We've all heard the maxim "There is no such thing as a free lunch". It appears, however, that few of us seem to understand that there are consequences to having a free lunch, as there is to everything.
For years we have bitched about the foreign cars destroying the American car industry. For sure they did, with a better car that many of us drive.
For years consumers in the U.S. must buy "on sale", "get a bargain", or "buy wholesale". It's engrained in our thinking, that getting a "price" is what we must get, unless we are of courses rich when we can not worry about what is on "sale".
"The Sales Bargain" mentality, "buy at cost plus" was truly defined by Sam Walton as Wal-Mart and various concepts permeated the U.S. and changed our retail environment.
What this means is that it is the CONSUMER who is at fault for the move to outsourcing our products and people resources to China, India, and the "global economy". Prices did this, not evil corporations intent on huge profits.
When a consumer is only willing to "pay to market" and the market creates the price points, the manufacturer (and thusly those distributing the product) are forced to lower the prices.
This cuts margins.
No matter what the business there is a minimum gross margin of profit a business must make (dependent by sector) for that business to stay profitable.
Of course we all know of the banks, and their rape of the American people, and we all hear of the massive bonuses and CEO salaries. Wrong as these may be, they are actually irrelevant to the overall financials of the company, and the "extravagance" in many instances of the corporation.
Let's use the example of a "Polo Shirt". Originally American made, and a "brand name" for a man's casual shirt.
Over the course of a 30 year period this shirt went from an "exclusive brand" (step 1 for a product), to "generally accepted" (step 2-now becoming a commodity", to "for sale by others" (this is when Lands End, and numerous other retailers began copycats of the product, some U.S. made, some import (step 3-the dissolution of the brand, and creation of the commodity), and finally to where the majority of all Polo Shirts are now imported, in various qualities,and at various prices. (Step #4-the product has become fully commodity driven, even if NOT a commodity) and retailers/ manufacturer
both begin price wars to stay in the business, often losing money.
The consumer "wins". The price of the product is lower.
Or so we think.
Now, let's move it to a larger type of business, a foodservice equipment distributor outfitting a new restaurant. These distributors buy wholesale the commercial product that they resell, and provide services (design, installation, holding of inventory) as part of their fee to "get a job".
In recent years manufacturers have begun offering "direct" prices to the consumer, the web has allowed everyone to "price" a product (many that do not have overhead that raises their cost of the goods for actually holding the inventory).
The bottom line: the industry has become an unprofitable shambles. Web companies do not stock product, but "sell the product" and drop ship. Larger distributors buy much better and have lower margins based on their buying ability. Smaller distributors, that often can do a superior job, are forced to either give up business because they can't be profitable, or "take the business" and end up losing money.
Oh, and by the way, even in this traditional industry now well over 50^% of the products we use commercially in foodservice are imported, many with questionable safety standards beyond mere licensing.
It's still our fricking fault.
It is our insatiable desire to buy at the "best price" that creates the need for such competition that we move industrialization from our own country,and blame corporations for out sourcing.
Yet again, we as the American people deceive ourselves. We are THEY, as Pogo said, and the THEY is what is "shopping ourselves" to death, both in discounting of product, and in the 70% of our GDP that is driven by consumerism.
