[Read this if you have half an hour - it is more an essay and probably
has become a bit off-topic!]
In the wider context, of course, what has happened is very simple.
1 Over the past two decades substantial R&D establishments that were part
of large industries or governments have been outsourced, cut down, sold or
just closed as the bottom line accounting for the year did not indicate
that they were profitable. This seemed a good idea at the time but I
believe it was a false economy.
Take a simple case of a research labs that is part of a major industry.
If there is a problem in that industry, the labs are there. No questions
- well maybe some budget approval and that sort of thing. What does the
industry do now? That is, if it realises it has a problem? Look for some
consultancy to solve the problem. What incentive does that consultancy
have to solve the problem fully? None. Well, not much anyway. First
they want to get the job finished asap. There's not much wrong with that
but the solution will likely be just enough to get the invoice signed off.
There is no long-term committment - even with so-called partnership
agreements - as in the end the consultancy can walk away or the industry
can place work elsewhere. And since such consultancies often themselves
depend on individual consultants, they often cannot guarantee that the
work can be done in the first place.
And even if the consultancy was originally outsourced from the industry,
after some years work and staff will have drifted away so that the
industry is left without real support. The ability of the industry to
respond to technical problems, let alone optimise the quality of it's
product, is reduced or even removed completely.
This is what has happened to a number of industries here in the UK and it
is I think a problem that governments of all persuasions - including the
one guilty of much of the idea in the first place and currently in
opposition - have shown little recognition of the problem or how to solve
it.
I suspect that if you work out the percentage of people actually doing
technical work compared to the total number of managers, finance
departments, etc in all the companies, it will be worse than a well run
big industry.
2 At the same time, the emerging economy of China with a non-convertible
currency has systematically started playing the free market capitalist
system by suppressing its currency yet buying western debt to keep the
game going. This means that it is undermining all manufacturing world wide
with 1.3 billion population many working for small wages, about 250
million middle class and a very organised command economy. Not everything
is perfect and eventually the wheels will come off the bus. However by
that time, not only toys but almost all commodity products, cars and many
high tech products will be made or owned there - all other manufacturers
will have been driven out of business. I don't know what their real agenda
was in playing with MG Rover but it may be much more than just appearing
to get cold feet at the 11th hour.
3 It is clear that the US has realised this and one of the reasons why
they are relaxed about the massive public and private sector debt is that
it reduces the value of the dollar. This doesn't help them as much as it
should of course - particulary with China - because many commodity prices
are in USD but it does mean that they can ensure that many of their job
losses are exported. Although there have been a lot of manufacturing job
losses in the US, they had actually started recovering 5 or 10 years ago
and, as I indicated before, much of the critical leading edge
semiconductor industry is still based and manufacturing there.
4 The major victims of this are (a) the poor and emerging economies, whose
efforts are also undermined by agricultural subsidies in the EU and US as
well as crippling debt, war and famine, and (b) the economies that have
overvalued currencies, particularly the Euro, where unemployment is 10% or
so partly because of restrictive labour policies but also because the two
major currencies are now being played ping-pong by speculators.
Euro-high, Dollar-low. What chance is there of recovery in Euroland?
Little I fear.
Some industries - particularly those with appalling industrial relations
in the UK during the 60's and 70's - never had sufficient research and
investment in the first place because they suffered from stupid
management, were always firefighting and believed that the market would
remain loyal to substandard products.
This was made worse by UK politicians of the 50's not engaging with other
European countries - where much of our blood and industrial investment had
been lost in two major wars - and leaving the design of the EEC as it was
to others. The whole EU still suffers from those decisions - particularly
to spend the majority of the budget on agriculture to the vast benefit of
one member alone. That member - France - has of course also resisted the
temptation to downsize and outsource their industries as much as possible.
Perhaps they are right. They can afford to be anyway.
It is bitterly ironic that the west has spent a lot of time protecting
it's primary sector - agriculture - while preaching via the WTO of the
need for free trade that will actually sacrifice it's secondary sector.
This has led to the poor countries not being able to trade food so they
have in some instances turned either to 'aid' dependency or cash crops
like drugs, the production of which of course are banned in the
'civilised' west.
This state will carry on until Beijing makes it's currency convertible and
floats it. At that stage, China's economy in USD terms will explode and
become the biggest. Checkmate.
What can we do about it? Apart from promoting military research, not a
lot but we can press our politicians and managers to ensure that the only
product worth making is a high quality product - and even this can be made
for a mass market. If we want a manufacturing industry left at all, today
is not too soon to act. That is the only connection with statistics!
Sorry about that. End of rant!
Best wishes
John
John Logsdon "Try to make things as simple
Quantex Research Ltd, Manchester UK as possible but not simpler"
[log in to unmask] [log in to unmask]
+44(0)161 445 4951/G:+44(0)7717758675 www.quantex-research.com
On Sun, 17 Apr 2005, alan truelove wrote:
> delighted to see this intelligent discussion on RADstats.
> Exactly the same content has been seen recently in US publications.
> There has been a staggering loss of manufacturing jobs in the US over the
> past few years
> Apologists like the Wall St Jrnl claim this will be made up by more
> 'hi-tech' Research and Development. This appears to be a bald-faced and
> knowing lie.
> R & D, new technology, jobs go where the manufacturing is done. China,
> Bangladore, even Switzerland, etc.
> Statistics and Operations Research (Management Science) has simiilarly gone
> down the tubes. The business of local OR & MS societies is largely
> organizing job fairs. I wonder how many of us teaching Management Science
> have had the uncomfortable thoughts "I myself have used this procedure in my
> consulting practice,[ and most likely in a Military Application ] but you
> poor guys - and gals - will almost certainly never come within a sniff of
> it" .. Hands up, how many have used Dykstra shortest route for real, and for
> money? I have, 3 times so far, (Military) and loved it of course.
> The one job that floats is IT - and very few entry level jobs at that.
> Highly sophisticated tools (Remedy, Peregrine, Oracle, VB.Net ..) with
> massive and slick Internet components, means that 1 or 2 consulltants can do
> the work of the good old COBOL teams .. all very nice for us of course.
> You see us in the local Borders browsing over the latest thick books, then
> laying out $120 a piece.
> The User group for one hoary old tool -Remedy - carries increasing listings
> for US, and world-wide jobs.
> This is all a shaking-out of 'Hi-tech' (incl Statistics) jobs, as well
> as make-work Middle Management and lower jobs (Investment Adviser, Help
> Desk, User Support) which has been in the works for 10-20 years. The result
> will be a permanent, sharply lowered standard of living for Joe Blow (B.Sc.
> or MBA) and his family in the Western Countries. and a rapid one-way trip to
> a rather nasty retirement Condo in the middle of Fla, or the Euro
> equivalent...
>
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