News Are Airlines Outsourcing Maintenance to Other Countries Increasingly?

[edward]

"A new world economy -
Balance of power will shift to the East as China and India evolve"
Businessweek Aug. 18, 2005

http://www.msnbc.msn.com/id/8998389/

From the same link:

But visit the office towers and research and development centers sprouting everywhere, and you see the miracle. Here, Indians are playing invaluable roles in the global innovation chain. Motorola, (MOT) Hewlett-Packard (HPQ), Cisco Systems (CSCO), and other tech giants now rely on their Indian teams to devise software platforms and dazzling multimedia features for next-generation devices.

I have seen this coming for a long time now. Some, however, see this situation as some kind of a new fun and games adventure for American workers.
It will be a brave new world alright, except for the very wealthy, few Americans will have any participation.

 

[The Smoking Man]

From the same link:



I have seen this coming for a long time now. Some, however, see this situation as some kind of a new fun and games adventure for American workers.
It will be a brave new world alright, except for the very wealthy, few Americans will have any participation.

They are also moving R&D to China in a massive way.

Face it, the USA is a saturated strained market.

Innovation in this case is 'What do people in these developing nations want in a product' and not 'how can we make an American throw away his old one in favour of a new one'.

There is just over 1/3 the population of the Earth living in China and India ... well over 2 billion people.

Why would R&D be centered around an economy that has a mere 300 million people or so when the largest market has different needs and requirements?

 

[russ_watters]

There is just over 1/3 the population of the Earth living in China and India ... well over 2 billion people.

Why would R&D be centered around an economy that has a mere 300 million people or so when the largest market has different needs and requirements?

Its pretty simple: the East isn't the largest market for the types of products you are talking about. Because the per capita gdp in those countries is so low that they can't buy most of the products that you can sell to Americans in anywhere near the quantities in which Americans buy them. For example, roughly 18 million computers were sold in China in 2003 while 160 million were sold in the US.

While Americans buy roughly 20 million cars a year, the Chinese buy about 5 million.

With all those people, a substantial fraction of the GDP goes to basic necessities, so in order for China's purchases of manufactured goods to exceed the America's, the Chinese GDP needs to be substantially higher than the US's. Therein lies the fallacy in directly comparing GDPs.

And yes, I know the Chinese economy is growing quickly. They may surpass the US in computer sales in a decade, but it'll be several decades before they do with most manufactured goods.

 

[The Smoking Man]

Its pretty simple: the East isn't the largest market for the types of products you are talking about. Because the per capita gdp in those countries is so low that they can't buy most of the products that you can sell to Americans in anywhere near the quantities in which Americans buy them. For example, roughly 18 million computers were sold in China in 2003 while 160 million were sold in the US.

While Americans buy roughly 20 million cars a year, the Chinese buy about 5 million.

With all those people, a substantial fraction of the GDP goes to basic necessities, so in order for China's purchases of manufactured goods to exceed the America's, the Chinese GDP needs to be substantially higher than the US's. Therein lies the fallacy in directly comparing GDPs.

And yes, I know the Chinese economy is growing quickly. They may surpass the US in computer sales in a decade, but it'll be several decades before they do with most manufactured goods.

Interesting you use 2003 figures and only quote for China instead of the combined purchasing power of China and India.

Basic necessities ... We have 85% cell phone market penetration in China and one of the most advanced and unified communications backbones over here.

Cars ... the government actively discourages the purchase of cars here because (a) purchasing happens around cities with Shanghai having 20 million people alone and (b) there isn't enough gasoline to run them all.

The population of Beijing and Shanghai exceeds the populations of Australia and of Canada!

GDP is a poor estimate when it comes to purchasing power because it averages income. I hate to tell you this but the 'citizens' (ie. the people who live in cities) make far more than you imagine and have purchasing power that isn't 'drempt of in your philosophy'.

China has for example past Australia, the UK and Germany in the purchase of automobiles.

Also, if you take a look at the stats, most analysts state the sales of cars went down in 2003/04 because the punters are waiting for the lifting of tarrifs which happens completely in 2005.

Now as far as household appliances ... who do you think is taking the cake here... Haier just tried to buy the failing Whirlpool and Hoover brandnames.

Believe me, ... everyday goods will quickly outstrip the USA especially when the USA contines on down the spiral.

 

[russ_watters]

Interesting you use 2003 figures and only quote for China instead of the combined purchasing power of China and India.

Partly laziness. But a quick google shows computer sales in India are even lower than in China: about 2.5 million. The other part of the reason is why are you comparing a continent to a country? It doesn't make sense.

