Tuesday, October 5, 2021

Why Planned Obsolescence is Bullshit (Poverty Stories)

Engineering isn't the science of making things last forever, it is the science of making things that work, at a cost the market can afford.

There is an old apocryphal story about Henry Ford.  He sent out teams of Engineers and "scientists" (in white lab coats, no doubt - the plebes eat that shit up!) to study Model-T Fords that were in junkyards.  Recall that the Model-T was in production for decades, so many had worn out over time.

Anyway, they found that nearly every part of the car had worn out, in one example or another, but in all cases, the only part that was still in serviceable condition was the crankshaft of the engine.  They put together a memo of their findings and presented it to Mr. Ford.  He reviewed the memo and then scrawled across the front, in red pen, "Make the crankshafts thinner!"

Haw-Haw! To someone who is not versed in Engineering, this is another example of "greedy industrialists" trying to "cut costs" to make products cheaper and rip-off John Q. Public. Those bastards!  Planned Obsolescence!  Landfills overflowing with broken-down Model T Fords!  We need to hold these people accountable!

Well, calm down, Larry, it isn't all that.  To begin with, there is no proof this "story" is true - it smacks of a poverty story which I wrote about before, twice.  The plebes think they are entitled to a car that lasts forever and costs nothing to buy.  But life isn't like that - we all have to make hard choices. And Engineering is nothing but a series of hard choices - but people don't get that.

They think designing cars is the part where the stylist makes a clay model, sculpting fenders to look sexy.  But that's not even Engineering - that's styling.  Engineering isn't nearly as glamorous.  It is a job of pinching pennies and finding savings, not so the car company can make "huge profits" (few do in this marginal business) but rather a way of making a product with a reasonable service life that can sell at a price that people can afford.  And the price is determined by the market, not by the manufacturer. So you can make an "indestructible" car - but it might cost more than most people could afford to pay.

Besides, most people get into a car wreck every eleven years, on average, so there is little point in making a car that will "last forever" - it will end up in a junkyard eventually in any case.

Not only that, since many people change cars every few years - for social reasons more than anything - there is little point in making a car that will "last forever".  Henry Ford got it right (assuming the story is true).  If the crankshafts were outlasting the rest of the car, they were clearly over-engineered.  Making them thinner wouldn't mean the cars would not last as long, only that all the parts would fail at about the same time - giving the same design life as before, but at a lower cost.

And costs were important.  When Ford started out with the Model T, it cost nearly $1000 in an era where cars cost thousands of dollars and were affordable by only a few. By the middle of the production run, he got the cost down to $365 or less - an astounding cost savings, given how inflation works.  Ford made more money - by selling more cars.

But more than that, people wanted cars they could afford, not "perfect" cars that theoretically would last forever.  Paying extra for a crankshaft that would outlast the rest of the car makes no sense - either for Henry Ford, or the person buying the car - they have no need for the excess service life they will never use.

A reader writes about an alarmist article that toasters ain't what they used to be. Seems "back in the day" the toaster makers used nichrome wire heating elements, which were very durable.  Nichrome is made of nickel and chrome - two metals that are very expensive these days.  Back in the 1920's and 1930's, you'd see beautiful nickle-plating on cars such as Duesenbergs and whatnot.  But it was expensive, and lesser makes made do with chrome plating, which was much shinier.  But chromium came from Rhodesia, and it was expensive.  Not only that, but chrome plating is an environmental nightmare.  So today, the "chrome" trim on your car is either stainless steel, polished aluminum with a clearcoat, or mylar film on plastic.  Most car bumpers today are painted plastic, not chromed steel.

Toasters went the same route.  Since nichrome was so expensive, they switched to cheaper materials that arguably don't last as long.  On the other hand, you can buy a toaster for $10 at Walmart - it is mostly made of plastic, made in China, and maybe will last 5-10 years.   On the other extreme are these designer toasters like Mark used to sell at Williams-Sonoma.  They had one there that cost $300 and all it did, besides occupying a square yard of counter space, was make toast. For the price of that toaster, you could buy 30 Walmart toasters - enough to last several lifetimes.

I learned this the hard way with our $3000 gas grill.  It was a nice toy, but didn't make food any better than a $300 grill from Home Depot.  Today, we use a dented Weber Kettle that we found on the side of the road - real charcoal makes food much better than the most expensive gas grill.  I realized that the cheap coffee makers are the best kind, too!

