Dan:
Well, it's slightly more interesting than that. I guess I could title it "Anecdotes Of the Business Cycle and International Logistics."
So our company is at the end of the 2nd quarter, and we have a big order shipping out to a customer. The bosses are frantic and hysterical to get the revenue booked in Q2. The rules say we can't book revenue until the product ships from the factory; more specifically, until we get a signed Forwarder Cargo Receipt from the forwarder.
Now we introduce a development from the world of international trade regulation. Apparently there goes into effect on July 1 a reduction in "duty drawbacks." My understanding is, if a US importer pays duty on an import, then takes that item and re-exports it (or something made from it), they can recover a lot of that duty. After July 1st, they can recover less.
Thus, all the buyers are pressuring the Chinese manufacturers to ship by June 30 to secure the higher duty drawback rate.
Thus, Chinese logistics are in gridlock. Thus, our $500K of mouse pads can't get to the forwarder, we can't get the receipt, and we can't book the revenue.
Our agent in Malaysia sent us pictures taken by the forwarder in Shanghai to document the traffic situation. Not particularly interesting in and of themselves, but interesting for me to see what's behind my personal torment.
Incidentally, my tongue-in-cheek comment on the situation was "we'll just book it next week." They looked at me with slack-jawed incomprehension.
Andrew:
Why is there such activity over there when I am finding it hard to find meaningful productive work here?
China & North Korea's success.
How do these countries with limited infrastructure grow so quickly?
The US preserved from the disruptions of war & famine has accumulated vast pools of cash (rich).
Technology has enabled the delivery of quality products, regardless of geography.
Seeking low price the US buys from the cheapest producers.
Why should this bother me? The rich sharing with the poor.
Years of xenophobic fueled propaganda of the inferiority of other nations and their peoples and the selfish (but logical) desire to invest in my community.
But cheap wins out.
What assurance do we have that this is not harming our interests?
Do the common citizens of these other countries enjoy life as much as we?
Net cash outflow, sort of like what I am experiencing.
China & North Korea's success.
How do these countries with limited infrastructure grow so quickly?
The US preserved from the disruptions of war & famine has accumulated vast pools of cash (rich).
Technology has enabled the delivery of quality products, regardless of geography.
Seeking low price the US buys from the cheapest producers.
Why should this bother me? The rich sharing with the poor.
Years of xenophobic fueled propaganda of the inferiority of other nations and their peoples and the selfish (but logical) desire to invest in my community.
But cheap wins out.
What assurance do we have that this is not harming our interests?
Do the common citizens of these other countries enjoy life as much as we?
Net cash outflow, sort of like what I am experiencing.
Me:
I bought a book by George Soros a few months ago called "On Globalization". I have not read it yet.
According to sailboat people (cruisers) America has the best and cheapest food.
All the new semiconductor fabrication facilities (fabs) are being built in SE Asia at a cost $2 billion and up, each. Similar facilities are required to make LCD flat panel displays. When they built fabs here, it was a big deal, people blabbing about how many jobs they would provide. By my estimate, the cost of the fab was about equal to the gross wages paid to the entire workforce for the next 20 years. I doubt the fab will last that long. I imagine that to stay competitive, all the equipment will need to be replaced within five years, and that is at least half of the cost of the fab.
So building these fabs in Asia might be saving them a few percent on manufacturing costs, but I doubt it even reaches ten percent. Still, that could amount to 100 million dollars, which is still a considerable amount.
Nike (also headquartered here) was lambasted in the press for running sweat shops in SE Asia. What the protesters didn't say was that for every person working there, there were three or four more wanting the job.
On PBS last night there was a talking head saying that real wages in America are at the same level they were in 1974. Worker productivity has doubled.
We have been running a trade deficit with Japan for years, ten? twenty? I don't know how long. Salaryman gets ground to dust.
US is trying to get China to adjust their exchange rate. China is holding it artificially low. Not sure what this is all about. Keeping the populace down, keeping the commies in power?
We bought a Japanese SUV in January. Consumer Reports OK'd it. But you look at American SUV's, and they haven't changed in ten years.
Update March 2016 replaced missing pictures.
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