"Buerste" wrote in message
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"Ed Huntress" wrote in message
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"John R. Carroll" wrote in message
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Ed Huntress wrote:
"John R. Carroll" wrote in message
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Ed Huntress wrote:
"Buerste" wrote in message
news
"Ed Huntress" wrote in message
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"Buerste" wrote in message
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"Wes" wrote in message
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"Buerste" wrote:
That's life. You do the best you can for your workers. But you'll
never be able to compete in a manufacturing field that responds to
technical productivity improvements and still keep them employed,
without a high rate of growth for your business, because it would
require an ever-declining wage rate -- until they couldn't live on
it at all.
Nonsense.
Nope. No growth, no employment. And with improving productivity, less
employment -- unless you have substantial growth.
Yeah, you have to pay attention and keep broadening your business into
areas
where growth will occur.
What you said was that growth can't keep up. The facts and the evidence
don't support that unless you want to keep making buggy whips. Then
there is
plenty.
What I said was that you can't maintain employment without a healthy rate
of growth. That applies to goods-producing industries in general, and to
individual companies in particular. I've never tried to sort it out for
the whole economy, but the pattern has been clear for years now in
manufacturing.
Here's employment in goods-producing industries since 1940:
http://research.stlouisfed.org/fred2.../USGOOD?cid=11
Here's the growth it took to sustain those levels of employment:
http://research.stlouisfed.org/fred2/series/IPMAN
Since about 1970, the output of goods produced in the US has had to be on
a pretty steep incline just to keep manufacturing employment about level.
In other words, you need a lot of growth to keep from laying people off
in manufacturing, due largely to improvements in productivity. And if you
have even a slight downturn in manufacturing output, you get a big dip in
employment.
All of this is happening, of course, while the population is increasing.
So the percentage of people in manufacturing keeps dropping, even though
the total number is fairly flat. Where do the others go? As I've said,
I've never tried a full analysis, but a lot of them never return to
manufacturing.
So, as I said to Tom, it doesn't matter if you're chasing wages or not;
your competition is automating, here and abroad, and you have to, as
well. And unless you grow, you're going to wind up with fewer people.
Let's take Cleveland as an example.
The cities population and tax base continue to evaporate. One area that
will
definitely grow is the downsizing business.
Flint Michigan is taking the lead on this. They will be wiping out half
of
the place with bulldozers and putting something, or in saome cases
nothing,
in the space created. The population will move to the space that is
left. I
was born in Flint's East Side Ed. My grandmothers family had a
successful
screw machine business on Dort Hwy. in Grand Blanc for half a century.
Two
years from now the East side of Flint won't even exist and the screw
machine
shop in Grand Blanc died with my Uncle Del, but what is left of all of
that
when the city is done will be serviceable and vibrant. They will
attract
new industry. I might move back just to watch it happen and lend a hand.
The
valuations will certainly be right but I'm pretty well hooked on warm
wheather and ocean breezes.
Tom might consider expanding into the automation industry. He seems to
have
a knack for it. There are also a ton of trainable people in his area.
He'd
experience real growth if he focused on the sort of automation the
energy
business was going to need to make, oh I don't know, batteries for
vehicles
that we'll otherwise buy from Korea.
What you have to be able to do is see opportunity, get organized and
seize
it. Otherwise, you just set yourself up to fail eventually.
--
John R. Carroll
All well and good. That requires getting into another business. If he
wants to keep all of his people employed, he'll need to sell more than
brushes.
--
Ed Huntress
Yep, or at least new products into new markets. 80% of what I make
today, didn't exist 10 years ago. The trick for me is to find a
market/product that is hard to make, over priced and nobody want's to
really do but they have to keep customers happy with "me-too" items. Then
I'll just tell my guys that it can't be done.
Nobody wants to deal with flat wire, it's a bitch. We're now the biggest
and best in the world. It's a little niche but it's a nice little niche
and not even the Chinese want anything to do with it.
To be fair, I should be self-contradictory and confusing here by pointing
out that you're more or less making John's point, and contradicting mine.
d8-)
This is one of the enigmas of mixing micro- and macroeconomics, because your
effort to seek new products and markets is what John is talking about, and
it's the way to look at things from the point of view of a businessman, or
of a microeconomist. Looking at you and what you do, from the point of view
of a microeconomist, one sees the necessity to keep innovating and pushing
the boundaries of what your business does. From that microeconomist's point
of view, that *is* what you do. As an economic agent, you don't just make
brushes. You discover or create brush markets and fulfill them. That's
John's mindset, too.
Then the macroeconomist looks at the situation and puts it into a different
context -- the national statistics and trend lines in manufacturing,
finance, etc. -- and sees that it doesn't matter very much what you do.
You're like Brownian motion in a problem that, to that macroeconomist, is a
problem of gas pressure and volume. A businessman or a microeconomist looks
at Ohio Brush and sees a dynamic system that has an individual path and a
fate of its own. The macroeconomist sees a particle taking its random walk
in a stochastic process, and he isn't concerned with where you're going, as
an individual or an individual company.
In this thread I've been talking about the pressure/volume issue: the
macroeconomics. John is talking about the microeconomics. The
self-contradictory part is where I'll agree with him and say that you can
indeed find ways to employ Robert and that your emotional involvement in his
welfare, and that of your other employees, is hardly in vain. You can do
something about it. The goals of your enterprise are yours to choose.
But the macroeconomist will say, that's interesting and good human interest
copy for page 3 of your local newspaper, but I only read the index tables in
the business section. I want to know the parameters as they're being set by
economic conditions. Individual particles can go where they may; they're not
my concern, any more than the behavior of individual vapor molecules are a
concern to someone trying to adjust the running of a steam engine. No matter
how any individual particle may behave, the dynamics I'm looking at are
based on the safe assumption that they'll behave in a certain average way.
Many of the enigmas, frustrations, and arguments that arise in talking about
business, trade, employment, wages, and so on are the result of not keeping
the macro and micro in their appropriate boxes. When you're looking at
government wage policies and the state of competition with China, you're
looking at macro issues, which have their own driving forces and desired
outcomes. When you consider how to run your business, those are among the
parameters you're working with. The confusion and frustration come from
assuming that the micro benefits you would gain if we followed some
different policy would project to general benefits across the economy, ones
that are greater than the negative macro consequences. Lower wages would
keep more people employed -- for a while. But the consequences of driving
down wages would be a running down of the entire clock mechanism that is our
economy. Everyone will be hurt by it, once the particles are averaged out
into units of pressure and volume.
You won't solve our problems with competition, or even of a slumping
economy, by starting a race to the bottom.
--
Ed Huntress