Viewing 36 posts - 1 through 36 (of 36 total)
  • The declining capitalist West – why don't we……?
  • plumslikerocks
    Free Member

    In various news publications, both right and left wing, I have seen the opinion voiced that our current financial woes are just the start of a long slide with China, India and the other emerging economies about to take the head of the table.

    All the heavy industry has gone, bulk and fine chemicals have gone, electronics has gone (in terms of innovation as well as commercial execution) and it seems our Pharma and scientific manufacturing sectors will be next. Especially with the likes of GSK getting into bed with Chinese companies to get round regulatory issues.

    One thing that irks me is that a lot of the lower cost of goods made in emerging economies can be attributed to more relaxed H&S and environmental regulation. (Obviously, the wage bill will be lower, but this will always be volatile as standard of living expectations catch up with the West).

    So basically we have (for better or worse) regulated our own industry out of existence and instead give all our money to the unregulated competition who are generations behind in terms of labour, safety and environmental practices. If we’re so worried, why can’t we (i.e. EU / US) as customers use our purchasing power to insist imported goods meet the same standards in their supply chain? This would have the twin benefits of levelling the cost of manufacture playing field and also making the world a fairer, cleaner, safer place. I’m not really an advocate of protectionism but it seems we’re sticking our heads in the sand.

    I’m sure someone much cleverer than me will come along with a compelling reason but I’m genuinely interested…

    TandemJeremy
    Free Member

    (i.e. EU / US) as customers use our purchasing power to insist imported goods meet the same standards in their supply chain?

    Capitalism – its all about profits.

    CHB
    Full Member

    It’s a great idea, but would need to be legislated for. In the same way as you can’t sell toys covered in toxic paint.
    However H&S is one thing, the main difference is wage costs, and you can’t really regulate for that (at least not ethically).

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    coffeeking
    Free Member

    It would pretty quickly lead to 2 things, I’d say:

    1) Return to manufacturing locally, cutting out transport costs
    2) Demolition of a large chunk of the Easts economy

    Might as well just insist we buy from within the EU.

    Zulu-Eleven
    Free Member

    Problem is, that China is already suffering from the rising wages and conditions making them less competitive

    documentary on Radio 4 this week about the textiles trade in the North west starting to rise again, as the lead times, quantities and quality problems of Chinese production makes them less of an advantage now they’re not longer super cheap

    plumslikerocks
    Free Member

    TJ – sure it is, which is why it would take governments / blocs of governments to make it happen. I guess there’s not a lot of votes is pushing up the price of cheap imported consumer goods….

    donsimon
    Free Member

    Capitalism – its all about profits efficiency .

    Killing the golden goose would be stupid, wouldn’t it?

    MrWoppit
    Free Member

    China, India and the other emerging economies about to take the head of the table.

    The Chinese bubble is getting big and cheap labour there is almost a thnk of the past.

    The “new China” is going to be the middle east.

    Junkyard
    Free Member

    can we get hold of a copy of your dictionary DS?
    EDIT: I am sure you can give a good punchline to that one 😉

    donsimon
    Free Member

    can we get hold of a copy of your dictionary DS?

    Haven’t you got any more wheels to fix?
    It’s now getting just a tad boring…..

    project
    Free Member

    Capitalism is a global phenomenom, not just us in the uk plc and usa, the BRIC countrys that emergeing are going to be the new dominant force.

    Oh and its the consumer who decides to buy or not buy the stuff made by those cheaper rated countries.

    BRIC countries, Brazil, Russia, India and China

    TooTall
    Free Member

    If we’re so worried

    On the whole, we’re not. Ethics, sustainability eco services etc are just ‘green paranoia’ to many and ‘don’t worry, it’s over there’ to most of the rest.

    zimbo
    Free Member

    Capitalism will end up eating itself and destroying us all in the process, whoever’s leading the pack. The only sustainably developing country in the world? Cuba. Mojito, anyone?

    hilldodger
    Free Member

    Who’s worried ?
    add to basket, whack it on the card, livin’ the dream….

    mrdestructo
    Full Member

    Problem is, that China is already suffering from the rising wages and conditions making them less competitive

    documentary on Radio 4 this week about the textiles trade in the North west starting to rise again, as the lead times, quantities and quality problems of Chinese production makes them less of an advantage now they’re not longer super cheap

    Check the labels in your clothing. More and more are starting to say “Made in Indonesia” on them. Factories are at full speed around Jakarta, one of the last places in the world a workforce can be exploited.