But others can't wrap their heads around this, and instead resort to emotional thinking. "The evil corporations are only interested in profits, man!" they say, between bong hits.  Well, that is partly true - you can't keep the doors open and the lights on in your factory if you make a product no one can afford to buy.  Similarly, you will go out of business if you make products that don't give a reasonable service life, for the price charged. Profit is not a dirty word.

The idea that Engineering is hard work and a job of making tough choices is alien to emotives.  To them, things should last forever, "but for" the company being "greedy" to make "record profits".   The reality is, of course, that most industries are marginal businesses.  Even if you have a decent product that is popular, your profit margins are often in the single digits for the simple reason that if you made huge profits, well, someone else would compete with you, making a percentage point less, and the race to the bottom begins.  Ford can't make a 50% profit on a car, simply because GM, Chrysler, Toyota, or whoever else would be willing to make 49% and so on, until the margins come down to a point where they are little more than bank interest.

Sure, maybe in the heyday, GM made $10,000 on a fancy SUV.  But that was an SUV that cost almost $100,000 - and that's at sticker price.  Actual profits were a lot lower.  And when you factor in they broke even or even lost money on smaller cars, well, that "huge profit margin" narrows down a lot.  In fact, back in 2008, it narrowed down to nothing and GM went bankrupt.  So much for "greedy evil corporations" making windfall profits.

Today, Ford is investing over ten billion dollars on a gamble - a gamble that electric cars and trucks will be the "thing" people want in the next 20 years.  Not only does this represent a huge investment that will take decades to pay back, it represents a huge risk as well.  It may be these products are not successful in the marketplace.  If so, the entire company could go broke.   And yes, there should be some reward for risk-taking - more than bank interest.

But all of that falls on deaf ears.  People today are like small children - "I wanna, I wanna!"- and what they want is a product that lasts forever and costs nothing to buy and nothing to maintain.  Such products do not exist.  The best option you have is to consume less - and be content with "consumer grade" products, which are often better than fancy, overpriced, "professional grade" junk.

As the articles cited by my reader noted, the fancy "high end" toasters don't work better than the cheap ones.  In fact, they often can be more unreliable, as they are not made in mass quantities.  A Toyota Camry is more reliable than a BMW 3-series simply because they make far more Camrys than BMWs.  If you want to chase high-end esoteric products, expect to pay not only in cash, but in pain and suffering as well.

Of course, emotional thinkers aren't done yet.  "It is wasteful to have things break down!  The landfills are overflowing with broken toasters!  What will we do?  WHAT WILL WE DO????" (Said while running in circles with their hands waving in the air).  The reality is, it is a myth, like that of "landfills overflowing with disposable diapers." Buying a new toaster every decade isn't going to rape the earth quite yet.

But what about "right to repair?"  Again, some argue that things should be "fixed" and there is a trend among the brain-dead emotive types to have "repair parties" where "the mending man" will fix your toaster right up to be "good as new!"   But as an Engineer - and a technician - I can tell you firsthand there is no such thing as "good as new!" - there is new, and there is patched together to keep it working a while longer.  Sure, you can rebuild a car from the ground-up, but it would cost you ten times as much as simply buying a new car.  And it would never be quite "good as new" as when you take things apart and put them back together, they are never quite the same, as Col. Waddington discovered back in 1942.

Note that the "right to repair" movement isn't about "repair parties" or trying to keep old cell phones out of the landfill.  Rather, it is a reaction to the use of chipped parts, such as in cars or famously, in John Deere tractors, that require a trip to a dealer to program the system to "recognize" the part.  Apple is famous for this as well, "bricking" phones with unauthorized batteries or screens in them.  But then again, if it was such a problem, why do people continue to buy Apple products?  It is like Jaguars, back in the day (and probably today as well) - the owners brag about how much pain and suffering they go through to have the "elite" product.  Myself, I buy used Android phones for $99 and throw them away every few years.

So, what's the answer?  There isn't one, so stop looking.  Be happy with your cheap-ass toaster and use it carefully and when it stops making toast, throw it in the trash and go to Walmart and buy a new one.  Don't be like a friend of mine who buttered his bread before putting it in the toaster (Eeeeew!) and odds are, you'll get a decent service life out of it.

And avoid esoteric high-end appliances of all sorts. Commercial-grade kitchen appliances are not better than consumer-grade, just far more expensive and far less reliable.  Again, my neighbors fell into this trap with their "Subzero" built-in fridge (formerly a division of Carrier).  We used to joke that the repair man was living in their house, he was there so often.  Our consumer-grade fridge cost less than half as much and lasted just as long, if not longer - and had a built-in icemaker!

But I digress...

