Tuesday, June 15, 2010

Cardboard and the Law

About 6 months ago, the rumbling started to emerge from nowhere. Even though everyone in
the business of cardboard (movers, fruit suppliers, consumer items, export items, consumer goods) had seen better days. For example, in moving, the van lines, like United Van Lines, North American Van Lines, Allied Van Lines, Bekins Van Lines, etc, all had sales declines of
between 20-45%, last year. While the two major truck rental firms, who are still out there
(U-Haul and Budget) also saw large decreases in their volume, last year, but they do not publicize
this information publicly, but there is little to no doubt that, for the moving industry, sales were
down sharply and one would have to conclude that moving boxes took the same % hit.

How come then, was it possible for the cartel of box manufacturers, to raise prices in this market, first by 10% and then with another 10% increase taking effect in the last 30 days.
Maybe they think that if the oil industry can do it, they can to.

This was nothing short of a contrived increase to benefit themselves. Lets define themselves.
There are about 4 firms who control the price of cardboard and while their sales were down.
how nice would it be to get extra money for the same item? I would love to, as they say, but
this only can happen (to raise price when volume is down) if it is contrived.

I am not sure why the law in this antitrust area was not more clear, as no one can explain the obvious, that supply and demand do not work if there is no free market. I guess there are political reasons for all of these things, but all of this crap is now hurting the small businessman
and he did nothing to bring it about. No one says anything about this stuff and I know why the
middlemen in our cardboard industry do not fight it, as they benefit too. Selling the same items
for more money, they benefit too.

However, on the street, this is bullshit and the customers will not buy it. Why would anyone
fall into this stupidity, it is just legally justified corruption. How do you raise prices when sales
are down, unless you are a fueling station or a supermarket? Whose product is so needed that you do not care how much it costs? Many of us in business, in the last two years, found out exactly how "elastic" out products and service really were, as sales fell more than anyone thought was possible.

So I ask, if sales are down for an entire industry, how is it that they can artificially create a shortage? They lay off people, claim this and that, but the truth is that we allow them to do this.
The powers that be have come up with every single reason and they blame the banks, and maybe correctly, but this is an anti trust issue, and I do not think we can leave industries
like this one, able to do whatever they want, as they are self serving. Either we have laws that
promote business competition and fair dealing, or we have what we have today, industries that have no real competition and can raise prices when sales are down. This is not a free market
just like with oil, as no matter how much or how little oil we use, the price is never going to stay
down. You just know that, no matter how many Prius' there are out there......

I complained to the authorities, in this election year, but no one got back to me until this week,
Senator Finestein's offce let me know that they finally got a response back from the Justice
Department. I will let you know how it goes, but I doubt that anyone is looking to do anything about this, as everyone one I know does not give any money to the politicians in Washington, so why would they start caring about real problems and real issues that affect Americans?

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