Posted by Michael Gilligan on 26/02/2019 07:38:11:
Posted by John Hall 7 on 25/02/2019 19:47:02:
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… which is probably just after one of the 'bean counters' sold his soul to the devil.
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In the interest of balance, the dreaded 'bean counters' have a far better understanding of a company's state of health than most. Chaps on the shop floor, techies, customers, politicians, and the man on the Clapham Omnibus rarely get to see the accounts, let alone study and understand them. Everyone has a limited view of the world that's more-or-less wrong compared with reality.
A good way of making a living from manufacturing is to produce "quality" products – items that sell profitably despite high prices because they perform better, last longer, or have bling value. In the past, "quality" has been associated with a skilled workforce operating in a developed country, when brand-names meant something for a few decades.
Much of this is folk memory: the history of the industrial revolution is one of continual downsizing of the workforce because people are expensive in every sense. They spend years being trained, then like to be paid more money than they're worth, take holidays, have big pensions and to have power. They also go sick, bunk off, take drugs, start fights, resist change and have distracting home problems. On top these disadvantages, people costs are usually the single most expensive item in the accounts. Therefore, replacing people with machines or cheaper people is always desirable. And a positive for society is that downsizing releases people for other work and this grows the economy.
Manufacturing is also highly competitive. It is a bad mistake to believe that Johnny Foreigner only makes cheap crap that no-one wants. Whatever we might believe or hope, the accounts say different. When it comes to money, evidence is more useful than opinion, especially ignorant opinion. Fondly imagining that foreign competition cheats, or their people, machines and methods are automatically inferior does no good whatever. Ignoring the financial results leads to bankruptcy. I'm afraid it's essential to play the game if you want to make a living from manufacturing. When a bean-counter says it's headed for the rocks, the business has to change! Typically, change is painful, including transferring machines and techniques to wherever labour and/or materials are cheaper. It's a global phenomenon – like it or not, manufacturing has become multi-national.
For obvious reasons people don't care for this much! Although we enrich our lives with consumer goods and luxuries, there's a strong sense something is missing. Far worse when it's your job that's outsourced, your loyalty that's rejected, and your skills and desire to work that are unwanted. While the past was far from perfect, it was more straightforward and settled than today. Sadly it is impossible to turn the clock back.
I don't think there is anything permanent about China's current success. As their economy matures, they will encounter exactly the same problems as the other industrial nations. Sooner or later, it will be advantageous to move manufacturing from China to wherever it's cheaper in future. One example: at the moment, China benefits from low cost container shipping which depends on cheap oil. When the price of oil rises, as it must, the bean counters will identify when it's cheaper to manufacture close to market, and the world will change again.
It's wrong to blame 'bean-counters' for bad news; they're just a tool for showing which way the wind is blowing.
Dave
Edited By SillyOldDuffer on 26/02/2019 11:04:30