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To: Bill/WA who wrote (144626)	1/18/2002 2:10:41 PM
From: Earlie	Read Replies (1) \| Respond to of 436258

Bill/Wa The outsourcers are indeed able to cut the actual cost-to-produce marginally, but not by much. Effectively it is the RISKS associated with production (wide variation in the number of widgets that must be produced in any given month, inventory costs, etc.) that are shifted to the outsourcer. Most outsourcers are very high fixed cost shops. From my perspective, what these shops do is intensify risks that were previously spread across several producers and concentrate them in a single producer where the "wiggle room" is tiny. By way of example, suppose the outsourcer is called and told to cut next month's delivery in half. Yuk. Now do that same thing again a few months later. Double yuk. The risk is with the longs, not the shorts in this environment IMHO. Best, Earlie