    When the minimum wage in China went up 12.5% recently it was pretty obvious what was going to happen.

    chewkw
    Free Member

    Mr Woppit – Member

    The “new China” is going to be the middle east.

    That will only work for a while because they do not have the work ethos of the east.

    ernie_lynch
    Free Member

    why can’t we (i.e. EU / US) as customers use our purchasing power to insist imported goods meet the same standards in their supply chain?

    Contract compliance was once a very important aspect of national and local government contracts, but that gave way to compulsory competitive tendering (although it still exists in a much reduced form). We don’t really have a culture of moral ethics in that respect anymore, reducing costs and maximising profits is now the overriding priority, with scant regard to the either the social effects or aggregate costs on our, or any other, society. There are international social accountability certificates which lay minimum standards, but I’m not sure how that relates to UK or EU legislation, I suspect that consumer demand is possibly more important in that respect, ie, boycott companies which source goods or services which don’t comply, something which large high profile companies are very sensitive to. IMHO

    bwaarp
    Free Member

    Capitalism will end up eating itself and destroying us all in the process, whoever’s leading the pack. The only sustainably developing country in the world? Cuba. Mojito, anyone?

    Nahhh, once we get fusion we can just plunder the moon and the kupier belt for the several million years until we either invent something new, kill ourselves in an interplanetary nuclear holocaust or invent FTL and go to another solar system.

    Don’t see what the worry is about capitalism coming to an end, it won’t, it will just start consuming new things.

    binners
    Full Member

    Glaxo Smithkline are presently building an enormous plant in Cumbria , and moving production there from the far east. The reason; wage costs is one of them. In the last ten years their far eastern workers have been demanding, and getting, wage rises of 15% a year.

    And the supposed initial savings on wage costs, etc were nowhere near the amount that the ‘consultents’ would have you believe. In fact, in a lot of cases they were non-existent. These relocations did raise huge issues with quality, where manufacturing was involved.

    Expect to see more of this kind of thing. Our glorious leaders are creating the same environment that lured companies out there in the first place, low tax with a low, and getting proportionally lower, wage costs.

    Globalisation innit?

    konabunny
    Free Member

    Glaxo Smithkline are presently building an enormous plant in Cumbria , and moving production there from the far east. The reason; wage costs is one of them. In the last ten years their far eastern workers have been demanding, and getting, wage rises of 15% a year.

    Pharma production isn’t a labour-intensive industry in the first place, is it?

    jonba
    Free Member

    Vietnam is where I see the next manufacturing boom for cheap goods. IME China is becoming more regulated and controlled as the western influence increases. They just take time to catch up. In some areas they are much more regulated.

    jonba
    Free Member

    Pharma production isn’t a labour-intensive industry in the first place, is it?

    No, research heavy though which is a good one for debate. It can be done cheaply in China and India but can it be done as well?

    tron
    Free Member

    It’s a myth. We still manufacture loads of things (google it – UK factory output is well ahead of where it was in the 60s, 70s and 80s, well, ever, more or less). It’s just that we use far less people to make the stuff.

    Have a shufti at this:
    http://blogs.telegraph.co.uk/finance/timworstall/100016398/the-insanity-of-subsidising-manufacturing/

    Anyway. There are lots of very good reasons to use UK suppliers. Largely that you can ring up a UK supplier, get your account manager on the phone and get things fixed that day. The clobber you want arrives quickly, and by and large exactly to the spec you have ordered.

    Compare that with far east sourcing, where you’re going through an agent / sourcing office, there’s an 8 hour time difference and a language barrier, the supplier is buying in from another factory half the time, the shipping alone takes 4 weeks etc. etc.

    In my view, if you cost things out properly – ie, not just on raw margin, but include the costs of managing the supplier, QA fails and holding extra inventory to cover for shipping and lead times, there’s probably very little in it for a large proportion of goods.

    porter_jamie
    Full Member

    this is an interesting thread. so for my next mtb, would it be possible to buy a bike that is made in the UK or at least the EU?

    I think we might stuggle with gears, unless it’s Rohloff?
    brakes / hubs / bearings / post / finishing kit – Hope
    cranks Middleburn
    saddle – Brookes
    Frame – Nicolai
    Bars – Renthal
    Rims – Mavic?
    Forks / Shock – Bos?
    Pedals – Superstar make some locally

    Seems premuim stuff is still made nearer home. JLR are flat out exporting RR and Jags which is fantastic. There is a motorcycle suspension company called Ktech (the Uk Ohlins) who are flat out selling components and they think they will expand at least 50% i think in a couple of years because of exports.

