10 ms·

I personally fail to see the downside of any manufacturer selling forever at a loss, except for the manufacturer itself.

numpad0 8mo ago
the currency eventually collapses
- extraduder_ire 8mo ago
  I don't know if it's still a thing, but China was getting a lot of heat about a decade ago for purposefully devaluing their currency to make their exports more attractive. They kind of had to do this, because their large amount of exports were pushing the value of it up compared to others.
xyzzy123 8mo ago
You become dependent on the supplier. The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced. Also they gradually lose the ability to meaningfully innovate in those sectors because there's no grounding against production reality anymore. This has geopolitical consequences further down the line.
- riku_iki 8mo ago
  > steel, heavy industry, semiconductors, machine tools the question is if single country can carry all these industries at loss for prolonged period of time. Another approach is to rely on international supply chain and speed of innovation, we can't produce steel domestically profitably today, fine, we may buy it from diversified international supplier network, and rebuild it fast tomorrow if needed using new tech, and focus on many other high margin verticals, instead of putting many billions of resources into infra which could be obsolete tomorrow.
  - xyzzy123 8mo ago
    This is fine as long as the supply chain is, in fact, diversified.
    - riku_iki 8mo ago
      sure, looks like more analysis is needed to check which verticals are diversified and which are not, instead of throwing blanket list of everything.
      - xyzzy123 8mo ago
        Agree, worth analysing what is genuinely commodity. There are more elements to it though which can be sort of hard to explain. There are whole cultures and ways of thinking built around production. The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0. There is a lot of tacit knowledge in these engineering fields and you have a huge advantage in knowledge retention if you can maintain unbroken chains of succession. You can't achieve the top levels of ability (decades of experience, generational knowledge) if you are whip-sawing production to and fro across the globe every 10 years. There are also cross pollination effects. Being in the same community with as many related fields as possible (co-located) is what drives cross-pollination and mobility of ideas and people between industries. Think how many countries have tried to copy "silicon valley" and failed, and _why_ they failed. What I'm saying is that technology is built by _people_ and there are human reasons why having local capacity is beneficial for all the related industries in the area.
        riku_iki 8mo ago
        > The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0. my point is that other children with no extremely heavy investments into perl v1.0, will have some skills in c++ v1.0 and python v1.0, and will have advantage in adapting Tensorflow v1.0, which is more valuable than skills in perl v2.0. Heavily investing in one industry you sacrifice some flexibility. So, this is multifactor analysis, lets say wise American people will elect me as next president, I would create list of industries, assign metrics (national security importance, potential revenue in 5y from now, impact on other industries, potential margin, risks of failure, etc), then build some formula which aggregate those metrics into single, and base on final metric allocate weighted funds to support N top industries.
- zozbot234 8mo ago
  > The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced. That's not really what happens though. You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry because (1) you can afford to, while low-cost competitors can't and (2) you can no longer expect to be the lowest-cost supplier for the bulk of the market. That's a win-win development and something to be encouraged.
  - deleted 8mo ago
    [deleted]
  - AnthonyMouse 8mo ago
