Bingo! Raw material prices are soaring: the hour of functional service economics has arrived

Sunday, 4 January 2015

Tuesday, 6th April 2010

(See comments at the bottom of this article)

In its edition from March 23rd 2010, Le Figaro economy announced that the Indian Nano car, the cheapest in the worlds, less than a year after its launch, was going to see its price rise significantly because of the prices of steel, aluminum, plastic, copper had soared.

In the edition from the 3rd April 2010, La Tribune’s title is “Steel soars, industry derailed!”. An article entitled “Survival of the strongest was necessary for iron ore », explains that the Brazilian mining company Vale imposed a 90% rise in prices (ninety!), questioned the principal of annual contracts and obtained a quarterly rate update. Read these articles in the topic “news articles”.

What have the experts in functional service economics been saying for years? That dematerializing the economy is vital, the balance between the offer and the demand in raw materials is now structurally in favor of the offer, with in addition, a few political complications … such as the ban to export neodymium via China since September 2009, without forgetting speculation that aggravates the weight of additional costs! Oh, I was forgetting: how to establish and respect a budget when the only word that counts is “price volatility”.

Non, there is no longer any choice: to stay competitive, to ensure profitability, of capital, in short, for companies to be sustainable, we need to dematerialize. Difficult? No! Who can say there is no energy and raw material overconsumption? Who can say that is certain domains (well known), there is no planned obsolescence of goods? No, quality is not expensive, it is the same as non-quality has a cost (Quality is free, reference book by Phil Crossby). Without the American state, GM and Chrysler would no longer exist today, in a domain where planned obsolescence is a well controlled art. Airbus and Boeing are doing well. However, when a has over 100.000 km, it is agreed that it needs to be replaced and that a plane lasts 25 to 30 years… without breaking down. A car breaks down, that ordinary, a plane crashes it’s a catastrophy!

No it is not difficult; however we must want it. It is so good to make last a system that works so well. Yes, but … the longer we wait, the higher the cost: what is expensive, is not a reconversion that’s profitability is ensured and that’s principal is a question of survival, it is the urgency in which we can find ourselves if we do know now how to anticipate.

Homo sustainabilisis and profitabilitisis

January 2015 Comments :

Oil prices collapsed in September 2014. Many commodities have also seen their prices fall. The first reason is the sharp slowdown in the global economy, the so-called emerging countries are no longer bringing growth, including China, the real growth is 2% as now show most experts as Patrick Artus Natixis (see article in La Tribune on this). China is stalling, as forseen in the book “The key renewal through the crisis“, published in September 2012.

The above article then is it obsolete? Not at all!

The crisis we are experiencing is the result, in particular, the oil shocks of the 70s, but also against the oil shock of the 80 Indeed, instead of maintaining the economic transformation efforts, many said, in favor of this against shock, “we can start as before.” Very serious mistake!

As well as 240 billion granted to Greece will have been lost since its debt returned to the level of the first intervention, and believe that the fall in commodity lets not reform itself is a serious mistake.

Do not start again the mistake of misinterpreting against the oil shock of the 80s: the decline is only a respite and a prelude to a sharp rise in a year, 2 or 3 perhaps, no more !


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