The Rupp Report: Farmer Or Hunter?
Jürg Rupp, Executive Editor
In the early days of modern mankind, human beings hunted for their daily food. Over time, they started to recognize that hunting only wouldn’t be enough to survive. Thanks to farming, which means seeding and then harvesting, mankind’s situation improved over the millennia. When they became farmers, humans settled down and modern life started to develop. First seeding and then harvesting. Hunting only was not the solution to survival. Before earning something, you’ve got to do something. So far, so good.
Since that time, this system has applied to almost every manufactured product at all levels. Everyone tried to produce something, and then swapped it for something else. Of course, over time, there were always hunters who tried to harvest without seeding. Around 400 B.C., Sun Tzu said in his book “The Art of War” that interminable war will bring no profit to a country whatsoever.
Later money was invented. Then in 1817, some traders rented a hall in Wall Street Building No. 40, and money trading began. This was the beginning of the New York Stock and Exchange Board, as it was known at that time. The rest is history: Trading and selling became commonplace around the world. However, on Tuesday, Sept. 3, 1929, the first big erosion started in the afternoon when shares of US Steel dropped in value. Within a few weeks, the situation accelerated into “Black Friday” Oct. 25, 1929. It was obvious some people became rich with virtual money, and some became poor with true debts. And was a lesson learned? Not at all.
Over the years, Black Friday was forgotten, and the hunters were on the road again. The textile industry began to change its traditional face, too: Markets moved to the East from the Western Hemisphere. And, even worse, the old entrepreneurs and patrons died off. The younger generation was and is not a kind of farmer, but more of a hunter. While old-style patrons showed responsibility for their people, the younger generation didn’t. Modern market theories indoctrinated students to forget about personal responsibility, and to have a look at the shareholder value.
Ups And Downs
The latest upswing culminated in 2007, which was one of the best years for the global textile industry in recent decades. Money was available to invest, and manufacturers around the world bought a lot of modern equipment. Order books were full, and delivery times were up to 10 months. The music was playing mainly in China and India, and the result was ITMA Asia + CITME, which took place in Shanghai in 2008.
However, back in 2007, some wise people mentioned that this rally couldn’t go on forever. It was mentioned in a past Rupp Report that gambling shouldn’t be done with borrowed money. Parallel to the soaring stock markets, energy costs increased drastically, and, of course, raw material prices too. A barrel of oil cost more than $140 — some people said that these prices were mainly a matter of speculation. Stock markets went mad and everybody was hunting for money. And the same story happened again. With more borrowed money, so-called “structured products” handed over the responsibility in a snowball system and collapsed. And now the same people are weeping for help. And who’s helping the world textile industry to invest with cheap loans?
There is no need to sum it up again: The downward trend has been heavier than ever over the last six to seven decades, thanks to virtual prosperity and now, true debts. It’s common sense — the textile and textile machinery industries are used to ups and downs. However, it’s quite amazing to see that in these hard times, companies with patrons remaining are not losing their will and confidence — the farmers are back on stage.
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December 9, 2008