Barbienomics or Why Britain Should Make Less

Generali

http://www.smh.com.au/business/barbienomics-the-reality-of-manufacturing-20110831-1jl6y.html

American protectionists seemed to have a particular focus on Chinese toy manufacturers at the time, so [a] student broke down where the value was in a Barbie doll when it was purchased from an American store.

In rough numbers, the brand – Mattel's trade mark, the Barbie name and design, the intellectual property - captured 40 per cent of the value. The retailer grabbed another 40 per cent. Parts and materials accounted for about 10 per cent. Logistics, moving Barbie from the factory to the shop, took six or seven per cent, leaving just three or four per cent for the assembly.

So do you want 40% or 4% of the value added?

HAMISH_MCTAVISH

Generali wrote: »

So do you want 40% or 4% of the value added?

Well technically it's 80%... 40% for IP and 40% for retail.

Plus a percentage of the shipping and logistics, financing, etc costs.

But I'm sure someone will be along shortly to proclaim that we'd be better off with the 4%.

Because we have to "make things".

ILW

Depends what is being made though. I would suspect the labour costs on something like an F1 car or a satellite are much higher.

Or why not go for the 40 and the 4% as well?

vivatifosi

I think Barbie and the F1 cars are the two extreme opposites.

Barbie is an amazing case study. Designed in the fifties, she's changed relatively little since, yet she still sells by the million. Imposters have come and gone, as have cheap copies, but little girls still like Barbie. She can be made in large runs, fits in a neat little box and you can probably fit about a gazillion (ok an over estimate there) in a shipping container.

Formula one cars on the other hand are bespoke, with even the two drivers having different set ups. Parts need to be tested nearby - eg the adjacent wind tunnel. There may be the option to buy some components from China, but even if you take something as simple as a bolt (though not even bolts are straightforward in F1), you risk catastrophic failure if you have a small part fail, as the death of Senna and the injury to Massa prove.

What's more interesting is all the stuff in the middle. Companies that at some point manufacture products, or outsource the manufacture of products. Here it may be less clear cut, or the options less obvious. For example, Lithuania has large forests and a tradition of working with wood. It's opening up as an economy offered greater opportunity for the manufacture of wooden goods. The issue then becomes what happens when people in Lithuania and other low-cost economies want higher wages in line with the EU - well you can go to the forests of Romania for example. My point is that this is a global issue, it is a combination of product/brand/safety specific (and probably other factors I haven't thought of) and changes over time as economies develop or change.

Interesting case study though, thanks Gen.

Wookster

There is actually a problem with Britain not manufacturing and that is the we lose a lot of menial jobs.

Sadly not everyone can be a highly paid professional and if we don't have menial jobs in the economy it makes it much harder to have working opportunities for everyone.

grizzly1911

Wookster wrote: »

There is actually a problem with Britain not manufacturing and that is the we lose a lot of menial jobs.

Sadly not everyone can be a highly paid professional and if we don't have menial jobs in the economy it makes it much harder to have working opportunities for everyone.

Without people at the bottom of the pile there is less for the "parasites" to feed on. So at some point the whole food chain suffers.

Menial probably isn't PC.;)

@gen

Thanks for the example.

Perhaps if the two 40s were shave down to say <20% Joe Public wouldn't need to get in debt to buy the consumer branded junk in the first place? Lots more money to spend on things that add real value to society or to pay the low paid workers a living wage?

HAMISH_MCTAVISH

grizzly1911 wrote: »

Perhaps if the two 40s were shave down to say <20% Joe Public wouldn't need to get in debt to buy the consumer branded junk in the first place?

They have been.

Just go to Primark, Aldi, Lidl, etc, and you can find any number of generic products with virtually no added value beyond the production and distribution costs.

But what a dull world we'd all live in if consumers didn't have the choice between cheap generic stuff and product of a better quality, design and reputation.

kabayiri

The issue is one of 'direction of travel'.

I have seen similar arguments to Gen's applied to Nike and their footwear. All the value in marketing and retail etc.

Except, you can find complete clones of the Nike experience out there in China today.

So what gives us the right to assume we can retain the edge on brand and retail?

grizzly1911

HAMISH_MCTAVISH wrote: »

They have been.

Just go to Primark, Aldi, Lidl, etc, and you can find any number of generic products with virtually no added value beyond the production and distribution costs.

But what a dull world we'd all live in if consumers didn't have the choice between cheap generic stuff and product of a better quality, design and reputation.

Your signature makes the point really. While a lot of people are still stupid enough to get into debt for self gratification that is their look out. If you can really afford the choice so be it, lots can't, but do.

I will give you design not so sure on the other two these days.

Why rate quality so high when it will be out of fashion next year and you will need a new one to keep up with the pack? I must admit I did enjoy my premium sausage sandwich yesterday though.;)

In a lot of case you are simply buying a badge or a wrapper.

Edit:- Dull world or debt albatross:think:

zagubov

HAMISH_MCTAVISH wrote: »

They have been.

Just go to Primark, Aldi, Lidl, etc, and you can find any number of generic products with virtually no added value beyond the production and distribution costs.

But what a dull world we'd all live in if consumers didn't have the choice between cheap generic stuff and product of a better quality, design and reputation.

A lot if what we're paying for is marketing hype.

When the Berlin wall came down, and the east Berliners rushed into the west for their first macdonalds and Coke, they had plenty of real cause to celebrate but at the end of the day when they calmed down they would have realised they were eating a minced beef sandwich and washing it down with a drink remarkably similar to the Pepsi they were already used to.

grizzly1911

kabayiri wrote: »

The issue is one of 'direction of travel'.

I have seen similar arguments to Gen's applied to Nike and their footwear. All the value in marketing and retail etc.

Except, you can find complete clones of the Nike experience out there in China today.

So what gives us the right to assume we can retain the edge on brand and retail?

I have had the same experience with earphones. I can't fault my Sennheiser CX300s but I have used low end branded near identical ones for 10% of the price that have given them a run for their money.

Interestingly a response by a branded earphone reseller on an AV Forum did say "that they basically source OME stuff and brand /tweak (whatever that may mean) to their specification so near copies could well be available" or WTTE.