Monday, September 25, 2006
Offshore Package Printing, Steve Forbert?, Capt. Bo
While we're importing more, we're exporting more, and many of the imported goods are in bulk and not packaged until they get here. It's really dynamic. I've figured that about $4b worth of packaging is part of the imports. It's not all that big, because so much of our packaging is for food, and that's either fully prepared here or arrives in bulk here and then packaged. In some cases, the imports are ingredients, such as cocoa or spices or other things. So it shouldn't automatically be assumed that the products need packaging. Packaging grows at the rate of 1% annually because of population, and then anything on top of that is the result of other effects, such as changes in preferences or innovations (people forget that there was a time when there wasn't frozen food!). It's a fascinating market because the materials and the filling technologies are all changing so much. As the world becomes wealthier, especially in emerging/developing economies, packaging will be a constantly growing and interesting business. It's becoming less so in the U.S. because household wealth is already so high and population growth is limited. Europe's population growth will not be all that good, in fact it is basically negative. But everywhere else in the world will be just plain fascinating.
Speaking of offshore, WSJ has a sky is falling story about U.S. owing more money to offsore investors than it gets in return from its own offshore investments. http://online.wsj.com/article/SB115915177853972817.html?mod=home_whats_news_us
Sorry, it doesn't make a difference. Interest rates (long-term bonds) are falling here and the returns overseas investors will get will decline. Interest rates are rising elsewhere. You can create dire situations depending on when you take the snapshot. Years ago I used to explain to my students that one of the worst things executives do is read the WSJ every day and decide based on what they just read to do something. There is quite the culture of "I believe the last thing I heard" among executives rather than building a preponderence of evidence. We see it the past few weeks: most economic data show very conflicting signs. Corporate profits are up; housing starts are down; inflation is high, commodities prices are falling. All data, every last bit of them, are historical, and those that often have reputations for being a way to predict marketplace conditions often give false signals. There are always times when executives have to act on the last thing they heard ("the building is on fire, sir"), but those should be rare. There are also too many times executives are indecisive, waiting for more and more data; by the time they have it, their opportunity has passed them by. Early '80s rocker Steve Forbert may have written it best, in a song that has absolutely nothing to do with business:
"I don't wanna see no fortune teller,
I'd rather do without prediction
I'll see it when it's all around me,
Hey, what's the hurry?"
Publishing guru Bob Sacks (known to his friends as "Capt. Bo" or "bosacks") has a an interesting article at Publishing Executive Magazine