Hello WFG, TeoTwawKi Watch:
We visited a Chongqin-based car plant yesterday, the message from Canadian plant manager was brutal:
- breakground to first car in 14 months
- plant is world class and breaks even on 60,000 units of current annual production run rate
- three-fold capacity expansion is underway
- market is growing at 30% per annum
- 1,600 workers are very good, quick studies;
- all assembly line workers have college degree; most can work in English
- majority parts China-sourced
- "how can the west save our manufacturing" - "I do not know"
- "the very same raw material (steel) in China shop floor costs less than in North America (excluding the steel tariff) because of handling"
- "will design and technical development be done in China as well" - "yes"
- "how much time before maturity (design, development, parts, ... export) of China-based auto industry" - "7 years, max"
We also visited a retired mining engineer's home:
- nice 1600 sqft apartment in facility of a perhaps 1,000 apartments, with swimming pool, garden, restaurants, underground parking
- all electronics and appliances (DVD at USD 55, 27 inch colour TV at USD 120, stereo at inconsequential price)
- retired since 9 years ago
- daughter is a stewardess of airline
- daughter bought home for parents (as opposed to parents buying apartment for daughter)
- USD 25,000 cost when purchased in 2000, now can be had for around USD 35,000 due to inflation (as opposed to wealth creation)
- mortgage has been paid off (as opposed to topping up with fourth mortgage cash out refinancing)
- own a car
Chugs, Jay
P.S. I think, between China and India, and later perhaps Russia, we will have global deflation of cost, revenue, asset, and later, planet-wide inflation of everything that went down.
The lenders are being slaughtered, then the borrowers will be wiped out, and then the lenders will have their carcass cleaned.
The market grinds, but grinds finely ;0)
I believe cash first, and gold later.
Energy, the uncontrollable variable, is also the wild card. |
