Firelock76 Yes, I'm sure corporate greed is a factor that I can't discount. Look at the mess the "whiz kids" made of the economy the past few years. I have no love for those irresponsible idiots AT ALL, considering all the people they hurt. As James Kilpatrick said "I'm a capitalist, and business has no bigger friend than me. But they sure make it hard, sometimes." And by the way, the standard of living in China is rising, no wonder with all the money coming in. Not at our level yet but they're on their way. All this being said, I stand by my previous post.
Yes, I'm sure corporate greed is a factor that I can't discount. Look at the mess the "whiz kids" made of the economy the past few years. I have no love for those irresponsible idiots AT ALL, considering all the people they hurt. As James Kilpatrick said "I'm a capitalist, and business has no bigger friend than me. But they sure make it hard, sometimes." And by the way, the standard of living in China is rising, no wonder with all the money coming in. Not at our level yet but they're on their way. All this being said, I stand by my previous post.
Once China gets too expensive, we'll move to the next 3rd world country. But there is a bright side... some day we will get to be that 3rd world country providing slave labor for other countries. Yay.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
Murphy Siding Today, I spoke to a sales rep who sells wooden stair rail parts. He claims that his competitors make their parts out of Appalacian oak, just like his company does. But, he claims, Brand X send the oak boards to China, has them machined into stair parts, and ships back the finished goods for sale here in the U.S. ( I'm not quite sure I believe that you can send a board to China and back for less than the cost to machine it here, but- he is a salesman, and they never lie.....) Will the anticipated higher fuel costs have any noticeable effects on the origins of products most Americans purchase?
Today, I spoke to a sales rep who sells wooden stair rail parts. He claims that his competitors make their parts out of Appalacian oak, just like his company does. But, he claims, Brand X send the oak boards to China, has them machined into stair parts, and ships back the finished goods for sale here in the U.S. ( I'm not quite sure I believe that you can send a board to China and back for less than the cost to machine it here, but- he is a salesman, and they never lie.....) Will the anticipated higher fuel costs have any noticeable effects on the origins of products most Americans purchase?
Sure, but not at a rate of change that will be amazing and dramatic. Look at the numbers. Logistics as an component of the cost of goods delivered to the end user in the U.S. is about 10%. Assume fuel accounts for 20% of logistics costs, or 2% of total price of the goods. Thus if we double the cost of fuel, we're raising the price of the goods by 1%. That will push some manufacturing back to the U.S., particularly manufacturing of heavy or bulky goods (e.g., appliances, earthmoving machinery), goods that have very high value but very low sales volume, and goods where the market demands frequent product changes and fast lead times. Thus you see companies such as Caterpillar, G.E., and specialty tooling and machining companies moving production back to the U.S. Companies making high-volume consumer goods with high labor inputs, such as shoes, clothing, toys, and consumer electronics, will not. More important may be the effects of rapidly escalating labor costs in China, on the order of 18-25% per year, and a rapidly shrinking labor pool in China -- it peaked in 2005 and will decline by 1/3 by 2050. What China has going for it, as a columnist pointed out in the Financial Times today, is Third-World costs and First-World infrastructure. Vietnam, Bangladesh, etc., have really cheap labor but very poor infrastructure.
Effects on railroads of manufacturing returning to the U.S. are quite complex. On the negative side, it diminishes long-haul intermodal freight, and may not present a compensatory domestic intermodal product as the effort is usually made to locate factories within a single day's truck radius of the majority of the customers. On the positive side, general growth of the U.S. economy means more disposable income, which means more electricity, food, and consumer goods consumed, which means more rail movement of coal, grain, and containers.
RWM
Here's a paper on logistics costs -- kind of dense, but might be helpful.
http://ops.fhwa.dot.gov/freight/freight_analysis/econ_methods/lcdp_rep/index.htm
....The "noise" is getting louder....all over the world...! The northern tier of Africa is now in no man's land....Where it's headed, is anybody's guess.
Certainly, we should all be glad the dictators are been rubbed out, now we have to pray some sort of stability will be put in place, but by whom, and when..
The movement started now in this country....{what looks like union busting}, is spreading.....Where are we going....??
It certainly looks like fuel costs around the world for the near future is now in great uncertain territory.....It sure would be great that this massive change might end up with increased production of {almost everything}, back in this country......Right now, things are running a bit scarey around this old world.