    I visit german auto component suppliers regularly, and they are doing well because they are tech leaders in their field, and invest huge amounts in production facilities to keep the labour costs under control and ensure the quality. They also insist on using local german suppliers for tooling who also are tech leaders.

    Getting a part made in china for example is not necessarily much cheaper, because it probably be made by a joint venture, and use the same tooling as the german supplier, so the part quality does not rely on too much labour. The benefit of making it in china is really the transport costs to the local manufacturing plants, so you make it where you use it.

    I have heard horror stories from colleagues of tooling being made in china, and the amount of managing required to try and get it right was unbelievable, teams of people camped there for months. the cost benefit is getting less all the time.

    konabunny
    Free Member

    No, research heavy though which is a good one for debate. It can be done cheaply in China and India but can it be done as well?

    I meant just the production, not the underlying r and d.

    plumslikerocks
    Free Member

    konabunny – you’d be surprised how many people are involved in a pharma factory. In the 2 I’ve worked in there has been a lot more direct labour involved than you would imagine (huge emphasis on equipment and facility cleanliness, also very involved line changovers) and something in the region of 40-60% headcount in support functions such as labs, QA, regulatory, engineering etc.

    Zulu-Eleven
    Free Member

    Plus, can you trust them not to be either:

    a) treating the QA process as a box ticking exercise – as long as the paperwork is in order, you can cut as many corners as you like, and there are known cases of downright fraud in return for bribes

    b) overproducing product and flogging it out the back door on the black market.

    c) Selling the formula to someone else on a USB stick, so they can start flogging counterfeit product, produced without all the regulatory and QA steps listed above, in a grey factory.

    Which, lets be honest, is pretty much endemic throughout certain countries.

    donsimon
    Free Member

    It can be done cheaply in China and India but can it be done as well?

    Why would you think it couldn’t be done as well?

    stavromuller
    Free Member

    OK ds, the BT contract negotiating team is now based in India and they have awarded the contract for supplying air conditioning equipment to a Chinese company who don’t have a range of products suitable for practical applications within BT premises. However, on paper, they are (theoretically) cheaper, so the UK company that has for the last 30 years provided this service satisfactorily is out on it’s ear and the staff involved are facing an uncertain future. The bottom line is BT will pay dearly for this penny pinching and so will all BT customers and shareholders.

    swedishmatt
    Free Member

    I have had the pleasure of dealing with BT profesionally. How they are still in business…..

    donsimon
    Free Member

    OK ds, the BT contract negotiating team is now based in India and they have awarded the contract for supplying air conditioning equipment to a Chinese company who don’t have a range of products suitable for practical applications within BT premises. However, on paper, they are (theoretically) cheaper, so the UK company that has for the last 30 years provided this service satisfactorily is out on it’s ear and the staff involved are facing an uncertain future. The bottom line is BT will pay dearly for this penny pinching and so will all BT customers and shareholders.

    That’s all very nice, but I don’t see how it fits with the R&D, my apologies for not putting the full quote.
    This is where I differentiate the idea of capitalism simply being about profit, it’s about effieciency. Many of the public workers I come across think cheapest is the best without considering the knock on effects. Cheapest and profiteering is not always the best and long term benfits often come not from the cheaperst but the most efficient.

    Northwind
    Full Member

    don simon – Member

    Many of the public workers I come across think cheapest is the best without considering the knock on effects.

    I could say the same about the private sector tbh. I think it’s a pretty commonplace dysfunction.

    TandemJeremy
    Free Member

    Many of the public workers I come across think cheapest is the best without considering the knock on effects.

    Actually in most cases the public sector is obliged to use the cheapest without consideration of quality

    Liftman
    Full Member

    The public sector do consider quality, they have to generally as part of the tender process, it’s just that they then choose to ignore it and go with the cheapest.

    donsimon
    Free Member

    Actually in most cases the public sector is obliged to use the cheapest without consideration of quality

    Which completely removes any argument that the public sector isn’t wasteful of resources. Cost is not simply the balance sheet number.

    The public sector do consider quality, they have to generally as part of the tender process, it’s just that they then choose to ignore it and go with the cheapest.

    😆

    konabunny
    Free Member

    you’d be surprised how many people are involved in a pharma factory.

    I stand corrected in that case!

Viewing 36 posts - 1 through 36 (of 36 total)

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