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High worker wages and cheap goods are incompatible. The companies can’t do anything especially since places with cheap labor can now put out mid to high quality

High worker wages and cheap goods are incompatible. The companies can’t do anything especially since places with cheap labor can now put out mid to high quality tier goods themselves. For a while it seemed like Germany et al were able to maintain a moat with their high quality goods but Asia has caught up. The only hope for American manufacturing is fully automated facilities but that isn’t happening quickly enough. Alternatively we would have to have some sort of communist like top down profit sharing/UBI but I don’t see the US going down that path either.

matrix87 2y ago
> cheap goods john deere isn't known for being cheap
- deleted 2y ago
  [deleted]
- dyauspitr 2y ago
  Which is why their sales are falling. My point is it needs to be cheaper to be competitive and they can’t seem to do that while still manufacturing in the US.
  - toomuchtodo 2y ago
    They had $10B in 2023 profits. This is simply not true. They are maximizing profits at the cost of other business inputs, just like Boeing.
    - alephnerd 2y ago
      You can make a profit and still lose market share Here's John Deere's Q2FY25 earnings report [0] Sales have dropped 10-20% in just about every market they are in (they have hidden the Asia figures which are probably even worse due to intense competition by dozens of local and multinational competitors like Sinomach, Kubota, Mahindra, Daedong, etc). And overall Net Sales have fallen 20-25%. [0] - https://www.deere.com/assets/pdfs/common/news/deere-2q24-earnings-release.pdf https://www.deere.com/assets/pdfs/common/news/deere-2q24-ear...
      - toomuchtodo 2y ago
        Will executives reduce their compensation packages accordingly?
        alephnerd 2y ago
        Depends on investor sentiment. Most investors in any company are institutional investors (hedge funds, pension funds, sovereign wealth funds, etc). They tend to have longer holding periods (years instead of days), and most are still riding high from John Deere's 3x'ed share price from 2020. Executives will still earn roughly what they earned before, assuming John Deere pivots the same way CAT did around a decade ago when faced with a similar problem. Investing much more in R&D along with diversifying away from the Farn Machinery sector will also help.
        matrix87 2y ago
        I wonder if Mexican executives are also cheaper Maybe we should just buy from Mexican tractor companies instead if that's the case?
        toomuchtodo 2y ago
        I suppose that China stealing the IP and selling cheap knockoffs is an option; at least farm equipment consumers then receive consumer excess via lower prices versus US execs soaking up the profits from offshoring manufacturing.
        alephnerd 2y ago
        Most of the commodity Ag Machinery market in the US is already been taken over by a multitude of American, Japanese, European, and Indian vendors already (and as I previously listed)
        alephnerd 2y ago
        > I wonder if Mexican executives are also cheaper The cream of the crop (UNAM, ISTEM, Ibero) end up earning roughly comparable to Canada or work in the US. For example, Associate Consultants (entry level w/ MBA or MS/PhD) at McKinsey CDMX earn around US$108,000-US$163,000 [0], which is similar to McKinsey Toronto for the same role (US$120,000-US$185,000) [1] Mexicans working white collar jobs are TN Visa eligible as well, so there is upwards salary pressure because someone who's good enough to be a Consultant at McK CDMX or a PM at IBM Guadalajara can land a job at McK Dallas or IBM Austin. That said, even mid-level management roles are moving abroad now that R&D and Product teams are getting offshored as well (speaking from personal experience) [0] - https://www.glassdoor.com/Salary/McKinsey-and-Company-Mexico-City-Salaries-EI_IE2893.0,20_IL.21,32_IM1176.htm https://www.glassdoor.com/Salary/McKinsey-and-Company-Mexico... [1] - https://www.glassdoor.com/Salary/McKinsey-and-Company-Associate-Toronto-Salaries-EJI_IE2893.0,20_KO21,30_IL.31,38_IM976.htm https://www.glassdoor.com/Salary/McKinsey-and-Company-Associ...
- drewcoo 2y ago
  > john deere isn't known for being cheap Just non-repairable.
alephnerd 2y ago
> The only hope for American manufacturing is fully automated facilities but that isn’t happening quickly enough It's happening, but unions like the UAW oppose it [0][1]. There's a reason most battery factories have shifted to Red States like Georgia, Tennessee, Kentucky, and Indiana [2] at the expense of previously established Michigan and Ohio. > Germany et al were able to maintain a moat with their high quality goods but Asia has caught up Due to lack of innovation. [0] - https://www.axios.com/2023/09/15/uaw-worker-strike-electric-vehicle-industry https://www.axios.com/2023/09/15/uaw-worker-strike-electric-... [1] - https://www.nytimes.com/2023/09/16/business/electric-vehicles-uaw-gm-ford-stellantis.html https://www.nytimes.com/2023/09/16/business/electric-vehicle... [2] - https://www.edf.org/media/analysis-finds-us-electric-vehicle-battery-manufacturing-track-meet-demand https://www.edf.org/media/analysis-finds-us-electric-vehicle...
- zamadatix 2y ago
  I'm not sure that really sells the UAW one way or the other on it. The companies would probably like people to think the union wants so much it'd impede being able to switch to good thing™. The UAW would probably like people to think electric production can be done with better wages than companies want to push for without having a big impact on the output and just eating at evil management profits™. The 0th article more or less says that and gives that outright as the reason Tesla is ahead. GM is behind in electric vs Tesla for lots of reasons and that may be one meaningful one but it doesn't really support why it just asserts it should be so. If it were that direct and simple then the unionized brands in the US would be long gone by now. The 1st article does an even worse job summarizing the situation, leaving the description of what the UAW wants to the manufacturer management. The 2nd article actually has some good data but it seems to say things like Michigan still has the most production and lacks information like "GM caved and all of their plants are in the other states in that list". I'm not saying the UAW is great for electric production or the UAW is bad for it, I'm just saying none of those sources really backs what you set out to say with them in the first place.
SkyMarshal 2y ago
Cheap goods and no middle class with discretionary income is also incompatible. "Buy now, pay later" will only last so long.

