Are we in a recession or do I just think we are?

We are in the retail & service industry .... Johns comment above ...

"And of course the retail industry that has been planned on the basis of continuous growth is finding it a problem. This applies to everything from day to day purchases to houses and commercial premises"

... holds so true ... for a business/industry to grow X% PA the market that it services has to grow X%+ PA (at or above your growth rate) for that to be a reality ... so if your market isn't growing faster than you hope to grow, where does your growth come from ? It comes from putting your competitors out of business :( ... and the smaller ones are the first to go. That means less jobs.

I have been in our business for 25Yrs. We have been in business for the last 32yrs ... what I see happening, is that in an effort to keep sales/turnover happening, the BIG boys keep finding ways of bringing product ranges to market at an ever decreasing sale price to keep encouraging the market to buy (and it appears they do) ... that's all good and well for the buyer, but at an ever decreasing price, quality takes a big hit, hence life expectancy, and so your out replacing that cheap item sooner than you should be, putting MORE money into the hands of the big boys. AND those $$$ are leaving the town / region / state you live in and in most cases are going overseas ... so we are progressivley devaluing our town areas.

They (the big boys) don't service, repair, or carry spare parts for what they sell, (they don't make any money out of that business sector), so the only way they can make money is to sell you another one .... and while this mentality grows, the service and repair industries slowly close down ... why fix it when its cheaper to buy another one ? ... but (and this is fact from one of the industries we work in) ... instead of buying one of item X to last you 20+yrs at $370 (which can be repaired and parts are readily available, and the machine needs to be serviced & maintained), you choose to buy item Y at $119 ... but it only lasts 2-3yrs ... but that's alright, it's affordable, and you can have it NOW. When it breaks down, you can just throw it away and buy another one .... Trouble is, to get 20yrs worth of item Y, you'll need to buy 7 to 10 of them and you end up spending 2-3 times as much money to do so ... where is all your disposable income going ? ... not to mention the greif and hassle you go through when the item lets you down ... over & over & over again .... and the disgusting waste of precious natural resources !

If you choose to buy the better item, then you are helping foster industries that employ people to service, repair, maintain said goods. Those industries then need to employ & train people to do said work. That provides JOBS & SKILLS and a sense of worth to those people who become employed doing something worthwhile .... and they earn a reasonable income, and hopefully, spend their money buying QUALITY goods that then makes the money go round .... not leave your town.

... but that isn't the business model of the big boys :(

I squarley blame the crap we are in on the multinational corporations and the advertising agencies (whose job it is to make every household want what the multinational corporations are pushing ... they got crap to sell, and they'll pay the ad agencies handsomley to convince us to buy it).

... sigh :(

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Originally Posted by roverfan

Most people??? Sometimes I wonder what world you live in

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One where people are driving near new cars, go overseas, dress well, and eat out. They are all around you. Open your eyes. Look at the proliferation of coffee shops and restaurants, car dealerships, clothing and jewellery shops, travel agents.

not a recession its just globalization & free trade doing its thing.

In my sick and twisted view it’s good to go through a correction from time to time, it should teach us a few things. Recessions are nature’s way for reminding those living on credit to pull their heads in. It reminds those not strong in business to improve by offering better or different value. I’m in business and the last 5 years have been tough. How we do business today is different to back then…basically what does not kill you makes you stronger.

The problem is US the consumer and not them (who ever that may be). I lived in Denmark between 2001 and 2005 and I can tell you their attitude to consumerism is different. They buy local cause it’s better not cheaper. They’ll buy one TV until it’s broke and then they’ll get it repaired cause it’s a better way to do it. You bought one lounge suite and kept it for ages cause it had style and it was quality. When I lived there, there were NO $2 shops, reject shops etc. Quality was a way of life. They build style into functionality without quality suffering, and not always at a huge price. I know that since my return I’ve always bought the best I could afford, typically meaning I bought it tomorrow after the next pay check rather than on credit today.

Recently I invested in a new ride on mower, a Chinese copy of a larger ZERO TORO. I would have preferred one made in Australia but AMC went under (poor quality and low tech). I ended paying the same price as a consumer would in the states as here in Australia the machine is twice as expensive. Why is it so expensive? I spent some time researching the copy and it appears to be made very well. The importer paid his duty and I’ll be paying the GST. The motor is covered by a two year global Briggs & Stratton warranty.

For me I’m doing my bit by teaching my children the value of waiting and saving, I teaching them the reward of self reliance and the joys of having a go and sharing/helping and after 30 years of working at it, tomorrow I’m picking up my first new car - saved and bought with money and not equity..The defender ticks all the boxes for the best I could afford, has proved itself in the test of time and will allow me to continue to do the best I can with the kids. I’m excited and they are really excited.

We could blame the banks for losing their social conscious and responsibility, we could blame the compulsory super and now the funds and their (our) hunger for great returns, we could blame globalization, we could blame the schools for not teaching the kids the value of saving and balancing the cheque book (hands up those that still have one?) ….at the end of the day we need to look in the mirror and reflect on our own behavior and on what we are doing to safe guard a future for our kids.

I now step down from my soap box and so look forward to picking up my red defender.

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Originally Posted by haydent

not a recession its just globalization & free trade doing its thing.

