|
|
|
|
|
|
by lxmorj
2263 days ago
|
|
|
Your penultimate point doesn't address that this isn't about expectations. It's asking companies to actively cause their own profits to fall. Raw material prices are being bid up - but even assuming you fix those prices somehow - you can't price fix labor prices while scaling up. Most production companies can't scale without running OT or hiring new employees, both of which will drive cost-per-unit up significantly. In a competitive industry, it's not crazy to think the difference between profitable and unprofitable is less than the increase cost of overtime pay. 3M may be large enough and have enough similar production lines that they can shift production around and still make a marginal profit on the scaled up production, but that's not a given. Smaller companies or more specialized ones would have to decide to increase production to their own detriment. Some might do that out of goodwill, but your last point correctly calls that out for the gamble it is. |
|
|
There is no gamble here. Maybe you're misunderstanding the article but again here is what it says:
> Ordering large supplies at fixed prices is the right policy.
Emphasis: ordering is the suggested policy. Not forcing companies to fill orders. Companies able to fill those orders will do it because those are the only orders that make sense for their scale. Small companies unable to ramp up production will produce what they can and fill smaller orders that make sense for their scale.