Mike - (...There is excess capacity in virtually every industry...)
This is easy to state, but is it true, or meaningful?
Any industry which is not running 3 shift operations could be said to have excess capacity, but I don't think this is what you mean.
If a manufacturing company is operating at a level below the theoretical capacity of its physical plant, this would only be significant if the company has taken on too much debt or if it has invested assuming that either demand or pricing were to be more favorable than turned out to be the fact. This is undoubtedly true in a number of cases, but I have the impression that corporate debt levels are far lower in general than in the past.
The entire service sector surely cannot be said to have excess capacity, either in terms of labor or in terms of office buildings.
The software industry certainly does not have excess capacity. Rather it has the opposite problem, very low effective productivity.
Unless I'm mistaken, the airline industry has pretty good load factors, as well as low fuel costs.
It seems to me that basic industrial materials (especially export dependent), DRAM's, and farming are about the only industries that come to mind as having excess capacity. OTOH, my mind often has a protective barrier against such things. -g-
None of this, even if true, refutes the basis of your overall thesis.
Regards, Don |
