From: Dehede011@aol.com
Date: Wed Dec 26 2001 - 06:20:41 MST
<<Predatory trade" is just a euphemism for low prices.>>
That comment papers over a great deal. In manufacturing we have to
sell at a price that recovers our labor, material and overhead. For
simplicity we are assuming that additional production would not cost extra
overhead.
If we can find a new market then we can profitably sell into that
market based on labor and material only. This of course assumes that
overhead has been paid for by our regular markets.
I will use an estimate of overhead being 40% of the sales prices.
Then if I can manufacture in Japan and recover my overhead there then I can
lower my price in the U. S. up to 40% and still be making a profit.
Then the American manufacturer finds himself blocked out of the
Japanese market and unable to recover his overhead in the U. S.
Some will ask "What makes up overhead?" Well, a lot of things but for
one thing all those white collar jobs we have seen eliminated.
Some will argue with my estimate of 40% of the sales price for
overhead -- if so they can provide their own estimate but the basic argument
won't change.
Some others will say that still comes down to cheap prices for the
American consumer. That argument is true. But those cheap prices come at
the cost of American jobs and with no guarentee the prices will remain low as
soon as American competion is eliminated. You can get some idea of the
foreign country's intention to play fair by their not allowing our products
to be sold in their country.
Ron h.
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