Posted by: Boldwin
- [2962619] Tue, Oct 28, 2008, 10:38
1
Taxman
ID: 3985420 Tue, Oct 28, 2008, 13:57
Interesting report Boldy.
Mexico has banned elctronic products(at a minimum, probably other product categories) due to the number of manufacturing jobs lost to China.
The margins are not unusual. Cost to wholesaler plus 30%-35% mark up of cost plus advertising gets the product to retailer @ $14-15 who sells retail at $29, allowing retailer to keystone. The archaic principal of "keystone" (selling products at 100% markup) keeps retailers a float due to US wage..tax..workplace..insurance..real estate costs. It is unremarkable and unimportant to consider/compare cost of manufactured goods to retail price of said good. Mark ups are necessarily applied at the distribution and retail levels to generate revenue for O/H and profit.
Isn't this the model that DELL broke years ago, as a manufacturer selling direct to the consumer market (cutting out many retailer costs) and cut manufacturing costs by shortening the inventory on hand cycle. The reduced inventory cycle required less capital, and the elimination of some retail costs allowed DELL more advertising $ and ability to sell equal if not superior products for less.
Interesting Dell now wants to sell all factories. Probably because DELL can buy cheaper from China's sweat-shop factories.
Won't be seeing "Made In America" labels/stickers in too short of a time span.
2
boikin
ID: 532592112 Tue, Oct 28, 2008, 14:40
I believe the dell model was that they merely assembled it for the final customer. they saved on inventory costs by not having to have every possible computer configuration on stock but the pieces to make every possible configuration. They then removed the retailer mark up by marketing directly to the customer. A great model when the price of computers were still not "cheap", but the proliferation of computers like the emachine which were basically the same model made over and over, customers began to choose on price instead of options. Dell also began to move to this model with their consumer computers. You can actually see the progression of DELL from a customizable computer to standard no options machine by watching how the mother boards become more and more integrated over the years. You will also note that older dells are superior machines while there latest ones are total junk.
bottom line dell always bought product from china now they just want them assembled there too.
3
Boldwin
ID: 2962619 Tue, Oct 28, 2008, 17:47
I would be inclined to bet that the WTO overturns Mexico's protectionist measures you pointed out. Not being contentious. Just pointing out how bad the globalist inspired trade agreements were.
Sooner or later they will even forbid 'made in __' labels. Just wait for it.
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