This industry does not have the contractual (union) issues that the auto industry has so they should be able to weather the storm pretty well by eliminating the less profitable plants or product lines.
Posted on 04/23/2009 12:37:25 AM PDT by bruinbirdman
Don't blame the banking crisis for the bad economy, says author of 1970's eco-doom classic.
The global economic crisis is like a Samurai movie, quips Dennis Meadows co-author of the 1970s eco-doom report, 'Limits to Growth.' In a Samurai film's inevitable finale, sword wielding hero and villain inevitably clash in a flurry of steel. The two halt and glower at each other before one, always the miscreant, collapses to the ground dead.
The baddy was "already dead, but didn't know it," Meadows explained in Tokyo.
The same is true in the current crisis for glowering corporate giants such as carmakers. They "will take some time to fall over, but they are dead," says the professor emeritus.
Meadows, in Tokyo to receive the Japan Prize, a Japanese version of the Nobel Prize that carries a cash award of $500,000, blames the worst global economic downturn since the Great Depression on oversupply. The world can produce more than 90 million cars a year, but demand is only 60 million this year, according to CSM Worldwide. Aircraft builders can manufacture twice as many planes a year as the world needs, and the supply of steel used to build them and other machines is way beyond consumption levels, argues Meadows.
The current capacity glut is part of a 50-year cycle identified by Russian economist Nikolai Kondratiev. Put simply, consumers get more affluent and buy more cars. In turn carmakers order more steel. Steel mills therefore employ more people, who then have the money to buy more cars. Suddenly, there is saturation and companies find themselves grossly over-invested, Meadows explained.
The last time that cycle bottomed out was in the 1930s. The accumulation of debt in recent decades postponed the world's next 50-year date with depression, but lead to the crisis that toppled the global
(Excerpt) Read more at forbes.com ...
This industry does not have the contractual (union) issues that the auto industry has so they should be able to weather the storm pretty well by eliminating the less profitable plants or product lines.
aka overproduction the last time around. I have made comments on this forum to this effect, only to be pooh-poohed. My interpretation is relatively more sophisticated than the feted Meadows, however. It's not simply a case of manufacturers overinvesting in production capacity, it's a result of outsourcing, or more generally, cheap foreign labor, which has been pervasively incorporated into the US manufacturing base. ( Outsourcing technically refers to the contracting with other firms to do work formerly done internally, rather than the incorporation of foreign labor into the firm itself, which is widely practiced. ) This displaces US wage earners, and lowers the demand for products, even though these products are being produced more cheaply.
It's "the race to the bottom", and we're winning it.
oh please.
Its how the market makes adjustments. If you produce more than customers want, time to cut back.
That is not why the economy is tanking, more of a symptom
We should all go to law school.
It’s “the race to the bottom”, and we’re winning it.
Yea! We’re winning! We’re winning!....oh, wait. Nevermind.
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