Basic necessities ... We have 85% cell phone market penetration in China and one of the most advanced and unified communications backbones over here.

Source? According to THIS article, its only 25%. And cell phones are a lot easier than other "needs" because they require significantly less infrastructure than, say, electricity. Regardless, its the rural areas that will get the infrastructure last and that is an enormous task.

Cars ...

I used cars as an example because for most Americans, its the second most expensive thing they own. Feel free to provide another example.

The population of Beijing and Shanghai exceeds the populations of Australia and of Canada!

That's my point: the markets of the east are big due to the mass of people alone, not due to an actual relative strength: ie, a per capita one.

GDP is a poor estimate when it comes to purchasing power because it averages income.

Actually, I think that makes it a good estimate, which is precisely why you don't want to use it:

I hate to tell you this but the 'citizens' (ie. the people who live in cities) make far more than you imagine and have purchasing power that isn't 'drempt of in your philosophy'.

Ironic - you were here for the discussions on income equality, weren't you? Yes, I suspect if you slice off the top 3rd of the population of China, you'll get a population that is almost half as prosperous (estimate - it could be closer to 2/3) as a comparable Western one, but what of the other 2/3 of the population? Don't they matter?

China has for example past Australia, the UK and Germany in the purchase of automobiles.

I should hope so - those countries have on the order of 1/10 the population of China.

Believe me, ... everyday goods will quickly outstrip the USA especially when the USA contines on down the spiral.

Heh - spiral? Must be a negative spiral, since the US GDP is still increasing at a pretty rapid clip. Regardless, "quickly" is a pretty relative term: my guess is it'll be about 50 years. The fastest it could possibly be is about 20.

For the most part, you didn't address my points, so let me restate them a little more concisely:

1. It will be several decades before China overtakes the US in raw economic strength (or if you want to lump all the east together, you may as well lump all the west together too).
2. However, most of that will continue to go toward necessities and infrastructure, meaning that China still has a ways to go before competing with the US's primary economic strength: consumer goods. If I had to guess, about 50 years.
3. And even then, that's still a raw number, which will not reflect the actual economic development of the country. For consumer products, the concentration of the market matters more than the overall size, and because of the uneven-ness of the economic growth, it could well be a century before China overtakes the US as the choice market for consumer products.

Caveat: my estimates are based on current growth rates and the reality of economics is that it changes much faster than my estimates allow for. So the most that can really be said with any veracty is that China won't be overtaking the US in anything but raw GDP and a few specific markets in the next 20 years.

 

[The Smoking Man]

Partly laziness. But a quick google shows computer sales in India are even lower than in China: about 2.5 million. The other part of the reason is why are you comparing a continent to a country? It doesn't make sense. Source? According to THIS article, its only 25%. And cell phones are a lot easier than other "needs" because they require significantly less infrastructure than, say, electricity. Regardless, its the rural areas that will get the infrastructure last and that is an enormous task. I used cars as an example because for most Americans, its the second most expensive thing they own. Feel free to provide another example. That's my point: the markets of the east are big due to the mass of people alone, not due to an actual relative strength: ie, a per capita one. Actually, I think that makes it a good estimate, which is precisely why you don't want to use it: Ironic - you were here for the discussions on income equality, weren't you? Yes, I suspect if you slice off the top 3rd of the population of China, you'll get a population that is almost half as prosperous (estimate - it could be closer to 2/3) as a comparable Western one, but what of the other 2/3 of the population? Don't they matter? I should hope so - those countries have on the order of 1/10 the population of China. Heh - spiral? Must be a negative spiral, since the US GDP is still increasing at a pretty rapid clip. Regardless, "quickly" is a pretty relative term: my guess is it'll be about 50 years. The fastest it could possibly be is about 20.

For the most part, you didn't address my points, so let me restate them a little more concisely:

1. It will be several decades before China overtakes the US in raw economic strength (or if you want to lump all the east together, you may as well lump all the west together too).
2. However, most of that will continue to go toward necessities and infrastructure, meaning that China still has a ways to go before competing with the US's primary economic strength: consumer goods. If I had to guess, about 50 years.
3. And even then, that's still a raw number, which will not reflect the actual economic development of the country. For consumer products, the concentration of the market matters more than the overall size, and because of the uneven-ness of the economic growth, it could well be a century before China overtakes the US as the choice market for consumer products.

Caveat: my estimates are based on current growth rates and the reality of economics is that it changes much faster than my estimates allow for. So the most that can really be said with any veracty is that China won't be overtaking the US in anything but raw GDP and a few specific markets in the next 20 years.

