POTUS 46.10: A New Hope

[The Sicatoka]

Scope definition and agreement

Feature creep is a real thing, ... a real ugly thing ... and it happens without those.

 

[Handyman]

I mean "or" as in you saying "If things were made here they would cost twice as much."

Things don't cost "twice as much"; things are underpriced elsewhere.

Put another way -- Is the real price the price to build in US or the price to build in Z. If Z price is real price, yeah, US price is "twice"; but if real price is US price, Z price is half of reality (and somebody is taking the short end of a stick).

That is incorrect. Things are not underpriced...in fact based on the slave labor used they are over priced. In a perfect world bringing it back home wouldn't change the price at all (it should LOWER IT) because they would still make a profit, they would just make the correct profit as opposed to the massive profits they make because they pay pennies on the dollar for manufacturing costs. If done right that would be offset by the cutting in costs of transportation and tax deals cut with local governments) Lets say it costs $10 to make a pair of Nikes in China and they sell them for $150. Bringing it statestide might make the cost be $50 which still leads to massive profits.

BUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUT.. .

Any company that did that would see a revolt from it's investors. So they would raise the price to be commensurate with the current profit margins. (actually most likely they would raise it more and justify it with commercials about being "Made in America" ) So in our pervious example if the cost went up to $50 they would raise the price likely to $200 to protect the bottom line. Technology would be worse because the margin would likely be based closer to percentage than dollars. And the costs to make it would not be insignificant probably doubling the cost on their own even without regards to profit.

Labor is underpriced everywhere so if that is what you mean I agree. Actual costs of products is overpriced on pretty much everything based on costs and means of production. Its one of the reasons there is the big fight for the Global Minimum Wage. This of course ticks off the Cooks of the world because Apple will get bent over a barrel on their balance sheets if that ever happened.

 

[LynahFan]

That is incorrect. Things are not underpriced...in fact based on the slave labor used they are over priced. In a perfect world bringing it back home wouldn't change the price at all (it should LOWER IT) because they would still make a profit, they would just make the correct profit as opposed to the massive profits they make because they pay pennies on the dollar for manufacturing costs. If done right that would be offset by the cutting in costs of transportation and tax deals cut with local governments) Lets say it costs $10 to make a pair of Nikes in China and they sell them for $150. Bringing it statestide might make the cost be $50 which still leads to massive profits.

BUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUT.. .

Any company that did that would see a revolt from it's investors. So they would raise the price to be commensurate with the current profit margins. (actually most likely they would raise it more and justify it with commercials about being "Made in America" ) So in our pervious example if the cost went up to $50 they would raise the price likely to $200 to protect the bottom line. Technology would be worse because the margin would likely be based closer to percentage than dollars. And the costs to make it would not be insignificant probably doubling the cost on their own even without regards to profit.

Labor is underpriced everywhere so if that is what you mean I agree. Actual costs of products is overpriced on pretty much everything based on costs and means of production. Its one of the reasons there is the big fight for the Global Minimum Wage. This of course ticks off the Cooks of the world because Apple will get bent over a barrel on their balance sheets if that ever happened.

But of course, at $200, fewer people would buy the shoes, so your OI (units sold x (unit price- unit cost)) still decreases. You'd need to raise the price even higher, and then you end up chasing your tail...

Off-shoring is done because it already maximizes profit. There's simply no way to bring it back and be profit-neutral (unless something like Global Minimum Wage happened to bring the unit cost in China somewhere within striking distance of unit cost in the US).

 

[MichVandal]

That is incorrect. Things are not underpriced...in fact based on the slave labor used they are over priced. In a perfect world bringing it back home wouldn't change the price at all (it should LOWER IT) because they would still make a profit, they would just make the correct profit as opposed to the massive profits they make because they pay pennies on the dollar for manufacturing costs. If done right that would be offset by the cutting in costs of transportation and tax deals cut with local governments) Lets say it costs $10 to make a pair of Nikes in China and they sell them for $150. Bringing it statestide might make the cost be $50 which still leads to massive profits.

BUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUT.. .

Any company that did that would see a revolt from it's investors. So they would raise the price to be commensurate with the current profit margins. (actually most likely they would raise it more and justify it with commercials about being "Made in America" ) So in our pervious example if the cost went up to $50 they would raise the price likely to $200 to protect the bottom line. Technology would be worse because the margin would likely be based closer to percentage than dollars. And the costs to make it would not be insignificant probably doubling the cost on their own even without regards to profit.

Labor is underpriced everywhere so if that is what you mean I agree. Actual costs of products is overpriced on pretty much everything based on costs and means of production. Its one of the reasons there is the big fight for the Global Minimum Wage. This of course ticks off the Cooks of the world because Apple will get bent over a barrel on their balance sheets if that ever happened.

Given all of the automation that goes into your example, I very much disagree. I'm more familiar with cars, but the actual percentage of labor in a car is a lot lower than most thing, and I'm pretty confident that there's a lot less manual labor in a phone than in a car- relatively speaking, of course. So the labor contribution to those is lower.

