Category Archives: Money

Economic posts

Why do people think manufacturing is for dummys?

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We hear a lot about how our country has shifted to a knowledge-based economy where manual, tactile skills are less important. This is based on an idiot’s dichotomy between intelligence and manual work. Because manufacturing inherently hints of manual work, it is never waved about as a career aspiration for our young folks who have evolved beyond manual labor.

But the process of turning material into a useful product is not too easy for a college-educated high-flyer; it is too hard. You are accountable to reality when you are working with physicality.

I got the below sentence in an e-mail today from the guy who runs our heat treat. I don’t think he has a college degree. He is not one of The Engineers. He is just the guy who constantly bails us out when we have a material integrity problem.

“I understand the attached report shows hardness’s of RC 46/47 when checked on the Knoop and converted to the Rockwell scale.”

Note his grammatical errors such as the incorrect possessive apostrophe on the word hardness. Like I said, he is not part of the intellgentsia. However, the point of his e-mail was that by converting from one measurement scale to another, we were getting an inaccurate result. Another dumb desk-jockey mistake. (Remember any stories of metric to English unit conversion?)

Also today: Did you know that by taking a casting and milling off somewhere around a quarter of an inch you will expose porosity within the casting? Did you know that if you are an engineer and you have to make a cast part lighter and you instruct the factory to mill the casting (rather than authorizing a new casting which you would have to pay for from your budget), the cost of poor quality because of the exposed porosity is now a manufacturing problem rather than an engineering problem? Did you know that the correct solution of redesigning the casting mold for a thinner part may not be possible because you might not have a realistic allowance for movement of the mold core without breaking through your thinness completely?

Of course you knew. You’re too smart to work in a factory.

End of the month

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End of the month is traditionally a day when we try to ship everything that we possibly can so as to post the highest possible dollar value of shipments for the month. It can be quite hectic. But there is an even stronger tradition in these parts of hunting deer after Thanksgiving–and that’s not limited to men. C.M., the shipping supervisor, is out in those hills, too.

Last week I was asked to help out in shipping today due to C.M.’s absence and I was expecting a horrible day. But it was pretty uneventful. Tomorrow will probably be horrible. Sorry, but it will. The first of the month I have to cram out as many reports as I can, and one of the harder ones to put together requires some input from the people who are off hunting to do properly. Also, something I did today wasn’t documented as desired so they want me to go back and document it tomorrow.

But, today really wasn’t bad, and I am glad for that. There is this one shipment which is not going to be ready to ship until late today which we have instructions to ignore the usual, picky process for this customer and give the shipment to a special pickup late tonight. The trucker who picks up tonight is going to bring the freight to our usual truckers tomorrow. We are doing this hocus-pocus so that we can say we shipped more stuff in November. It’s dumb and it is going to cause us more work. But, today, it was pretty harmless for me.

Rumblings of the Big One

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Today I hear a rumble. I see everything starting to shift. I think there is an earthquake coming.

Words that should scare you…

As of July 2009, California’s budget shortfall was 49.3% of its general funds. States have considered drastic options to fill such gaps.

“I looked as hard as I could at how states could declare bankruptcy,” said Michael Genest, director of the California Department of Finance who is stepping down at the end of the year. “I literally looked at the federal constitution to see if there was a way for states to return to territory status.”

From later on in the same article….

Mr. Genest estimated that, eventually, 40% of the state’s budget would go to the state Medicaid program, 40% to education, 10% to debt service and 6% to retiree medical services and pension—leaving little left for anything else, such as the state’s corrections system.

In other words, California is going to choose hand outs over maintaining public order. The lowering of crime rates over the last twenty years was achieved by throwing lots and lots of people in jail. We are going to see violent crime rates climb as states decided that they can not afford to keep people in jails.

But it is not just California…..

The real talking was done Monday, when Mr. Paterson was at his articulate, compelling best, explaining the budget crisis in terms even someone otherwise oblivious to deadlines and consequences and seemingly any pressure to confront them might still understand.

“Unless immediate action is taken, we will have challenges to our state’s finances and to our cash flow in four and a half weeks,” the governor said.

Translation: New York State is not going to have enough money to pay all of its bills in a month.

Not a surprise when you consider this…..

New York spends $2,283 per capita on Medicaid, far more than any other state and twice the national average, according to statistics compiled by the state budget division. Second is Rhode Island, which spends $1,659. The state also spends $14,884 per pupil on school aid, more than any other state and well above the national average of $9,138.

But of course, it is not just America that is facing these kinds of problems….

Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.

Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.

This, Chanos and others argue, is happening in sector after sector in the Chinese economy. And that means the Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.