I was never talking about 'countries' I was talking about MARKETS.

The figures you gave of 168 million ... where did you get it? According to http://in.tech.yahoo.com/050126/137/2j8it.html sales are far short of what you claim.

Chinese PC sales rose 19 percent to 16 million units last year, according to preliminary International Data Corp (IDC) figures, while U.S. demand grew 11 percent to 58 million. Indian growth last year was 31 percent.

Though regional economic engines may cool down in 2005 as the U.S. economy slows, Asian PC demand was likely to stay resilient.

"In China and India, there are 3 billion people, of which 80 to 90 percent do not own or have access to computing, and while not completely isolated from worldwide economic growth, it appears that demand for PCs is going to remain strong," he added.

Asia Pacific ex-Japan contributed about 46 percent of Intel's total revenue in the fourth quarter, with Japan accounting for about 9 percent.

Intel's microprocessors, the "brains" of a personal computer, are used in 80 percent of the world's PCs.

The Asia Pacific ex-Japan saw total PC shipments of 34 million units last year, 16 percent higher than in 2003. Growth is expected to ease to 11 percent this year, IDC said.

This all backs my claim that growth has its major potential in Asia.

You're right I had misread the market penetration of Cells in China in this article: http://www.crn-india.com/features/stories/44951.html Which does state:

A key indicator of a country''''s consumption potential is the total number of cell phone users in that country In China the cell phone users have already equaled the landline phones installed As on end-November 2002, China had 20 03-crore cell phone users According to COAI, the total number of cell phone users in India (June 2003) are 1 52 crore India today has 3 6 crore (till April 2003) landline phones installed In China this figure is 21 3 crore (till November 2002)

What we are looking at is the growth of cell phone use because, as you have pointed out, connections to the backbone in rural areas has been outstripped by demand.

Regardless of WHY it is happening, the sales indicate concentrated areas of consumption indicating markets that exceed US consumption.

Cars are now a false indicator due to as I said, the fact that it costs more than the price of a car to actually license a car in Shanghai ... 34,000 RMB to buy a plate when a used VW Santana can be purchased for $15,000 AND they have limited the number of licences for sale.

Now the reason WHY I am comparing Asia to the USA is to go by your false assumption that the USA is not in competition with a product type in demand in a market.

There are currently trade agreements between the Chinese and India creating a market potential of 3 billion people. While America does see a larger demand for luxury goods, the combined Asian market has created a LARGER secondary market in utility goods which now require another form of innivation in R&D.

While you are experiencing mediocre sales in refrigerators with bluetooth connections for example, sales of simple utilitarian refrigerators with super-insulation and efficient motors/vacuum pumps (due to unstable electricity supplies) are going through the roof.

This is the new market.

What is currently being seen in the USA is viewed as a false market since it is 'credit driven'. China and India are cash driven societies since banks are reluctant to make personal loans.

All in all, the traditional view of the American Markets can not be applied to SE Asia and much of the world any more. There are too many new factors.

The view of The USA compared to China is, for example like trying to compare a country (China) to all of America and forgetting about Brazil, Argentina and Peru.

That is why we must discuss Markets instead of countries.

Now while the GDP of America is 'enviable' from one point of view, it is absurd from another. The question simply is ... how do you compete when your market is so far out of kilter with the rest of the world? Sure you can produce cars but who can buy them?

Germany (BMW) is currently manufacturing their product in China at a fraction of the price due to lower costs and they are going like gangbusters here. The USA is also manufacturing cars here for sales in this market. This is HOW your companies are having to remain competetive. So yeah, American cars are sold in China are going up and your corporate profits are up substantially however you are still closing factories AND having to develop vehicles that fit into this market.

You saw me mention the VW Santana ... what is it? It's a car specifically developed for the Chinese market BY VW to fit this market. Where was it developed? ... HERE from the components of other VW models.

In the early 90's, the USA held 95% of all patents issued worldwide. You are now sitting with about 45% of the current patents. That alone should scare the sh!t out of you.

The fact that the market is driven by the sheer number of people as opposed to the GDP ... that's absurd. Companies don't care HOW they tap a growing market. They are not foing to sit on the sidelines waiting for China and India to come up to the level of the US before they introduce product. They are simply going to introduce product that suits the market.

So yeah, your idea is to become like Britain in the late 50's, early 60's with your blinders on to the 'new order'. If you want to sell Rolls' and British Leyland products to a shrinking elite, go ahead.