    > You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry That's not what people mean by "lose" capacity. Suppose DRAM companies expand capacity because prices are high, then demand levels off, the price crashes, and they all go out of business except for the one in China which gets a government bailout. That's fine, right? We're not interested in making DRAM, that's a fungible commodity, we want to make iPhones or something. (They make those too anymore, but never mind that.) What happens now if China restricts what you can buy to give an advantage to their own companies who are trying to displace you in the higher-valued special niches? Or just raises the price for you and not them? What if there's a trade war? Or a conventional war? When you still have a domestic industry, you go to them and have a source for the commodity. If only one country becomes the sole global supplier and that country isn't even particularly friendly, that's bad.
    - zozbot234 8mo ago
      The domestic industry is still there, only instead of mass-market DRAM it has started making higher-valued varieties of the same stuff. If there's a trade war, they can easily reconvert to making the mass-market stuff, just at much higher cost. You can't expect more than that, since they never really were as big or as low-cost as the lowest cost suppliers can be in normal times. That's not "losing" capacity, it's just acknowledging that you can't create capacity out of thin air.
- nandomrumber 8mo ago
  Blame China. As though moving production to China wasn’t something the West did intentionally. And now continues to push manufacturing out of Western countries by, for example in the UK and Germany, and Australia too, making electricity and gas so expensive it becomes cost prohibitive to manufacture much at all.
  - vkou 8mo ago
    You forgot to mention embargoes against it. The US is free to sanction firms for their exports to China, but then shouldn't be surprised when China builds out domestic competitors.
creato 8mo ago
If you actually believe this, then what is your explanation for a manufacturer to do this? Do you think they are just stupid?
fph 8mo ago
Microsoft gave away Internet Explorer at a loss, and what happened to internet standards?
skeeter2020 8mo ago
First, they're not selling at a loss; the huge price increases have allowed them to push aggrssively in the legacy markets. They're making "slightly smaller" profits than other manufacturers (of which there are now very few). Second, they can drive out all competition and then have a captive audience for whatever prices they want, as the barriers to entry in these markets are very high. This is essentially what's happened with all higher-end manufacturing in the west over the past 30+ years.
gchamonlive 8mo ago
Because it's never forever. It's until the corporation substitutes the market, at which point you are at their mercy.
- zozbot234 8mo ago
  You're always at someone's mercy in any industry with significant barriers to entry, you might as well pick a low-cost supplier.
  - gchamonlive 8mo ago
    That is such a defeatist position... How about regulation?
    - PowerElectronix 8mo ago
      Ask the EU how that regulate everything policy is going for local manufacturing.
      - gchamonlive 8mo ago
        Is the answer to bad regulation to not regulate at all? How EU is regulating isn't the only way to do it. And is bad regulation that much worse than monopoly by the billionaires? There is no distinction. At least with bad regulation you always have the chance to vote better next time. Good luck dealing with oligarchs.
        PowerElectronix 8mo ago
        I wish we could regulate the oligarchs away, but it seems to me that is precisely the right amount of regulation that allows for oligarchs to thrive. If you regulate to protect IP owners, and basically make them rentists, you create IP based monopolies and olygarchs. If you also regulate to prevent consumer, worker and industry sector abuse, you end up with a very stagnant economy a la europe. If you don't regulate at all... I don't know what would happen, but it sure seems interesting to me.