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I agree 100% with that, Australia should stop selling raw materials and start the manufacturing industry again. We have to go back to our manufacture base in the seventies.
Many countries start protecting thier industry, Brazil do not allow importing textiles for other South American countries if they have fibres from China.
The same applies to cars.

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Originally Posted by Chucaro

We have to go back to our manufacture base in the seventies.

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Agree with restarting the manufacturing section - we as a people are great innovators but we need support from the government (and I do not mean protection).

Look at the mess the finance & banking industries are in .... once upon a time finance was something you went to the bank for, for the purpose of making a MAJOR purchase (like a house, a car, a boat, a business). YOU sought out the finance when you needed it.

.... move forward to today. Finance is a commodity to be SOLD to consumers, just like goods, fridges, TV's, etc ... There's BIG money to be made by retailers who sell product via finance ... in some cases, they make more via the finance on the sale, than they do on the product sold. I sold a machinery package to a contractor just prior to Xmas. It was all quality equipment with good life expectancy & solid parts backup ... his equipment had failed horribly at the busiest time of the year, and he didn't have the spare cash to buy new stuff ... so the finance was his only option ... perfectly justafiable business expenditure ($30/wk for 30 months) ... but, the amount of $$$ we made from selling the finance was substantial ... 1st finance deal we have ever done, and frankly I was a little embarased as too how much money we made just on the finance! Ask Jerry Harvey (& the other big players) why he sells so much product with finance readily available .... :eek:

So by selling finance to consumers the retailers & financial sector have backed themselves into the corner they are now currently in. They have built up a market expectation that cannot be sustained over the long term.

People (some) are starting to wise up and choose to do it the old fashioned way ... save up for that new televison, laptop, 4WD accessory, etc, and keep the extra money that would be paid to the finance sector in their own back pocket.

I have soooo many friends who have fallen foul of the "take it home today - 4yrs interest free nothing to pay" deals .... at some point it has to be paid out, but they have so many "deals" that they end up having to use a credit card, OR the finance that was sold with the item to pay for it ... and in alot of cases, the item purchased doesn't even last for the "interest free" period, so they are left paying for something they no longer own ... :angel:

Once upon a time, if you couldn't afford it, you saved until you could afford it ... and when you purchased, you got a good one ... or you paid a bit more and bought a better one, or a bit more and got the best one ... and it was well made, and it lasted, and was fit-for-the-purpose-intended.

Nowdays you just find the cheapest one you think you can afford, and slap it on the fantastic plastic or do the finance deal offered .... and it's generally NOT built very well, and has minimal life expectancy, and alot of the time it's NOT-fit-for-the-purpose-intended.

Very, very sad :(

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Originally Posted by Fluids

Look at the mess the finance & banking industries are in .... once upon a time finance was something you went to the bank for, for the purpose of making a MAJOR purchase (like a house, a car, a boat, a business). YOU sought out the finance when you needed it.

:(

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Fluids,

Consumerism driven by easy credit, mostly not from the big banks is what you are referring to and hey if people are so lazy or stupid and sign up for finance deals without understanding the cost then there will always be someone ready to give it to them and take their money.

One of the things that has kept Australia in such a strong position over the past 4 -5 years has been the fact that our banking system is strong and on the whole has acted responsible and prudently, it is the envy of the world.

The big 4 banks are easy targets but in the majority of cases they have been prudent lenders to business and individuals, have remained profitable whilst all around the world major banks have been under real pressure, if not folding.

Do not get me wrong they are a pain to deal, there are always horror stories and everyone hates that they make such big profits (unless you are a share holder or senior executive) whilst not passing on or increasing interest rate to mortgage holders etc etc. However I think most places would swap us for our commercial banking sector every day of the week.

In the area I work there seems to be plenty of money around just not a lot of confidence to spend it.

I think broadly things are in good shape but for many things are really tough and until confidence returns and people start spending again then it will continue to be tough for a lot of retails and service businesses.

Just my thoughts and I would rather be driving my Land Rover !!!!.

George

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Originally Posted by bee utey

in . Farming is crippled.

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I don't know what it takes to make farmers happy. I suspect they will always winge no matter how good times are. it seems to be the nature of the beast.

This year a record wheat harvest was brought in. Sheep are solid gold. Wool is good again. Cattle prices have been high for years. Sugar is so good that foreign companies are falling over each other trying to buy our mills and there is talk of expanding production. Other grains are in short supply due to demand for lot feeding and ethanol production.

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Originally Posted by Brian Hjelm

I don't know what it takes to make farmers happy. I suspect they will always winge no matter how good times are. it seems to be the nature of the beast.

This year a record wheat harvest was brought in. Sheep are solid gold. Wool is good again. Cattle prices have been high for years. Sugar is so good that foreign companies are falling over each other trying to buy our mills and there is talk of expanding production. Other grains are in short supply due to demand for lot feeding and ethanol production.

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Well.... the farmers if all is going well they have one good year in five and that good year is to pay for the loans to keep them afloat during the previous 4 years.
2008 wqas a bad year for them and the increase in mental health problems was very bad.
I have a lot of time for them, not many people can wait for 11 month for a crop and then to be destroyed by hail.:(