 

[Skyhunter]

Russ you keep saying how unemployment is so low. And based on the Labor department statistics it is currently at 5%. But look what happens when you combine job creation with population growth.

In Jan 2001 there were 132.388 million Americans employed. Unemployment was 4.2% with a civilian labor force participation rate of 67.2%. In Dec 2004 there are 132.266 million Americans employed. Unemployment is 5.4% with a civilian labor force participation rate of 66.0%.

I couldn’t find the exact job numbers I was looking for but here is a fairly accurate estimate.

The Population of the US increased by 14,312,228 since Bush took office.
New job created in since Bush took office is 2,346,000. This leaves approximately 12 million new people without jobs. At 66% participation new jobs should be 9,446,070.

So how can we use the number of people receiving benefits as a measure of how many people are not working?

What are the other 7,100,070 people doing?

 

[SOS2008]

Russ you keep saying how unemployment is so low. And based on the Labor department statistics it is currently at 5%. But look what happens when you combine job creation with population growth.

In Jan 2001 there were 132.388 million Americans employed. Unemployment was 4.2% with a civilian labor force participation rate of 67.2%. In Dec 2004 there are 132.266 million Americans employed. Unemployment is 5.4% with a civilian labor force participation rate of 66.0%.

I couldn’t find the exact job numbers I was looking for but here is a fairly accurate estimate.

The Population of the US increased by 14,312,228 since Bush took office.
New job created in since Bush took office is 2,346,000. This leaves approximately 12 million new people without jobs. At 66% participation new jobs should be 9,446,070.

So how can we use the number of people receiving benefits as a measure of how many people are not working?

What are the other 7,100,070 people doing?

Agreed -- benefits are not a good indicator for two reasons. I know three people who were laid off. They were still unemployed after their benefits ended for as much as two more years. All three people have jobs again, but two have jobs in different industries at a fraction of what they used to earn. So when we look at job creation, we must also realize these jobs are not as high-end. It's all just Bush-s**t.

 

[Smurf]

Ironic - you were here for the discussions on income equality, weren't you? Yes, I suspect if you slice off the top 3rd of the population of China, you'll get a population that is almost half as prosperous (estimate - it could be closer to 2/3) as a comparable Western one, but what of the other 2/3 of the population? Don't they matter?

Actually, no. Because just 1/3 of China's population is still more than 400 million people. I think GM trys to tap markets much much smaller than that.

 

[edward]

The Population of the US increased by 14,312,228 since Bush took office.
New job created in since Bush took office is 2,346,000. This leaves approximately 12 million new people without jobs. At 66% participation new jobs should be 9,446,070.

So how can we use the number of people receiving benefits as a measure of how many people are not working?

What are the other 7,100,070 people doing?

Over two million of them are in prison.
As my mother used to say: "Idle hands are the devils plaything."


Most of the rest of them are here:

The official rate is the percentage of all workers who are unemployed, expressed as unemploy- ment/labor force. The numerator, unemployment, is the number of jobless people who have actively looked for work during the last four weeks. The denominator is the number of people in the labor force, which equals employment plus unemployment, or people who have jobs plus those who are unemployed as defined in the numerator.

This measure understates unemployment in two key respects. First, unemployment excludes involuntary part-timers—people who want full-time work but have to settle for part-time or split-week schedules. Second, it excludes “discouraged workers”—those who believe they can no longer find work and stop looking or who indicate they want a job and have looked for work sometime in the indefinite recent past. People in this category are no longer actively seeking work and are therefore classified as “not in the labor force” (neither employed nor unemployed).

http://zmagsite.zmag.org/Feb2004/duboff0204.html

 

[solutions in a box]

There seems to be no hint of ethics left in corporate America.

The following link describes illegal aleins who were caught working in an aircraft maintenance facility in Greensboro S.C.

http://www.usatoday.com/travel/news/2005-04-18-air-security_x.htm

Were these jobs that Amercans won't do?

More inside outsourcing:

Firm Charged For Supplying Ilegal Aliens to Package MREs for U.S. Military – On September 30, 2004, the U.S. Attorney in Houston unsealed a federal indictment charging a Texas firm with providing illegal alien workers to a plant that packaged combat meals for the U.S. military. The indictment charged the Tollin Group Inc. (Remedy Intelligent Staffing), with conspiracy to falsify Employment Eligibility Verification Forms to conceal from the Joint Terrorism Task Force that it had illegally and unlawfully hired illegal aliens as employees to work for the Wornick Co. Wornick is a company that assembles the U.S. military's packaged food called MREs, or "Meals Ready to Eat." Wornick was the recipient of a $47.2 million contract to produce and deliver more than 1.1 million MREs between February and May 2003 to support U.S. military forces in Iraq. Ten Remedy temporary employees, who worked at Wornick and were also indicted in July 2004, have been arrested and c onvicted of the misdemeanor offense of fraud in connection with the unlawful possession of a false Social Security number following guilty pleas.