And seeing some of the chip makers put plants into the US (why Arizona is a good question), they must see that small fact, too.

One thing to think about- when computers went fully off shore, there was not a quantum drop in prices. If labor was *that* important, there would have been a big drop in prices. It was there, as everyone just left, but it was not that dramatic.

Your shoe example is probably closer, but New Balance does make running shoes in the US, so it's also not perfect.

 

[LynahFan]

One thing to think about- when computers went fully off shore, there was not a quantum drop in prices. If labor was *that* important, there would have been a big drop in prices. It was there, as everyone just left, but it was not that dramatic.

No, no, no.

We should probably take it to the Economics thread, but price is only tangentially related to cost. If you're making widgets for $5 and selling them for $10, and you find a way to start making them for $2, why in the world would you drop your price, when you know darn well (based on years of data) that consumers are willing to pay $10? If you're the GM of the plant and you report to the board that you dropped your price to $7 to reflect those cost savings.....well, your successor would have quite a job on his hands to raise the price back up without alienating consumers.

Now, obviously, if your competitor starts offering them for $9, that can change the "willingness to pay" calculus - but that's a completely separate issue from the production cost.

 

[Handyman]

No, no, no.

We should probably take it to the Economics thread, but price is only tangentially related to cost. If you're making widgets for $5 and selling them for $10, and you find a way to start making them for $2, why in the world would you drop your price, when you know darn well (based on years of data) that consumers are willing to pay $10? If you're the GM of the plant and you report to the board that you dropped your price to $7 to reflect those cost savings.....well, your successor would have quite a job on his hands to raise the price back up without alienating consumers.

Now, obviously, if your competitor starts offering them for $9, that can change the "willingness to pay" calculus - but that's a completely separate issue from the production cost.

Yeah this is spot on. In theory if the cost of production becomes more economically efficient the price would drop but no business would ever do that long term. You never leave money on the table.

It is why Hillary got destroyed for suggesting a gas tax holiday. In theory it would lower the price of gas but since every station knows the price people will pay for gas if they need it the change would be nominal at best meaning the company reaps all the benefits.

No CEO (unless they own the company outright) would keep their job if they didn't maximize profits.

 

[psych]

(and I'm sure he'll point out that Capitol Gains Tax cuts are from Clinton, too- but they were also amplified since then- Clinton's policies are exactly why there's dissent in the Democratic party- are we playing to the big bucks or for the people?)

Clinton fucking sucked. Carter sucked. We haven’t had an antitrust, anti-monopoly type president since Eisenhower. I would take Eisenhower over Obama since Obama was a big business, big bank a—hole too.
Bernie Sanders, Elizabeth Warren, Sherrod Brown, and a smattering of Democrats in the House are about all remaining who actually call out big banks, big business, etc. Letting wealth concentrate at the top, becoming lax on mergers, all of that sh-t has been happening for longer than Reagan, and Democrats farther back than Reagan were openly advocating for big business, monopolization, concentrating of wealth. Both parties fucked us to the situation we’re in now, six decades or so in the making.

 

[dxmnkd316]

Given all of the automation that goes into your example, I very much disagree. I'm more familiar with cars, but the actual percentage of labor in a car is a lot lower than most thing, and I'm pretty confident that there's a lot less manual labor in a phone than in a car- relatively speaking, of course. So the labor contribution to those is lower.

And seeing some of the chip makers put plants into the US (why Arizona is a good question), they must see that small fact, too.

One thing to think about- when computers went fully off shore, there was not a quantum drop in prices. If labor was *that* important, there would have been a big drop in prices. It was there, as everyone just left, but it was not that dramatic.

Your shoe example is probably closer, but New Balance does make running shoes in the US, so it's also not perfect.

Labor isn't the cost anymore, liability is

 

[dxmnkd316]

No, no, no.

We should probably take it to the Economics thread, but price is only tangentially related to cost. If you're making widgets for $5 and selling them for $10, and you find a way to start making them for $2, why in the world would you drop your price, when you know darn well (based on years of data) that consumers are willing to pay $10? If you're the GM of the plant and you report to the board that you dropped your price to $7 to reflect those cost savings.....well, your successor would have quite a job on his hands to raise the price back up without alienating consumers.

Now, obviously, if your competitor starts offering them for $9, that can change the "willingness to pay" calculus - but that's a completely separate issue from the production cost.

This is exactly what we do. Do you think the machines to make everyone's favorite tape are 50 years old and we're happy making a profit? Fuck no. We build bigger badder machines that produce it at Mach 4 on a half mile wide roll. Because it's cheaper to make. And the cost of tape hasn't gone down substantially, it's gone up. Despite it being made for pennies on what it used to be made for.

 

[MichVandal]

No, no, no.

