Originally posted by: DrMrLordX
Still seems kind of sad that the machines can't do a better job than that. And the general trend here is that mechanizing the process and doing it right would cost more than human laborers would. If anything, paying a guy $25/hr or what have you is generally considered to be a cost-cutting measure.
No one is disagreeing with you, but we are saying the existing (already paid for and depreciating) machines simply don't. Replacing them would merely add cost (the cost of the machines) at a questionable probability of being able to raise prices to recapture the investment.
If consumers were shunning the parts because of the TIM issue then it would be sales loss issue, and the investment would be billed as a necessary enhancement to their existing production line.
Or if someone in marketing could convince a capital expenditure decision maker that upgrading the equipment would result in the creation of a more desirable (i.e. shifts the
demand pricepoint to the right) end-product from which the estimated increase in ASP is expected to pay for the equipment upgrade plus deliver an ROI which is competitive with the other existing/known ROI opportunities for the same capex allocation.
A new company that might come onto the scene would not burden their decision makers with the task of proving ROI for upgrading existing antiquated equipment (because they wouldn't have any to begin with) and this is actually a competive advantage to new comers in the industry segment.
No one is saying equipment doesn't exist to do the job, nor are we saying that the equipment would cost more than humans given a threshold minimum volume, but there are standard GAAP metrics of capex replacement that get in the way when the consumers aren't providing the incentive (i.e. reducing demand) to the company's decision makers to make investments in themselves.
Sidenote: BTW this is exactly how/why the Japanese steel industry upended and routed the established american steel industry in the 1980's.
Japan's primary disadvantage, its lack of raw materials, was overcome through the building of huge vessels designed to carry large amounts of ore for low cost, building deep harbors and steel mills on the coast, and utilizing the most advanced technology. For example, 86 percent of Japanese steel is continuously cast-a process that saves energy and raises productivity-compared to only 26 percent in tile U.S.
A Political History of Steel - published 1983