More jobs Americans supposedly would't do:
Note this is a federal government website. ICE = Immigration and Customs enforcment.

http://www.ice.gov/text/news/factsheets/worksite_cases.htm

 

[edward]

More inside outsourcing:More jobs Americans supposedly would't do:
Note this is a federal government website. ICE = Immigration and Customs enforcment.

http://www.ice.gov/text/news/factsheets/worksite_cases.htm

I understand that the illegals are spreading pretty much nationwide, but I suppose your being in AZ gives you a more up close and personal look at the situation.

I thought it all was harmless at first, but when I began looking up the sheer numbers about a year ago, I could see that we were diving headlong into another problem.

I think what really made the immigration of illegals much worse was when Bush, in an attempt to win the Latino vote during the last election, started using the "magic" word ; Amnesty. And then promised to initiate a guest worker program in a country already full of uninvited guest workers.

 

[Skyhunter]

More inside outsourcing:

Firm Charged For Supplying Ilegal Aliens to Package MREs for U.S. Military – On September 30, 2004, the U.S. Attorney in Houston unsealed a federal indictment charging a Texas firm with providing illegal alien workers to a plant that packaged combat meals for the U.S. military. The indictment charged the Tollin Group Inc. (Remedy Intelligent Staffing), with conspiracy to falsify Employment Eligibility Verification Forms to conceal from the Joint Terrorism Task Force that it had illegally and unlawfully hired illegal aliens as employees to work for the Wornick Co. Wornick is a company that assembles the U.S. military's packaged food called MREs, or "Meals Ready to Eat." Wornick was the recipient of a $47.2 million contract to produce and deliver more than 1.1 million MREs between February and May 2003 to support U.S. military forces in Iraq. Ten Remedy temporary employees, who worked at Wornick and were also indicted in July 2004, have been arrested and c onvicted of the misdemeanor offense of fraud in connection with the unlawful possession of a false Social Security number following guilty pleas.

At $42.91 a meal I would think they could afford to pay an American to work there.

 

[russ_watters]

Russ you keep saying how unemployment is so low. And based on the Labor department statistics it is currently at 5%. But look what happens when you combine job creation with population growth.

In Jan 2001 there were 132.388 million Americans employed. Unemployment was 4.2% with a civilian labor force participation rate of 67.2%. In Dec 2004 there are 132.266 million Americans employed. Unemployment is 5.4% with a civilian labor force participation rate of 66.0%.

I couldn’t find the exact job numbers I was looking for but here is a fairly accurate estimate.

The Population of the US increased by 14,312,228 since Bush took office.
New job created in since Bush took office is 2,346,000. This leaves approximately 12 million new people without jobs. At 66% participation new jobs should be 9,446,070.

So how can we use the number of people receiving benefits as a measure of how many people are not working?

What are the other 7,100,070 people doing?

C'mon, Skyhunter (SOS, edward), you're smarter than that. Apply some critical thinking to your scenario, there. Do a reality check: Ie, if there were 7 million new and unaccounted-for unemployed people, they'd be dragging down the economy in ways that just aren't happening. Household wages would be down because more people would be out of work. Poverty rates would go up. Per capita gpd would drop. Etc, etc, etc. Is any of that happening? (Answer: no).

The flaw in your analysis is simple: population growth and workforce growth don't exactly correlate. In particular, the first baby boom generation is in the process of retiring as we speak. In some cases, I'm sure, people retired earlier than they really wanted to because of the job situation, but they still retired and left the workforce.

Don't make up numbers. If you can find some actual workforce data that supports your point, by all means post it, but it appears your entire thesis is based on not believing the data that you do have!

 

[Astronuc]

Russ you keep saying how unemployment is so low. And based on the Labor department statistics it is currently at 5%. But look what happens when you combine job creation with population growth.

In Jan 2001 there were 132.388 million Americans employed. Unemployment was 4.2% with a civilian labor force participation rate of 67.2%. In Dec 2004 there are 132.266 million Americans employed. Unemployment is 5.4% with a civilian labor force participation rate of 66.0%.

