Recession and Interest Rates

Discussion in 'Current Affairs' started by Daktari, Dec 6, 2007.

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  1. Just heard on the Radio that Interest rates are going down. Interesting guy was saying that the Chinese interest rate is currently at 14% and that increasing transportation costs are beginning to make getting things made in the UK a little more attractive.

    Intersting because a local company which makes wind turbine blades out of carbon fibre has just moved production to China due to the H&S legislation on Carbon Fibre and the high cost of employing people to work with it.

    Piss all over China is we can win back some of the manufacturing that we shipped out there in the first place and then pull out of the OG's!
  2. The reality is that basic touch labour will always follow the lowest hourly rate, so labour that leaves China will go somewhere else but very unlikely back to the UK. OK so higher intteret rates and transport costs may be putting up the effective cost of buying touch labour n China but is that going to be enough to make it worth paying the minimum wage here. The reality is we are a reasonably high wage high overhead economy and we need to adjust what we do and make to that fact. That does not mean we stop making things rather we have to choose what we make and be prepared to kepp changing to keep ahead of the game
  3. There was an article on freighting costs a couple of weeks go in the Economist.
  4. So making things cheaply in China makes them more expensive.
  5. I think it's inevitable, as manufacturing moves around the industries supporting manufacturing also move around, and the reasons that manufacturing moves for respond themselves to the increased demand and increase in cost as well. I'd asses that a significant chunk of the increase in transport cost is the instability in the oil market.

    Personally I think that the dynamism in the market is a good thing. I agree with your point upthread about the UK being unlikely to see the demand for manufacturing back here for the foreseeable future. As we become less competitive overall and our manpower costs become competitive then it will happen, but I don't think I'll see it in my lifetime.

    I did see some analysis recently which suggested a mild increase in high value manufacturing in the UK, those niche industries where the cost is less sensitive to the price of skilled manpower. It did note that there are always products dropping out of the bottom of that segment towards lower cost manufacturers, but new opportunities are filling it at a faster rate, for now.
  6. Guy on the radio - was saying that the UK was infact seeing an upturn in some goods which have been made in China now reverrting back to the UK. I agree with both of you that I think it is unlikely to see a mass return to UK industry but I would certainly think that some form of return is probable. I hope that the UK industries whaich have mearly moved their operation to foreign countries just to take advantage of laxer H&S legislation and cheaper labour costs may well live to regret the move - after all they are still reponsible for the polution and sweatshops just in a different country.
  7. Clearly now we are in a global market any comodity will gravitate to the lowest cost and in especially volume manufacturing touch labour is really a comodity. In our high cost high overhead economy we must keep up with the high intelectual value markets where we can still compete.

    The biggest mistake we made as a nation was to try and keep manufacturing in the 50s, 60, and 70s with tools factories and labour practices that belonged in the Victorian era. When we realised how bad it really was it was too late and we have paid a hefty price for that.
  8. There has been a steady stabilisation over the last three or four yers after the early frenzy for offshoring. It's come to be recognised that some things are best done in-country and others best done elsewhere. It's most prevalent in the call-centre industry, some products are best supported from overseas, whilst others are best in the UK. Things that require a high degree of cultural awareness are expensive to train into non residents; insurance was the main example there, I think Prudential had just moved back from India. IT support on the other hand doesn't need that.

    I did hear on Radio 4 the other morning about a tin mine re-opening in Cornwall after about 5 years. The improvement in the market and innovations in recovery have made it cost effective to open up again.

    It's not just the industries that are at fault here, consumers drive a lot of this. When people want to pay the lowest cost for something, and manpower costs are a big driver to the cost at the point of delivery, then you need to account for that. Managers are responsible to the owners of the company, shareholders, and if consumers aren't buying the product then the company folds. Managers need to respond to that and make the products saleable.
  9. Seaweed

    Seaweed War Hero Book Reviewer

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