. Well trained and efficient work
force, reasonable labor costs, good supply chain management, great
imbedded product knowledge, and a very reasonable depreciation expense
component of the overhead. If closed and all lost or made obselete,
the cost of retooling and equiping would cause depreciation expense to
be about four times what it was. That alone would put me out of the
running not to mention the impact of the lost imbedded knowledge.

That's clearly true. But I'd suggest - at least at the Big Picture level -
that there will always be a demand for high value/quality goods and
people will pay a premium for it. For example, my first passion in
life is not woodworking but traditional B&W silver chemical photography.
My field camera is a hand made wooden box (Honduran quarter sawn mahogany and
shiny brass) that I paid a *lot* for. Why? Because it is a superbly
executed instrument that nothing else can touch in its class. It does
thing that *no* digital camera, at any price can do (including the
$40K Hasselblad H-39). The manufacturer, Wisner, has a nice little
high end business, building the "best" of something for people who
know the difference. So, while mass manufacturing will migrate to
the lowest cost producer (in a commodity market, the lowest cost
producer always win), I believe there will always be room for crafstmen
to make Ferraris, Steinways, and so on.


So maybe in another generation that equilibrium you describe will be a
reality. In the meantime, I hope this Delta initiative will be a
success.

I think it is happening already and a lot faster than many people
realize. Indian IT outsourcing is taking a real hit because of
wage inflation. Europeans are starting to build factories
here in the US. For the moment this is because of the Dollar/Euro
ratio. But in the not so distant future I think all this new
technology and the success of global trade and markets is going
to drive work to be done by whoever does it *best* at a fairly
constant (currency adjusted) price. I too hope that Delta succeeds
here, but not because "The flag is back" but because I love seeing
high quality anything being made ... no matter where and by whom.