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post #91 of 132 (permalink) Old 02-20-2009, 10:28 AM
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Originally Posted by QBNCGAR View Post
^ There's absolutely value in the equation, and price is definitely a core component of it.

If you have customers leaving you for someone cheaper, or buying something cheaper for the same task, it's because they haven't been convinced of the value that you or the more expensive item represent. That isn't their fault, it's yours.

Quality is only relevant in the value proposition if the bar for "good enough" can't be cleared. If two products are good enough for what you need to do, you'll go for the cheaper one. If it's such a piece of shit, why the hell is the store carrying it to begin with? The fact that it's on the shelf (and stays there) is proof that the cheaper product is good enough for most people, because any store will stop carrying items that get continually returned due to quality issues.

And if a product is good enough, why not carry it? If you have an item that is of acceptable quality at a low price, you are delivering value to your customers (hence, they'll be much more likely to come back).

This isn't tricky stuff.
OK, Q, I'll explain it again since you are having a tough time with this.
The trend (in my industry, anyway) is going AWAY from value. And the "acceptable" quality standard is diminished to the point of being nonexistant. My company is/was KNOWN worldwide for quality, craftsmanship, durability, customer service, tech support, research and development. Due to a MASSIVE influx of Chinese product in the last 5 years, our sales have tanked. This was addressed with the Federal Trade Commission and a class action lawsuit was filed. And won. But the damage is done, the market is totally undermined and we were forced to begin buying product overseas in order to compete with the myriad of "manufacturers" that showed up (actually our parent company built a mfg. plant in Thailand). Our manufacturing here has gone from employing 400+ to probably about 120 or so.
Back to the "value" issue. If I can buy 1 car made in the US for the same money as 5 cars made in China and it will last as long, from a value standpoint the one car should be an easier sell, since I would not have to keep changing cars everytime one breaks down, right? WRONG. The customer's perception is that the Chinese car is 1/5th the price and therefore they will "save" all this money. And with the economical times we are facing, that is a HARD argument to make.

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post #92 of 132 (permalink) Old 02-20-2009, 11:14 AM
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Oh I forget, the LIE's don't make anything, they just live off the food chain.
Both Skippy, we are fully capable of multitasking and parallel processing.

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post #93 of 132 (permalink) Old 02-20-2009, 11:23 AM
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bandit96,
Why is Q's statement bullshit? Is it not true management decided to maximizing profits by cutting corners in producing products until there is no more corners to cut, then they looked overseas for cheap labor since unions in this country made it impossible to produce anything at a price point to compete with the cheap imports?
Where did unions come into the discussion?

Many of the secondary and tertiary suppliers are not union. The piece price for manufacturing hardware and supplies is not always dictated just by labor.

The key cloud that you don't address in your question is "cutting corners" That can be so subjective and contain so many variables that, unless you look at an individual business you cannot begin to know if their process is truly streamlined and offshoring was the only solution or if there were other variables that involved "incentives".

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post #94 of 132 (permalink) Old 02-20-2009, 11:26 AM
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Yes. True that. Except in today's manufacturing climate, it is a 2-edged sword. Companies want to produce and make a profit, consumers want to buy at an affordable price, hence, Walmart is so popular. They pay low wages and sell cheap stuff from China (which both practices violate my principles and therefore I have never spent a penny at Walmart). I will gladly pay more if that means keeping jobs in this country, but that higher price may mean lot of hardships to many Americans, especially the Walmart fans. I think many people, especially those live outside of the manufacturing epicenter of the Mid-West would rather pay less and care less where the jobs are shipped to. It is a sad state of affairs we are facing.
Once folks understand what erased much of their 401Ks and what triggered this recession and the ramifications of it I imagine they are much more attuned to that little issue.

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post #95 of 132 (permalink) Old 02-20-2009, 11:40 AM
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Originally Posted by bandit
OK, Q, I'll explain it again since you are having a tough time with this.
The trend (in my industry, anyway) is going AWAY from value. And the "acceptable" quality standard is diminished to the point of being nonexistant. My company is/was KNOWN worldwide for quality, craftsmanship, durability, customer service, tech support, research and development. Due to a MASSIVE influx of Chinese product in the last 5 years, our sales have tanked. This was addressed with the Federal Trade Commission and a class action lawsuit was filed. And won. But the damage is done, the market is totally undermined and we were forced to begin buying product overseas in order to compete with the myriad of "manufacturers" that showed up (actually our parent company built a mfg. plant in Thailand). Our manufacturing here has gone from employing 400+ to probably about 120 or so.
Back to the "value" issue. If I can buy 1 car made in the US for the same money as 5 cars made in China and it will last as long, from a value standpoint the one car should be an easier sell, since I would not have to keep changing cars everytime one breaks down, right? WRONG. The customer's perception is that the Chinese car is 1/5th the price and therefore they will "save" all this money. And with the economical times we are facing, that is a HARD argument to make.
I never said it was an easy argument to make. Do you want a manufacturing base in America or not? We don't get bonus points for being "patriotic consumers". I don't get credits towards putting my son through college because I paid more for something than I needed to, just because it subsidized a company or industry that has failed to adapt itself to changing conditions.

The question I'd pose to you is this - do you want to be right, or do you want to be employed?