I couldn’t find the exact job numbers I was looking for but here is a fairly accurate estimate.

The Population of the US increased by 14,312,228 since Bush took office.
New job created in since Bush took office is 2,346,000. This leaves approximately 12 million new people without jobs. At 66% participation new jobs should be 9,446,070.

So how can we use the number of people receiving benefits as a measure of how many people are not working?

What are the other 7,100,070 people doing?

Well, there are lies, d****d lies, and statistics.

It is possible that the criteria are selected to report a favorable version of the economy. On the other hand, children and adults who are students are not considered in the pool of elligible workers.

In the unemployment category, millions of people are excluded if they are employed part-time, in the penal (aka criminal justice) system, retired (even prematurely), discouraged (gave up), . . . . So the 'real' unemployment may be considerably higher - about that of Europe.

There is also under-employment - people looking for higher paying jobs, but being unable to find them, or people looking for full-time jobs, but only finding part-time or temporary. Anecdotally, I know of several people who were laid off and had to accept jobs with 30-50% lower income (wages or salaries) than they previously had. Many of the jobs created during the Bush administration have actually been low-wage/low-salary jobs. However, I have heard of higher salary jobs increasing during the last three months. But I have also heard of pending layoffs and bankruptcy in some large companies.

I just learned of an increase in home foreclosures in Houston. The economy is doing very well for a few, somewhat OK for many, and mediocre or rather poorly for many others.

And just watch Delta and Northwest Airlines - bankruptcy is a strong possibility. While I was delayed in Detroit this past weekend, and Airbus plane was being held at the gate while NW Airlines was waiting for a qualified mechanics to fix the APU, which had apparently malfunctioned.

For some numbers, not necessarily real, but more or less 'official' - try the Bureau of Labor Statistics. ( http://www.bls.gov/ ) and Bureau of Economic Analysis ( http://www.bea.doc.gov/ ).

 

[russ_watters]

I was never talking about 'countries' I was talking about MARKETS.

A "market" is an ill-defined concept without much value. North America (not just the US) is considered a "market" for many products - yet you were just using the US.

The figures you gave of 168 million ... where did you get it? According to http://in.tech.yahoo.com/050126/137/2j8it.html Which does state:What we are looking at is the growth of cell phone use because, as you have pointed out, connections to the backbone in rural areas has been outstripped by demand.

While America does see a larger demand for luxury goods, the combined Asian market has created a LARGER secondary market in utility goods which now require another form of innivation in R&D.

While you are experiencing mediocre sales in refrigerators with bluetooth connections for example, sales of simple utilitarian refrigerators with super-insulation and efficient motors/vacuum pumps (due to unstable electricity supplies) are going through the roof.

This is the new market.

"Higher-end" goods (new computers, new cars, that bluetooth refrigerator, etc) require significantly more R&D than a refrigerator with more insulation. That's part of the reason I've said (perhaps in another thread) that I'm not too concernd about my job as an engineer: for the most part, developing countries develop with hand-me-down technology from developed countries. Its partly a different issue, but speaking of refrigerators, one of my reasons for disliking the Kyoto treaty is that the vast majority of the R&D for things like refrigerators without CFCs is done in and paid for by the West. The same applies to other pollution technologies. Along the same vein, China may be buying 19 million computers, but they are last year's computers and the R&D for them has already been paid-for by American consumers. That is the last thing developing countries achieve parity in because it requires the general population to be prosperous enough to buy such things as first-generation computers.

What is currently being seen in the USA is viewed as a false market since it is 'credit driven'. China and India are cash driven societies since banks are reluctant to make personal loans.

That's another discussion, but people have been talking about the US economy imploding due to too much debt for decades. It may happen, but in the meantime, that money moving around in here is real enough to buy a house with, and that's as real as money needs to be.

Now while the GDP of America is 'enviable' from one point of view, it is absurd from another. The question simply is ... how do you compete when your market is so far out of kilter with the rest of the world? Sure you can produce cars but who can buy them?

That's a catch-22, of course, but it cuts both ways: as China develops, more and more people will be able to buy American cars (for example) and our trade deficit will vanish. That's also the flaw in the common capitalism-exploits-poor-countries argument (I haven't seen it from you): a rich country provides a better market for goods, so it is to our benefit to see countries become rich.

Germany (BMW) is currently manufacturing their product in China at a fraction of the price due to lower costs and they are going like gangbusters here. The USA is also manufacturing cars here for sales in this market. This is HOW your companies are having to remain competetive. So yeah, American cars are sold in China are going up and your corporate profits are up substantially however you are still closing factories AND having to develop vehicles that fit into this market.