The point is, everything has a service design life - even (and especially) the human body. Yea, sure, you can patch it together and "fix" it, but it is never as "good as new" and all you've done is extend the service life for a few years at best.  We aren't much different than cars or toasters.

I recently fell out of my chair laughing at a posting online that showed a number of cruise ships that were prematurely scrapped due to the pandemic.  Perhaps not "premature" as they were scrapped when they were no longer economically viable - just as you scrap a car when the repair cost exceeds the resale value.

No, you don't make money by scrapping things.  You ameliorate losses.

These were mostly older ships that probably would have been phased out shortly anyway, but their time came due a few years early, due to the pandemic.  The cruise lines are moving to larger and larger ships, to take advantage of economies of scale.  There is a hierarchy of how new ships are used, and then work their way down to the economy cruises, are then sold off, and then eventually scrapped.  Oddly enough, while it may seem like a better idea to sell an older ship to a low-cost cruise line, what you are doing, in effect, is subsidizing your competition.  So from a competitive standpoint, it may make more sense to scrap an older ship, rather than see it in a berth across the harbor from you, siphoning off your paying passengers.

What made me laugh were the comments (Never read the comments!) where some knowledgeable teenager opined that "the cruise lines take a write-off when they build these ships, and then they get another write-off when they scrap them!  And they make Billions at this!"   Perhaps this was a Russian troll trying to stir up class warfare, but I've heard this sort of nonsense before, when working in factories.

It is another example of a poverty story, and usually Johnny Lunchbucket would keep his peers enthralled with this nonsense.  "Naw, the company didn't lose money on the Vega!  They took a write-off for it!"  And everyone would nod their head knowingly without really knowing what a "write-off" is or what it meant, other than those fat-cat managers are no doubt smoking cigars and lighting them with $100 bills.  The fellows in the audience go along with this, because they don't want to appear "stupid" by asking how you can make money by losing money.  If they did, Johnny Lunchbucket would just laugh at them for asking such a stupid question - a question he couldn't answer, himself.

And the reason is, you don't make money from losses, you lose money, hence the term "loss" - but you don't have to pay taxes on a loss- or an expense, either.  So yes, you spend a billion dollars building a cruise ship - that's an expense, not profit.  And you deduct the cost of that from your income when figuring out your net profit.   For big things like cruise ship, well, that expense is usually deducted over a number of years as a depreciation deduction.  When you sell the ship for scrap, well, yea, that is income.  But if the scrap price was less that what you had depreciated the value of the ship, well, you might not pay taxes - or as much taxes - on that scrap income.

Again - and this seems pretty simple to most people - they don't make money scrapping cruise ships.  If they did, the cruise lines would just stop doing cruises and be in the business of building and them immediately scrapping, brand-new ships.  But some folks think that way - they don't understand basic accounting or tax law.  I was one of those dweebs back in the day.  This is a reflection of how lame our educational system is (I really didn't understand deductions, tax credits, and depreciation until law school) and how weak thinking permeates our society and how much fun it is.

Getting ahead in life isn't hard - Act rationally in an irrational world.  Stop engaging in wishful thinking and externalizing - thinking things that are convenient to you, but are not true.  It is easy to fall into the trap of thinking "the other guy" has it so easy and that the world is an unfair place designed to fleece you from your very last penny.  And oddly enough, if you start thinking this way, the world pretty much turns out that way - you end up getting a series of raw deals, because you are being a raging true believer and not thinking logically.

It is funny, but the people who bend my ear about the "greater injustices in the world!" can't even balance their own checkbook, and are carrying a $5000 balance on their credit card (and have been, for a decade or more).  No wonder they think the world is out to get them and that banks are "evil".  These are the same folks who buy a fancy car or truck or SUV and finance it over seven years and then get all upset because it isn't freaking perfect and they have to pay the loan back.

We see this particularly today, where people obsess about politics - convinced that enacting this law or electing that person will change their lives forever.  If only we kept out immigrants, we'd all make a hundred grand a year working at Walmart!  People want easy solutions to complex problems, and they want to blame someone else for their personal decisions.

So... poverty stories.  The big greedy evil corporations (that you probably work for) are out to get you.  But of course, you are not without options.  Yea, sure, Facebook gets more "engagement" from negative stories than positive ones (this surprises you? Ever seen Fox News?).  The problem isn't Facebook or Fox, it is us for clicking and watching.

Getting ahead means taking responsibility for our actions and choices.  If a company makes a crappy product - stop buying it.  If enough people did that, they'd go out of business.  But you'd be surprised how many people continue to buy crappy products because they have a coveted logo on them....

....and I find it harder and harder to feel sorry for them.