No need to apologise I realised it was just a light-hearted off-hand comment. Economists get far worse things said about them 😉

“you should do another interest rates post so I can argue that point”

I’ll see what I can do, maybe in a few weeks – I have a bit of a backlog of posts at the moment 🙂

you should do another interest rates post so I can argue that point. maybe I will just thread hack a related post 🙂 . “Target Rate…” that looks close enough

I have just heard on the radio someone saying they would not buy F&P products. That is his perogative as a consumer just as much as it is my perogative to buy goods based on what I think is the best value (as I perceive it) for money.

Now I can understand if people rail against firms relocating overseas if they are using sweatshop labour. Just look at what happened to Nike. But given the level of complexity involved in the manufacture of whiteware, we are talking about jobs that are at least semi-skilled. Are Mexicans going to be exploited by F&P? I rather doubt it. I also rather doubt that this is the actual beef.

The beef is that people lose their jobs in NZ.

But is this enough to say something should be done? Suppose there is a global decline in demand for something we export and the industry here has to rationalise. Is there a sound basis for doing something about it? Now suppose instead our hypothetical exporter is undercut by its competitors. This is effectively the same thing as a reduction in demand for the exporter’s product.

What seems to be coming through in all the criticism of F&P is that the interests of the shareholders are being ignored. If the critics expect F&P to stick it out in NZ and face an even greater squeeze on their margins then they are saying that the shareholders should bear the burden. Not many shareholders will do that. Instead, they are likely to sell. The question becomes then to whom? Assuming everyone has the same information, it would have to be to someone who wants to take the company in a different (more profitable) direction – selling the assets and possibly moving the intangible assets overseas as well.

I know from sources that the F&P management are as about proud to be Kiwi as any other company in NZ. However, they have been under financial pressure for a long time and there comes a time when one has to say that the future cost is too much. Indeed, many of the staff have been commenting that they knew the shift overseas was coming, just that they didn’t expect it to be so soon.

Damn 😛

“If he needs some research done on a topic he just sends an email to India”

That does sound hot.

“whiteware is a high transport cost low margin business. their domestic base must have protected them”

from sagenz’s post 🙂

I reckon David Skilling would run fibre to my tea kettle if he had the chance, now that would transform the economy!

That said, I do find it interesting that a country like india (which has plenty of other problems) have transformed itself into an outsourcing centers. A friend of mine works for a large multinational consulting company that has outsourced all of their research to india. If he needs some research done on a topic he just sends an email to India. I wish I could do that.

No-one actually said that 😉

“Maybe we do need fibre to the home/microwave/lawn mower/dishwasher”

I said comparative advantage – debating the worth of David Skillings policy suggestions should be the issue for a different post *wink* *wink*

Maybe we do need fibre to the home/microwave/lawn mower/dishwasher 🙂

That is why I gave a heads up to government policy – labour matching program etc help to reduce these adjustment costs, which I think is a useful intervention by government.

“I thought it would be highly interesting to take an example like this as a case study and follow the workers involved in detail to see what happens to them”

I agree with you that it would be very useful to have some sort of longitudinal study would be very useful – that is what they are doing with immigration:

http://www.immigration.govt.nz/migrant/general/generalinformation/research/lisnz/

Being able to quantify and explain these costs would given government a clearer idea about how it can help minimise the costs and improve outcomes.