Thursday, June 10, 2010

US Bottle Manufacturers Try to Go out of Business - and Will Probably Succeed

Enron took a cue from the Arab Oil Embargo of 1973. During this trumped-up crisis, oil became scarce and prices soared. Oil companies made a killing because oil consumption in the US actually rose during the 'embargo.' There never was a real shortage of oil, just the perception created by the oil companies and President Nixon. The saying, "Oil crisis means higher prices," became common vernacular.

During the California Energy Crisis of 2000 and 2001, Enron took the lesson from the oil embargo of 1973 and closed down a lot of generating plants for 'maintenance.' This phony crisis created a shortage of electricity and as we know, "Energy crisis means higher prices." Enron made a killing - for a while.

Not to be outdone, in 2006 the glass bottle manufacturers of the United States decided they wanted a bigger cut of the rising world of sky-high wine prices, so they shut down half the furnaces in the US for phony 'maintenance.' After all, "Bottle crisis means higher prices." Wineries were required to preorder their glass one year in advance to be assured of deliveries. Wineries received monthly notices to buy now because the surcharge on the surcharges was going up next month. The glass companies made a killing -for a while.

This seemed a good strategy at the time. Remember, US corporations have no long-term vision. They are into short-term profits only. Chinese glass at the time was clunky, not very round, and the corks sometimes didn't fit. Canada was in on the scheme and Mexico couldn't produce enough glass to meet demand. We were able to get Mexican glass that year.

In the US, it takes ten years to build a factory. Five years to fight the Sierra Club, Audubon Society, and the Democratic Party. Five more years fighting local petty bureaucrats for permits and building code design. So, the only new glass plant in the US, Cameron Family Glass, failed.

In China, things are different. Drive down a boulevard in Shenzhen on Monday and you will see a vacant lot. Drive by on Tuesday, and you will see heavy equipment. Drive by on Wednesday, and you will see cranes erecting a building. Drive by on Friday and you will see people working at the brand-new state-of-the-art bottle factory. No bullshit environmental impact studies or NIMBY neighbors.

Because they tried to stick it to us, I have no loyalty to American bottle manufacturers - most of whom are French-owned anyway. Our next shipment of bottles will be all Chinese. We save $2 per case. On cases that sell for $56, that $2 goes in my pocket. They are nice looking bottles with a slight punt - much nicer than the flat-bottom overpriced low-end US bottles. We have run Chinese glass on our line for other wineries and it works fine. US industries take note: the Chinese don't try to sell shoddy products at inflated prices for short-term gain. Their goal is to create world-class products at low prices and eat your lunch.

I think American bottle manufacturers deserve to go out of business because of their greed, just like greedy wineries that charged exorbitant prices for wine deserve to go bankrupt. Enron got what it deserved. Unfortunately, BP, Chevron, and Exxon* are still screwing us and they aren't even using petroleum jelly. (Okay, so they are using lubricant to screw the Gulf Coast, but that is different.)

And you wonder why I am grumpy.

*Exxon is a combination of Esso (the original name) and Nixxon, as a thank you to the president for the oil crisis and obscene profits.

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