Why build a new factory?
Long time Insight readers may recall our earlier statistical work that revealed that the most important driver of capital spending by far is the level of spare capacity.
A.Gary Shilling
Since most factories are working at 80% why built a new one or to hire new workers?
In fact what we are seeing is automation of the current factories and get rid of excess man power.
There is a lack of demand in the world. In the last 20 years the demand was increased with a growing leverage and credit expansion. Now it's time to pay the debts. We are in deleveraging and that is deflationary!
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