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Shipping Costs Start To Crimp Globalization

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http://www.nytimes.com/2008/08/03/business...amp;oref=slogin

When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for installation, then bring the mostly assembled cars back to the United States.

But when it began production this spring, the company decided to make the batteries and assemble the cars near its home base in California, cutting more than 5,000 miles from the shipping bill for each vehicle.

“It was kind of a no-brain decision for us,” said Darryl Siry, the company’s senior vice president of global sales, marketing and service. “A major reason was to avoid the transportation costs, which are terrible.”

The world economy has become so integrated that shoppers find relatively few T-shirts and sneakers in Wal-Mart and Target carrying a “Made in the USA” label. But globalization may be losing some of the inexorable economic power it had for much of the past quarter-century, even as it faces fresh challenges as a political ideology.

Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

“If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,” said Naomi Klein, the author of “The Shock Doctrine: The Rise of Disaster Capitalism.” “That is necessarily leading to a rethinking of this emissions-intensive model, whether the increased interest in growing foods locally, producing locally or shopping locally, and I think that’s great.”

Many economists argue that globalization will not shift into reverse even if oil prices continue their rising trend. But many see evidence that companies looking to keep prices low will have to move some production closer to consumers. Globe-spanning supply chains — Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, Calif., and then trucked to appliance stores in Chicago — make less sense today than they did a few years ago.

To avoid having to ship all its products from abroad, the Swedish furniture manufacturer Ikea opened its first factory in the United States in May. Some electronics companies that left Mexico in recent years for the lower wages in China are now returning to Mexico, because they can lower costs by trucking their output overland to American consumers.

The current economic model of globalisation was completely unsustainable.

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http://www.nytimes.com/2008/08/03/business...amp;oref=slogin

The current economic model of globalisation was completely unsustainable.

Yes I am suprised more is not being made of this. This crises puts into question the neo liberal policies being followed

by Bush and Brown. The neo liberal policies that have lead us into disaster and that business is pleading for the

government to intervene with socialist solutions.

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Yes I am suprised more is not being made of this. This crises puts into question the neo liberal policies being followed

by Bush and Brown. The neo liberal policies that have lead us into disaster and that business is pleading for the

government to intervene with socialist solutions.

Not so much socialist solutions- they just want the cash with no strings attached. Ironicly it could be that the chavs see their value rise as the cost of transporting physical goods rises, while the 'knowlege workers' see their jobs being exported because there is little cost in sending information around the globe.

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Not so much socialist solutions- they just want the cash with no strings attached. Ironicly it could be that the chavs see their value rise as the cost of transporting physical goods rises, while the 'knowlege workers' see their jobs being exported because there is little cost in sending information around the globe.

So in other words the people who actually do something will be better off than the bullshitting hot air merchants? :)

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Guest LongBlackKilt
Not so much socialist solutions- they just want the cash with no strings attached. Ironicly it could be that the chavs see their value rise as the cost of transporting physical goods rises, while the 'knowlege workers' see their jobs being exported because there is little cost in sending information around the globe.

And the political-managerial classes who prided themselves on their jobs depending 'on thin air' will hopefully see them returning to such.

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So in other words the people who actually do something will be better off than the bullshitting hot air merchants? :)

Might explain the massive rise in agri land around large built up areas, even though the speculative (i might get to build on it)element has dropped out of the market, prices still keep going up!

I think the wise money is clearly falling into the agri land close to large populations might actually be a good idea! (as it always has been), no better inflation/deflation proofed investment, people need to eat and flying runner beans in from the other side of the plannet was always doomed to fail.

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http://www.nytimes.com/2008/08/03/business...amp;oref=slogin

The current economic model of globalisation was completely unsustainable.

Specifically the debt money system which puts growth bias on our economies by making individual nations compete for debt free money through exports. Cheap energy has allowed the west to export inflation to Asia since the mid eighties.

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So in other words the people who actually do something will be better off than the bullshitting hot air merchants? :)

Whatever a bulshitting hot air merchant is, I don't think they will have their occupation off-shored. Software development, accountancy, insurance (and most other financial services), call centres, advertising, graphic design, proof reading and more all involve doing something and can all be done anywhere. Management consultancy is the closest I can imagine to a pure BS job, and they have to be in the same geographic location as the company they're leeching off.

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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