QANTAS - Last To Spot A Trend

[Sunfish]

Hey! I know! Lets all get our aircraft maintained by dirt cheap Chinese labor in China!

It's taken how long for Qantas to spot a trend? Ten years? Bunnings was selling Chinese power tools at least Ten years ago.

So anyway Qantas management heaves itself off its backside, looks around and decides that China is the flavor of the moment - Ten years to Fifteen years after retailers and miners worked this out. But Hey! Airlines are conservative right? So why does it matter when we go to China as long as we go?

Because the Chinese cost advantage is already disappearing! Qantas is too late, you missed the boat! Remember you heard it first from Sunfish:

Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, 're-inshoring' is the new fashion.

"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.

A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.

The gap in "productivity-adjusted wages" will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

The list of "repatriates" is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.






World power swings back to America - Telegraph (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8844646/World-power-swings-back-to-America.html)

[dodgybrothers]

boston consulting says so. It must be right then eh Brucey boy?

[QF94]

Qantas is too late, you missed the boat! Remember you heard it first from Sunfish:



That sounds all too familiar. QANTAS missed the boat on 777's, new generation 747's and John Borghetti.

What did we get instead? A380's, getting 787's, Alan Joyce and a shrinking company!

[MACH082]

Don't forget the pride of the southern hemisphere, Bruce Buchanan. The rattle snake salesman himself.

The only thing more worrying than Alan Joyce as Qantas CEO is Bruce Buchanan.

Mark my words, he will replace Joyce at it will be business as usual at RedQ HQ on Coward Street.

[virgindriver]

RedQ HQ

I thought FarQ had a better ring to it...

[gobbledock]

No doubt BCG hand delivered a copy of this report to both Bruce and Alan, and it was encrusted with diamonds and gold borders, all for an attractive fee?

What a load of bollocks, as Sunfish said, this is old news, China is no longer 'the new black'. Actually, why don't QF hire Sunfish as a Consultant, he could provide better advice at a third of the cost of other 'consultants' and still make enough coin in 1 year to live happily off for the next half century.

[Howard Hughes]

There's always India, although they aren't far behind China in growth.

Africa will be the home of cheap manufacturing over the next 30-40 years. The recent over throwing of despots will go some of the way to making this a reality.

[Ultralights]

i was thinking the same thing, India is the next big factory.

[Baileys]

Do you really want India maintaining anything - Dodgy brothers country.

[Ultralights]

and China wasn't? all that matters is the $,

[600ft-lb]

The only thing that has protected the aircraft maintenance of Qantas aircraft in Australia is the clause in the Qantas Sale Act that says the majority must be done here.

But it never stopped Qantas management threatening their workers with their jobs in an indirect way or 'no getting the contract' if they didn't sign up to particular clauses in the previous EBA's. Or as they would probably call it, robust industrial relations.

[gobbledock]

So where is the 'R' regulator in all of this? Is the regulator ensuring that QF is carrying out 'change management' processes in line with its necessity to comply with it's safety management system? Do the comments that QF management are making about staff redundancies and the threatening manner these messages are being delivered via media outlets as well as unproven statements about death threats being made constitute a 'just culture' which is also required under the regulations?

[hotnhigh]

Stick with it victor two. You say it enough times you'll begin to believe you're own propaganda. As for virgin, the latest press releases highlight the burgeoning gap.......
News and Press Releases | Virgin Australia (http://www.virginaustralia.com/AboutUs/Media/NewsandPressReleases/P_018898.html)
News and Press Releases | Virgin Australia (http://www.virginaustralia.com/AboutUs/Media/NewsandPressReleases/P_018692.html)
The little birdie is telling everyone within qantas, the enemy is outside, not within.
It's a shame Strambi, Joyce, Clifford and Buchanan fail to understand this.:ugh::ugh::ugh:

[Sunfish]

Victor Two, the sheep are the Board and Senior Management of Qantas who do not understand reality.

Chinese minimum wages grew 22% this year.

China's minimum wage shows average increase of 22% this year (http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20111026000038&cid=1201)

If you extrapolate that trend and combine it with the inevitable decision to float the Yuan instead of keeping it pegged ludicrously low, then your costs of offshoring and outsourcing to China are only going to rise in future.

From my own experience as a senior manager in an outsourcing operation, once Qantas puts all its eggs in the outsourcing basket by closing/downsizing the remainder of its heavy maintenance facilities, the MRO's will raise their prices - negating any outsourcing advantage.

Then there is the issue of losing control of a core competency - for example outsourcing RB211 maintenance was such a good move wasn't it? A double engine shutdown on a B747 is now on the cards.

The net effect of all this is that once the Board realises that outsourcing has not only cost them money, but surrendered control of core competencies, and with it the Qantas reputation for safety and reliability, then they will have to bring these functions back on shore, and I don't think the airline has the capital to allow that to happen.

I've watched this cyclical behavior play out in the IT industry many times.

[gobbledock]

Victor two stroke, you better get back to your trailer before somebody steals your flannelette shirt and overflowing ashtray.

[QFinsider]

The whole Chinese miracle hasn't worked so well for Sue Morphett and Pacific Brands...

[ohallen]

Pac Brands certainly worked well for Sue because she got to keep her total remuneration despite dismal strategy and poor outcomes for all.

Therein lies the lesson...they don't give a stuff as long as they get the money and move on before it has any consequences for them.

It is up to the Boards to take a stand and the other problem is if they penalise the CEO they have to admit to their own errors unless they can prove strategy was correct and just poor implementation.

Qantas will not get away with that one because history will show the strategy was the problem.

[DutchRoll]

Blah rant insult rant blah insult insult something indecipherable

Nice day for trolling, eh?