"Wärtsilä has analysed its manufacturing footprint as announced in October. To adjust to the fundamental changes in the market Wärtsilä plans to reduce its manufacturing capacity.If you look at the chart above, Finland has never been so uncompetitive, since the past decade or so. Had Finland stayed with the "Markka", the Finnish currency before the Euro, they would have certainly devaluated it...but they can't.
Wärtsilä also plans to move the majority of its propeller production and auxiliary engine production to China, close to the main marine markets. The current propeller manufacturing in Drunen, and the component manufacturing DTS in Zwolle, both in The Netherlands, are planned to be closed.
The Wärtsilä 20 generating set production in Vaasa Finland is planned to be closed and moved to China in order to stay competitive in this market."
The result is a slow but sure disappearance of the manufacturing from Finland to low cost countries like China as expressed by Wartsila in the above article. By the way, it is worth noting that China is artificially keeping its currency at low level which of course accelerate the "one way" globalization.
Obviously, the competitiveness is a function of the currency - the Euro - that is far too strong at the current time and of course wage growth agreement not inline with the current situation.
4 comments:
Do you suggest a hyper-inflation as a solution to increase the competitive level? Then, it would be many steps further away from the deflation scenario. The hyper over-consumption has been there for many years, like the guy has heavily addicted to heroin. Let's kill the guy right now?
I guess the hyper-inflation could help the bankers to rob the mass once again, doesn't so?
On the contrary, I think only going through deflation can help the country get competitif ; Spain, Greece etc... will have to go through that process.
Hyperinflation is not in the card yet. Deflationnary forces are far too strong...but fighting them could lead to policy and fiscal mistakes that could undermine price stability...maybe in 3-5 years very high inflation could be in the agenda.
I was commenting on the assumption "if Finland would still use Finn MK, the Finnish gov could devalue it significantly to re-gain the competitive level."
I still remember the 1992 legal robbery made by the 1/3 devaluation of the MK. Before that, the mass had lost a lot in the over-consumption encouraged. They were robbed again by the devaluation.
Do you like this way?
I like neither way but when I see household gettting more and more debt burden , getting bigger and bigger...it is a worrying fact...
This was supported with the idea that asset price could nly go one way and it is higher and higher and the fact that salary can only increase indefinitely....
Now, Finland cannot devalue its currency and it is a fact. So the robbery you are suggesting, won't happen in that sense...
Tax "robbery" will happen for sure as some will have to pay for the excess financial and government have and are currently doing...
Pension fund "roberry" should a decline in market assets resume...
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