Export Pricing

The Last Government report said Imports--up 0.8%, Exports--up 0.6%, but the previous report put Imports--up 2%, Exports--up about 0.6% (in Price). This reflects a trend which has been going on for about a Year. Resources and low-Tech production has been gaining in value against high-Tech production. Another way of expressing it: American and World high-Tech products have been suffering Product-inflation; Resource and low-Tech Products have been enjoying a Product-deflation.

What has brought on this Trend?

The primary cause consists of American Outsourcing of base element (low-Tech) Production. This has raised foreign industrial demand for Resources and semi-Finished Products, while the American demand for such Resources and Products diminished at a slower rate than the rate of Outsourcing; the Process increasing overall industrial demand for the Products, leading to higher Resource pricing. The second primary cause stands as the fact that American Producers did not pass all Profits gained from Outsourcing along to the Wholesalers, who did not pass all the reduced Costs along to the Retailers, who did not pass all the reduced Costs along to the Consumers through lower Pricing.

We can now turn to the Production side of the Equation. The Producers of high-Tech Products face higher Production Costs due to higher Pricing for Resources and Semi-Finished Products. Their Profits from Production have been reduced, and they face a sharply competitive market for their Product. They individually chose to maintain their Price schedules, in hopes to achieve greater market share, intent on recouping lost Profits through expanded Sales. Now comes the debacle: Achievement of their intent resulted in higher Labor Costs, again reducing Profits. Exorbitant failure of intent led to increased Inventory Costs and higher Resource Pricing.

This Author suggests high-Tech Producers Worldwide abandon a self-defeating pursuit of expanded Sales, and initiate Price schedules which would increase high-Tech Product pricing to an overall 3.5-6% gain. lgl