Quentin
zugmann Yep, we just have to settle for the standard of living that places like China have. Oh boy, sign me up. Besides, if we don't employ any Americans, then who is going to be able buy the crap made in China? But I guess that kind of long term thinking is too complicated for the lazy bums that just want to maximize their greed today.
Yep, we just have to settle for the standard of living that places like China have.
Oh boy, sign me up. Besides, if we don't employ any Americans, then who is going to be able buy the crap made in China? But I guess that kind of long term thinking is too complicated for the lazy bums that just want to maximize their greed today.
That's correct. Globalization is a convenient means by which we can sidestep labor and envirnomental laws by allowing one to employ cheap labor elsewhere in countries that have no environmental regulations. And since that happens "far away" we can remain smug in our belief that it isn't really happening at all.
cacole Wasn't this topic brought up here about six months ago? And the answer then was, NO WAY! China does NOT allow wood to be imported into their country even if it is to be exported after finishing -- something about bugs.
Wasn't this topic brought up here about six months ago? And the answer then was, NO WAY! China does NOT allow wood to be imported into their country even if it is to be exported after finishing -- something about bugs.
Are you certain? This powerpoint says China is importing around $5 billion per annum of saw logs and lumber. I was at one of our ports a week ago watching a Handymax size ship being loaded with Douglas-fir saw logs, and another with wood chips, and I was told it was for China. But maybe they were kidding me.
http://www.forestprod.org/internationaltrade06zhang1.pdf
cacole Murphy Siding: But, he claims, Brand X send the oak boards to China, has them machined into stair parts, and ships back the finished goods for sale here in the U.S. Wasn't this topic brought up here about six months ago? And the answer then was, NO WAY! China does NOT allow wood to be imported into their country even if it is to be exported after finishing -- something about bugs.
Murphy Siding: But, he claims, Brand X send the oak boards to China, has them machined into stair parts, and ships back the finished goods for sale here in the U.S.
But, he claims, Brand X send the oak boards to China, has them machined into stair parts, and ships back the finished goods for sale here in the U.S.
Thanks to Chris / CopCarSS for my avatar.
Transportation costs are one thing, but if you're a US manufacturer thinking of moving operations overseas look at what you won't have to put up with anymore: No EPA, no EEOC, no ADA, no Social Security payments, no federally mandated ANYTHING for that matter, and no unions. You just pay Ding Hao Enterprises for the finished products and that's it. If we want to get manufacturing back into this country, the "Alphabet Soup" of federal agencies and regs have got to be cut back. Sorry to sound like Rush Limbaugh on this but it's the truth, boys and girls. People go into business to make money, not to support government beaurocracies!
Murphy Siding But, he claims, Brand X send the oak boards to China, has them machined into stair parts, and ships back the finished goods for sale here in the U.S.
Increased fuel prices will affect the modes differentially. The most obvious will be to encourage a shift from long haul truck to intermodal. The reason is that fuel cost is ballpark 25% of truck operating cost and 7-8% of rail operating cost so truck costs will rise faster than rail on any given fuel price rise all else being equal.
Steamship liner rates will increase somewhat with fuel price increases. Whether or not that would encourage domestic production as opposed to foreign enough to make a difference is the real question. My sense is not much, particularly in the short term.
Remember we have hobbled the production side of our economy with all nature of regulation, while many foreign countries have not. The decision of where to source is far more complex that fuel cost, or even freight rates.
Mac
What if manufacturing did increase in the US?
Would the railroads be able to compete domestically?
The price of fuel affects the price of transportation, and the price of transportation affects the price of manufactured goods to the final consumer. So yes, the price of fuel does matter and whenever transportation costs rise one has to look at all alternatives to remain competitive.
Transportation is a necessary evil...in a perfect world all suppliers and all consumers would be right next to each other, and transportation needs would be minimal. But since we don't live in a perfect world we can still minimize our transportation cost, and one way to do that is to minimize the need for transportation services by sourcing local suppliers wherever possible and by selling locally as well.
I hope that manufacturers who use American parts and American labor advertise that fact in large red letters. I can't speak for others, but it would matter to me.
Dave
Lackawanna Route of the Phoebe Snow
As a Regional Manager for a company who manufacturers American made building products, I sure hope the answer is YES. I'm tired of competing with all the Chinese made products, and especially those from a Japanese company who manufacturers in China...BUY AMERICAN.
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