There's a middle-ground point where consumers say to themselves "well yeah, it's a little more money, but it's a lot less headache." Not all consumers, but most of them. You need to find that point. How you get there is up to you. You can get there by slashing profit, or you can get there by getting better at what you do, or you can get there by consolidating with your competition and eliminating redundancies.

If your processes are people-dependent, figure out a better way to use them. Challenge everything you do to see how you can do it better, faster, and cheaper. Or, complain to anyone who will listen about how the Chinese are breaking it off in your ass. One of those courses of action pays, the other doesn't.
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post #96 of 132 (permalink) Old 02-20-2009, 11:53 AM
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Hmm, I guess it didn't get through. Free trade does not equal fair trade. Oh, well, when the chinese knock on your office door and tell you that your job is no longer needed, you can explain everything to them as you're packing up your shit....

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post #97 of 132 (permalink) Old 02-20-2009, 11:54 AM
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^ I'm not arguing the fairness of 'free trade' agreements. I'm asking what you're going to DO about it.

Fortunately I'm resourceful and experienced - I can make a living doing about 10 different things. China can take this job and shove it if they want it so bad. End results are part of the value equation, and I'm pretty confident they can't do as much for as little as I can.
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post #98 of 132 (permalink) Old 02-20-2009, 12:09 PM
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I think that both of you are looking in the MIDDLE of the problem, and toward the consumer side of it and not the decision making at the top end.

If a company, or group of companies make decisions to move production offshore several things happen.

The most obvious is layoffs of American Workers. The DOMINOES from that decision is what you are not watching [and where you get credits for putting your son through college]. First, as middle and upper middle class jobs disappear we end up with a large group of low wage service jobs and a group of high wage management jobs. In the middle of that there is a group of "expediters". But the years of hearing "declining middle class" is not just a media buzz phrase.

Once that middle class begins to break down several things happen. Bankruptcies increase. Foreclosures increase. Demand for housing drops. We have seen that already. Credit use goes up, ability to pay goes down. We have seen that. Cities begin to raise taxes and reduce services, schools drop programs, infrastructure starts to be ignored. We have seen that.

Of the 3.6Million jobs lost just this past year, very majority were from the middle class. The abject poor and the affluent are not affected by layoffs directly. The MIDDLE CLASS IS.

And the Middle Class is the primary customer base of the companies that began the circle by offshoring jobs. The companies begin to lose business quickly either through direct to Middle Class consumers or through the businesses that do get their business from that client base.

The problem is not the need for absolute low costs. Folks have never demanded that. And the need for value is not something that a company has to "sell" to their client base over lowest cost. The problem is much higher as companies look at short term profits over long term planning.

If I need to make my numbers THIS QUARTER I will do stuff that might not be in the best interest of my business, the general economy or even my customers. But if I take the long view and don't listen to what talking heads and those who make money on the churn say, I am more likely to actually continue to provide VALUE and support my client base, both by providing product and keeping the employment base thriving.

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post #99 of 132 (permalink) Old 02-20-2009, 12:13 PM
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^ I'm not arguing the fairness of 'free trade' agreements. I'm asking what you're going to DO about it.

Fortunately I'm resourceful and experienced - I can make a living doing about 10 different things. China can take this job and shove it if they want it so bad. End results are part of the value equation, and I'm pretty confident they can't do as much for as little as I can.
I can make a list of over 100 people right now in the IT biz, throughout the country, from systems support to Systems Architects who would be more than happy to show you the error of that logic. Many still have free time, all have had their jobs offshored in the past 24 months. ALL, to a person just know that their type of job could not be offshored.

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post #100 of 132 (permalink) Old 02-20-2009, 12:20 PM
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I think that both of you are looking in the MIDDLE of the problem, and toward the consumer side of it and not the decision making at the top end.

If a company, or group of companies make decisions to move production offshore several things happen.
I'd have stopped you right there in person.

The impact of off-shoring is, I don't think, in dispute. It's bad news overall if a company feels like they have to go there. The kindest word I have to describe that is "lazy".

Here's what I'm playing at. Look at the companies and industries which have NOT gone off-shore and who are still successful; who still employ tons of Americans, who are profitable, etc. Look at the companies who have used off-shore labor responsibly to improve profit without impacting quality or to give more for less.

Every company and industry needs a different approach to stay alive. Technology and all sorts of other things have DRAMATICALLY changed the landscape in even the past 30 - 40 years, which is less than a career's length for some people. The best companies adapt with ease. The lesser ones don't. They'll get with the program, or they'll die.

Quote:
Originally Posted by mcbear
The problem is not the need for absolute low costs. Folks have never demanded that. And the need for value is not something that a company has to "sell" to their client base over lowest cost. The problem is much higher as companies look at short term profits over long term planning.
When you have no other differentiators, the only ground you can compete on ends up being price. This gets back to a failure of management, and a failure of a company to promote and reward innovation. It is a failure of management to take a turn down a dead-end road. Likewise, it is a failure of management to FOLLOW someone who has turned down a dead-end road just because you're trying to keep up with them.

It's EASY to sell value against companies that have gone off-shore. Nothing resonates with customers like the drumbeat of offshore-induced problems. You don't do it at the point of sale though, or at the closing table. You do it by sending out a consistent message in every medium possible and at every contact with customers. Just like you said, there's not a latent market need for these ridiculously low prices. People WILL increase their spend, as long as the VALUE equation is there.

Last edited by Qubes; 02-20-2009 at 12:24 PM.
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