matrix87 2y ago

> cheap goods john deere isn't known for being cheap

deleted 2y ago
[deleted]
dyauspitr 2y ago
Which is why their sales are falling. My point is it needs to be cheaper to be competitive and they can’t seem to do that while still manufacturing in the US.
- toomuchtodo 2y ago
  They had $10B in 2023 profits. This is simply not true. They are maximizing profits at the cost of other business inputs, just like Boeing.
  - alephnerd 2y ago
    You can make a profit and still lose market share Here's John Deere's Q2FY25 earnings report [0] Sales have dropped 10-20% in just about every market they are in (they have hidden the Asia figures which are probably even worse due to intense competition by dozens of local and multinational competitors like Sinomach, Kubota, Mahindra, Daedong, etc). And overall Net Sales have fallen 20-25%. [0] - https://www.deere.com/assets/pdfs/common/news/deere-2q24-earnings-release.pdf https://www.deere.com/assets/pdfs/common/news/deere-2q24-ear...
    - toomuchtodo 2y ago
      Will executives reduce their compensation packages accordingly?
      - alephnerd 2y ago
        Depends on investor sentiment. Most investors in any company are institutional investors (hedge funds, pension funds, sovereign wealth funds, etc). They tend to have longer holding periods (years instead of days), and most are still riding high from John Deere's 3x'ed share price from 2020. Executives will still earn roughly what they earned before, assuming John Deere pivots the same way CAT did around a decade ago when faced with a similar problem. Investing much more in R&D along with diversifying away from the Farn Machinery sector will also help.
      - matrix87 2y ago
        I wonder if Mexican executives are also cheaper Maybe we should just buy from Mexican tractor companies instead if that's the case?
        toomuchtodo 2y ago
        I suppose that China stealing the IP and selling cheap knockoffs is an option; at least farm equipment consumers then receive consumer excess via lower prices versus US execs soaking up the profits from offshoring manufacturing.
        alephnerd 2y ago
        Most of the commodity Ag Machinery market in the US is already been taken over by a multitude of American, Japanese, European, and Indian vendors already (and as I previously listed)
        alephnerd 2y ago
        > I wonder if Mexican executives are also cheaper The cream of the crop (UNAM, ISTEM, Ibero) end up earning roughly comparable to Canada or work in the US. For example, Associate Consultants (entry level w/ MBA or MS/PhD) at McKinsey CDMX earn around US$108,000-US$163,000 [0], which is similar to McKinsey Toronto for the same role (US$120,000-US$185,000) [1] Mexicans working white collar jobs are TN Visa eligible as well, so there is upwards salary pressure because someone who's good enough to be a Consultant at McK CDMX or a PM at IBM Guadalajara can land a job at McK Dallas or IBM Austin. That said, even mid-level management roles are moving abroad now that R&D and Product teams are getting offshored as well (speaking from personal experience) [0] - https://www.glassdoor.com/Salary/McKinsey-and-Company-Mexico-City-Salaries-EI_IE2893.0,20_IL.21,32_IM1176.htm https://www.glassdoor.com/Salary/McKinsey-and-Company-Mexico... [1] - https://www.glassdoor.com/Salary/McKinsey-and-Company-Associate-Toronto-Salaries-EJI_IE2893.0,20_KO21,30_IL.31,38_IM976.htm https://www.glassdoor.com/Salary/McKinsey-and-Company-Associ...
drewcoo 2y ago
> john deere isn't known for being cheap Just non-repairable.

alephnerd 2y ago

> The only hope for American manufacturing is fully automated facilities but that isn’t happening quickly enough It's happening, but unions like the UAW oppose it [0][1]. There's a reason most battery factories have shifted to Red States like Georgia, Tennessee, Kentucky, and Indiana [2] at the expense of previously established Michigan and Ohio. > Germany et al were able to maintain a moat with their high quality goods but Asia has caught up Due to lack of innovation. [0] - https://www.axios.com/2023/09/15/uaw-worker-strike-electric-vehicle-industry https://www.axios.com/2023/09/15/uaw-worker-strike-electric-... [1] - https://www.nytimes.com/2023/09/16/business/electric-vehicles-uaw-gm-ford-stellantis.html https://www.nytimes.com/2023/09/16/business/electric-vehicle... [2] - https://www.edf.org/media/analysis-finds-us-electric-vehicle-battery-manufacturing-track-meet-demand https://www.edf.org/media/analysis-finds-us-electric-vehicle...

zamadatix 2y ago
I'm not sure that really sells the UAW one way or the other on it. The companies would probably like people to think the union wants so much it'd impede being able to switch to good thing™. The UAW would probably like people to think electric production can be done with better wages than companies want to push for without having a big impact on the output and just eating at evil management profits™. The 0th article more or less says that and gives that outright as the reason Tesla is ahead. GM is behind in electric vs Tesla for lots of reasons and that may be one meaningful one but it doesn't really support why it just asserts it should be so. If it were that direct and simple then the unionized brands in the US would be long gone by now. The 1st article does an even worse job summarizing the situation, leaving the description of what the UAW wants to the manufacturer management. The 2nd article actually has some good data but it seems to say things like Michigan still has the most production and lacks information like "GM caved and all of their plants are in the other states in that list". I'm not saying the UAW is great for electric production or the UAW is bad for it, I'm just saying none of those sources really backs what you set out to say with them in the first place.

SkyMarshal 2y ago

Cheap goods and no middle class with discretionary income is also incompatible. "Buy now, pay later" will only last so long.