BMW also manufactures cars in North Carolina. Again, the catch-22 from above cuts both ways: as more Chinese are able to buy cars, more plants will be built in China to sell cars in China. But that's not so much moving manufacturing overseas as it is building new manufacturing overseas. And it evens out.

In the early 90's, the USA held 95% of all patents issued worldwide. You are now sitting with about 45% of the current patents. That alone should scare the sh!t out of you.

Why? For a country with 1/20th of the world's population to own half the technology is pretty damned spectacular.

The fact that the market is driven by the sheer number of people as opposed to the GDP ... that's absurd. Companies don't care HOW they tap a growing market. They are not foing to sit on the sidelines waiting for China and India to come up to the level of the US before they introduce product. They are simply going to introduce product that suits the market.

They care if their business model requries drawing a 10mile radius circle and calculating how many people in it can buy their prduct.

 

[The Smoking Man]

Hmm - I googled, but I may have been looking at the data for American vendors not domestic sales. So the Chinese market is 1/4, not 1/10th the size of the American one - still a good 5 years at current growth rates until it catches up (and that doesn't take into account what people pay for a computer here vs there).

Well Russ, you have to question your numbers because 168 million computers in sales means that just over 50% of the population of the USA would be purchasing a new computer every year. If we take 1/3 of the population as being the number in households (ignoring the fact that 2.5 kids would be the average), that would mean EVERY household is buying an average of more than one brand new state-of-the art computer every year... Bullsh!t and I am surprised you would even quote it as a possibility.

Now the reason I lump China and India together is not simply because of the 'sales in a specific area' but because of the double threat of software and hardware development.

Hardware is definitely coming out of China.

However, I am sure you have noticed the reduction in H1 visas but the continued loss of jobs in the software industry to India.

What they pay for a computer 'here and there' ... ah yes ... Good time to bring up your protectionist tarriffs.

Pop your computer and mine and we will see almost identical components produced for the same funds in the same factories on the same motherboards etc.

I go http://www.compusa.com/specials/sales/sale82105/default.asp?prod_group_category_id=1726&pfp=fod and seriously have to wonder when my clients are also Samsung who just moved worldwide production and R&D to Suzhou, Logitec, and Mitac has 7 factories in Kunshan ... about 15 minutes by train.

"Higher-end" goods (new computers, new cars, that bluetooth refrigerator, etc) require significantly more R&D than a refrigerator with more insulation. That's part of the reason I've said (perhaps in another thread) that I'm not too concernd about my job as an engineer: for the most part, developing countries develop with hand-me-down technology from developed countries. Its partly a different issue, but speaking of refrigerators, one of my reasons for disliking the Kyoto treaty is that the vast majority of the R&D for things like refrigerators without CFCs is done in paid for by the West. The same applies to other pollution technologies.

LOL, Russ, Russ ... The Irony is just too sweet. One of my clients here is Emmerson. If you check them out, they are an American EOM supplier of compressor components to the refrigeration industry. Your attempt to conjur up ideas of ice-boxes with 1' thick walls of insulation does not quite fly. Emmerson's R&D is now here in Suzhou and what you THINK is being developed in the USA is actually being tackled here by multiple Chinese teams along with 'developing nation' requirements, each one of the members of these teams probably makes half your income (If that)

Bluetooth refrigerators ... In America, you can create that need through advertising. The people in the rest of the world go 'what the fvck!?' These crackpot schemes are only desireable IN the USA.

Cars!? Nobody is taking the USA seriously any more. They just had a guy on Fox news saying the average American car is still consuming 25 miles to the gallon!

The fact that you are cornering the market on Gas purchases has most of the rest of the world, including China, tapping and attempting to tap alternate fuel sources RIGHT NOW. Your whole industry is an anachronism!

Along the same vein, China may be buying 19 million computers, but they are last year's computers and the R&D for them has already been paid-for by American consumers.

Russ, Please ... who do you think you are talking to here? Intel, by default drives the CPU development only. You'll find the computer is made up of more than a CPU. Now really, open your computer and find out what it is you are talking about. I can drag you down streets in Suzhou where you can purchase products that will make you green with envy. Some things you will NOT have seen before.

That is the last thing developing countries achieve parity in because it requires the general population to be prosperous enough to buy such things as first-generation computers. That's another discussion, but people have been talking about the US economy imploding due to too much debt for decades. It may happen, but in the meantime, that money moving around in here is real enough to buy a house with, and that's as real as money needs to be.