numpad0 8mo ago

the currency eventually collapses

extraduder_ire 8mo ago
I don't know if it's still a thing, but China was getting a lot of heat about a decade ago for purposefully devaluing their currency to make their exports more attractive. They kind of had to do this, because their large amount of exports were pushing the value of it up compared to others.

xyzzy123 8mo ago

You become dependent on the supplier. The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced. Also they gradually lose the ability to meaningfully innovate in those sectors because there's no grounding against production reality anymore. This has geopolitical consequences further down the line.

riku_iki 8mo ago
> steel, heavy industry, semiconductors, machine tools the question is if single country can carry all these industries at loss for prolonged period of time. Another approach is to rely on international supply chain and speed of innovation, we can't produce steel domestically profitably today, fine, we may buy it from diversified international supplier network, and rebuild it fast tomorrow if needed using new tech, and focus on many other high margin verticals, instead of putting many billions of resources into infra which could be obsolete tomorrow.
- xyzzy123 8mo ago
  This is fine as long as the supply chain is, in fact, diversified.
  - riku_iki 8mo ago
    sure, looks like more analysis is needed to check which verticals are diversified and which are not, instead of throwing blanket list of everything.
    - xyzzy123 8mo ago
      Agree, worth analysing what is genuinely commodity. There are more elements to it though which can be sort of hard to explain. There are whole cultures and ways of thinking built around production. The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0. There is a lot of tacit knowledge in these engineering fields and you have a huge advantage in knowledge retention if you can maintain unbroken chains of succession. You can't achieve the top levels of ability (decades of experience, generational knowledge) if you are whip-sawing production to and fro across the globe every 10 years. There are also cross pollination effects. Being in the same community with as many related fields as possible (co-located) is what drives cross-pollination and mobility of ideas and people between industries. Think how many countries have tried to copy "silicon valley" and failed, and _why_ they failed. What I'm saying is that technology is built by _people_ and there are human reasons why having local capacity is beneficial for all the related industries in the area.
      - riku_iki 8mo ago
        > The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0. my point is that other children with no extremely heavy investments into perl v1.0, will have some skills in c++ v1.0 and python v1.0, and will have advantage in adapting Tensorflow v1.0, which is more valuable than skills in perl v2.0. Heavily investing in one industry you sacrifice some flexibility. So, this is multifactor analysis, lets say wise American people will elect me as next president, I would create list of industries, assign metrics (national security importance, potential revenue in 5y from now, impact on other industries, potential margin, risks of failure, etc), then build some formula which aggregate those metrics into single, and base on final metric allocate weighted funds to support N top industries.
zozbot234 8mo ago
> The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced. That's not really what happens though. You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry because (1) you can afford to, while low-cost competitors can't and (2) you can no longer expect to be the lowest-cost supplier for the bulk of the market. That's a win-win development and something to be encouraged.
- deleted 8mo ago
  [deleted]
- AnthonyMouse 8mo ago
  > You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry That's not what people mean by "lose" capacity. Suppose DRAM companies expand capacity because prices are high, then demand levels off, the price crashes, and they all go out of business except for the one in China which gets a government bailout. That's fine, right? We're not interested in making DRAM, that's a fungible commodity, we want to make iPhones or something. (They make those too anymore, but never mind that.) What happens now if China restricts what you can buy to give an advantage to their own companies who are trying to displace you in the higher-valued special niches? Or just raises the price for you and not them? What if there's a trade war? Or a conventional war? When you still have a domestic industry, you go to them and have a source for the commodity. If only one country becomes the sole global supplier and that country isn't even particularly friendly, that's bad.
  - zozbot234 8mo ago
    The domestic industry is still there, only instead of mass-market DRAM it has started making higher-valued varieties of the same stuff. If there's a trade war, they can easily reconvert to making the mass-market stuff, just at much higher cost. You can't expect more than that, since they never really were as big or as low-cost as the lowest cost suppliers can be in normal times. That's not "losing" capacity, it's just acknowledging that you can't create capacity out of thin air.
nandomrumber 8mo ago
Blame China. As though moving production to China wasn’t something the West did intentionally. And now continues to push manufacturing out of Western countries by, for example in the UK and Germany, and Australia too, making electricity and gas so expensive it becomes cost prohibitive to manufacture much at all.
- vkou 8mo ago
  You forgot to mention embargoes against it. The US is free to sanction firms for their exports to China, but then shouldn't be surprised when China builds out domestic competitors.

creato 8mo ago

If you actually believe this, then what is your explanation for a manufacturer to do this? Do you think they are just stupid?

fph 8mo ago

Microsoft gave away Internet Explorer at a loss, and what happened to internet standards?

skeeter2020 8mo ago

First, they're not selling at a loss; the huge price increases have allowed them to push aggrssively in the legacy markets. They're making "slightly smaller" profits than other manufacturers (of which there are now very few). Second, they can drive out all competition and then have a captive audience for whatever prices they want, as the barriers to entry in these markets are very high. This is essentially what's happened with all higher-end manufacturing in the west over the past 30+ years.

gchamonlive 8mo ago

Because it's never forever. It's until the corporation substitutes the market, at which point you are at their mercy.

zozbot234 8mo ago
You're always at someone's mercy in any industry with significant barriers to entry, you might as well pick a low-cost supplier.
- gchamonlive 8mo ago
  That is such a defeatist position... How about regulation?
  - PowerElectronix 8mo ago
    Ask the EU how that regulate everything policy is going for local manufacturing.
    - gchamonlive 8mo ago
      Is the answer to bad regulation to not regulate at all? How EU is regulating isn't the only way to do it. And is bad regulation that much worse than monopoly by the billionaires? There is no distinction. At least with bad regulation you always have the chance to vote better next time. Good luck dealing with oligarchs.
      - PowerElectronix 8mo ago
        I wish we could regulate the oligarchs away, but it seems to me that is precisely the right amount of regulation that allows for oligarchs to thrive. If you regulate to protect IP owners, and basically make them rentists, you create IP based monopolies and olygarchs. If you also regulate to prevent consumer, worker and industry sector abuse, you end up with a very stagnant economy a la europe. If you don't regulate at all... I don't know what would happen, but it sure seems interesting to me.