We should probably take it to the Economics thread, but price is only tangentially related to cost. If you're making widgets for $5 and selling them for $10, and you find a way to start making them for $2, why in the world would you drop your price, when you know darn well (based on years of data) that consumers are willing to pay $10? If you're the GM of the plant and you report to the board that you dropped your price to $7 to reflect those cost savings.....well, your successor would have quite a job on his hands to raise the price back up without alienating consumers.

Now, obviously, if your competitor starts offering them for $9, that can change the "willingness to pay" calculus - but that's a completely separate issue from the production cost.

Thanks to conservation of mass, if your cost goes down by 50% and your sale cost is the same, the profit per unit goes up by whatever you save.

What company pulled that off? Or was it just a ruse to increase share prices?

 

[LynahFan]

Thanks to conservation of mass, if your cost goes down by 50% and your sale cost is the same, the profit per unit goes up by whatever you save.

What company pulled that off? Or was it just a ruse to increase share prices?

Are you new to capitalism?

*Everything* that companies do is a ruse to raise share prices.

Less snarky version: there is only so much you can do to raise the price of your goods (advertising, etc). But no matter what you do on the price side, the consumer always gets a vote. There is always an alternative to your product, so if the consumer doesn’t consider the value difference to be worth the price difference, he will go with the alternative. The cost side of the equation, in contrast, is much more in your control. Every successful company since the dawn of corporations has striven to reduce costs, and has done so ruthlessly. Cost is where you can make dollars instead of pennies. If you don’t understand this, then you truly, fundamentally just don’t understand business.

 

[rufus]

And labor is their biggest cost.

 

[RaceBoarder]

Are you new to capitalism?

*Everything* that companies do is a ruse to raise share prices.

Less snarky version: there is only so much you can do to raise the price of your goods (advertising, etc). But no matter what you do on the price side, the consumer always gets a vote. There is always an alternative to your product, so if the consumer doesn’t consider the value difference to be worth the price difference, he will go with the alternative. The cost side of the equation, in contrast, is much more in your control. Every successful company since the dawn of corporations has striven to reduce costs, and has done so ruthlessly. Cost is where you can make dollars instead of pennies. If you don’t understand this, then you truly, fundamentally just don’t understand business.

This.

For reference: Butterball (of turkey fame) uses the cheapest packaging (shipping, not sale packaging) of any of the companies I deal with at my distribution facility. It's a cost cutting measure on their end. And they save more using the cheap packaging and having us damage out the number of packages we do than the added cost of using beefier cardboard and better wrap.


Y'all never see this on the consumer end. But if they save .1 cent per box and ship (literally) a million boxes, you can see how that adds up super quick.

 

[Jimjamesak]

This.

For reference: Butterball (of turkey fame) uses the cheapest packaging (shipping, not sale packaging) of any of the companies I deal with at my distribution facility. It's a cost cutting measure on their end. And they save more using the cheap packaging and having us damage out the number of packages we do than the added cost of using beefier cardboard and better wrap.


Y'all never see this on the consumer end. But if they save .1 cent per box and ship (literally) a million boxes, you can see how that adds up super quick.

Amazon, Target, and Walmart are all the same, cheap, flimsy, cardboard with a lonely strip of cheap paper tape. They do not care if we damage out hundreds of their boxes every day, just send the stuff back.

 

[RaceBoarder]

Amazon, Target, and Walmart are all the same, cheap, flimsy, cardboard with a lonely strip of cheap paper tape. They do not care if we damage out hundreds of their boxes every day, just send the stuff back.

I'm sure there are other companies that have done the math and use similar means. I was just using them as an example of a cost savings outweighing known losses those cost cuts would make. It's all part of the grand plan and is already accounted for ahead of time.

 

[LynahFan]

I'm sure there are other companies that have done the math and use similar means. I was just using them as an example of a cost savings outweighing known losses those cost cuts would make. It's all part of the grand plan and is already accounted for ahead of time.

Yes. True in every industry. The only time I bought a new house, the workers broke a few windows (before closing), so they had to replace them. I asked the site foreman about it and he said they build 20% breakage into every cost estimate, because that’s still cheaper than hiring careful workers.

Cost, cost, cost. And then, if you have some time left over, think about cost.

 

[Handyman]

When I worked at Target they figured in 30% loss from theft. The security they had was all for show. Hell the guy was like 70 and could barely walk he was never supposed to stop people if they left the building.

This type of corporate bean counting is nothing new. I mean car companies have been doing it for decades.

 

[dxmnkd316]

30% sounds awfully high

 

[French Rage]

When I worked at Target they figured in 30% loss from theft. The security they had was all for show. Hell the guy was like 70 and could barely walk he was never supposed to stop people if they left the building.

This type of corporate bean counting is nothing new. I mean car companies have been doing it for decades.

I was wondering recently how much additional theft occurs now due to the self-checkouts, and how many of it they're willing to accept by not having to pay additional checkout people.

 

[Drew S.]

30% sounds awfully high

Way too high. I figure an average department store does what maybe a $100k a day in sales? I’d be surprised if it’s even 1%. The 30% figure sounds like some sort of propaganda number to make people feel bad for them.