But that's the problem though isn't it Russ? There ISN'T actually any money moving around. What is being moved around is debt and that debt is being bought up by China, Japan and Saudi.

They make loans to your central bank. Your central bank loans it to the banking system and the banking system loans it to your public ... along with financing invasions and the Halliburton wet dream, of course.

And then Condie comes onto the scene and condemns China for tagging the USD... Well. how did you think it was being done? Buying your debt is HOW the Yuan maintains its value against the dollar. China is backing your currency WITH the Yuan effectively lowering its value while at the same time boosting the value of yours.

That's a catch-22, of course, but it cuts both ways: as China develops, more and more people will be able to buy American cars (for example) and our trade deficit will vanish.

LOL ... Now there's a pipe dream. Is this before or after your manufacturing base completely implodes? China is going to have a desire for inefficient poorly made cars? Do you ever think that type of conspicuous consumption will be popular anywhere in the world again outside of the USA?

And then there are those problems of government discouragement on the ownership of cars ... especially inefficient ones.

That's also the flaw in the common capitalism-exploits-poor-countries argument (I haven't seen it from you): a rich country provides a better market for goods, so it is to our benefit to see countries become rich.

You won't see it from me either when it comes to China. China IS the market and the wold is trying to tap it. You can't exploit a market into extinction at the same time as fostering growth. At a compound growth of an average of 8-10%PA, I'd never make that argument.

BMW also manufactures cars in North Carolina. Again, the catch-22 from above cuts both ways: as more Chinese are able to buy cars, more plants will be built in China to sell cars in China.

Right ... built BY Chinese FOR Chinese and, if the current trend with other car companies is adhered to, designed by Chinese. (American Beamers are the same as the Euro Beamers ... In China they are different)

Question ... how does an influx of funds to the owners of Detroit actually help the unemployed of Detroit? Does the government exact a higher tax burden to pay the welfare checks? Last I heard Bush was handing out tax breaks!?

But that's not so much moving manufacturing overseas as it is building new manufacturing overseas. And it evens out. Why? For a country with 1/20th of the world's population to own half the technology is pretty damned spectacular.

or it would be if it didn't indicate a trend that you used to own a 95% share and have reduced by half in less than 10 years! I guess this blows your earlier theory that innovation is being driven in America for the American market, eh Russ?

You have also to explain the job LOSSES in the auto industry to places around the world such as Mexico. That is what we are talking about when it comes to NOT building up the market overseas and losing the market TO overseas.

Since Japan is doing this to you, you 'see' no job losses but you experience capital loss and profit loss to Japan and Korea as their market overtakes the US product with the US product being produced in Mexico.

I am sure there must be logic to it somewhere but face it, you will NEVER export an American car to China.

They care if their business model requries drawing a 10mile radius circle and calculating how many people in it can buy their prduct.

And that is the flaw of the American business model, isn't it? If they do that, or did that, as you imply, there would be no desire to tap this market. The reality is, your largest retailer is WalMart... A front for Chinese goods.

While your patriotism is admirable, even all the goods marketed by WalMart are available here at a fraction the price at the side of the road meaning that the American lifestyle is available. Heck ... all that the average Yank has is purchased from plants in Shenzhen or Suzhou or ...

The flawed model of conspicuous consumption is however being discouraged and the infrastructure that produces it will not even get a chance to get off the ground since the 'lifestyle' is being developed in a different environment.

The Chinese will never be told about a chicken in every pot, two cars in the garage, Mom's apple pie and baseball because that too is an anachronism.

A good portion of the most 'desirable products' in the USA will never be marketable in the rest of the world ... Monster Trucks and Hummers/Humvees ... That's America ... Other things that are happening are movies like Super-Size Me and The Corporation are hitting the public pretty hard here.

From what I see here, I think you are assuming that most countries want to BE America and that eventually they will desire what America has to offer.

I am living in my 6th country now ... believe me, the wold doesn't want what you have to offer and they are seriously reconsidering the US Dollar as the world currency. But then, that too is another topic.

 

[Astronuc]

Why? For a country with 1/20th of the world's population to own half the technology is pretty damned spectacular.

Actually, one has to look at the patents. A lot of foreign companies and multi-nationals file patents in the US, so that technology is not owned by a US corporation, but controlled by foreign entities. Also, there are a lot of patents for marginally useful products or processes.

China has an effective technology transfer program whereby foreign companies are encouraged to supply technology to Chinese companies, with minimal investment returning to other nations, like the US.

The Chinese economy could overtake the US economy earlier than 2015.