Wednesday, November 06, 2013

The withering of repairs and the great divergence

There is much thought and hand-wringing all around about the divergence of wealth in the last few decades.  The other day, I found myself wondering:  could a minor contributor to this process be the rise of quality control in manufacturing and the withering of the repair sector?

Before the rise of TQM, Kaizen, Six Sigma, and whatever other methodologies took root from the late 70s forward, driven by Toyota, manufactured goods used to break, and we would fix them.  Remember when there was a TV repairman?  Remember when Maytag had commercials featuring its reliable repairmen (yes, it was primarily men)?  That was a differentiator for Maytag. Now things are better made, they break less, and they are fixed less.

Having a repair shop used to be a good skilled trade, and for the more ambitious, it was a way to own a business and learn the skills of being a businessperson.

Then manufacturing got better, as management developed methodologies to relentless decrease defects, and management consultants and MBAs generalized these ways of doing things and carried them across industries. Now cars and all other things break much less often, and when TVs, etc break, we just get new ones.  More often, they don't break before they have been obsoleted by product development cycles.

And when they do break, the repair supply chains have been more tightly corporatized.  Auto dealers, in particular, have been successful, at bringing the repair ecosystem back under their own rooves, where it is a huge component of profitability.

Compare how it was back in the day.  My grandfather owned a couple of auto parts stores in an NC small town (Roxboro), and made good money by doing so. I was just talking the other day to a lawyer in that same town (who now lives in Chapel Hill for the better schools) whose dad owned a garage and general store out in Bushy Fork, and who got his parts from my grandad's store.  The store building was bought by the municipal government not long ago, and now there are Autozones/Carquests etc. to source parts (and ANSI and other standards organizations to make sure that many standard parts are not branded).

So these things make it harder to carve out a niche within which to make money and found a small business.

On the other hand, the improvements in product quality do to a certain extent support the conservative argument for the incorporation of hedonic considerations into inflation calculations:  if cars and other things break less frequently, last longer, and offer more functionality to consumers, than one is getting objectively more for one's money, however little it is, than one did 10 years ago.

What is lost is social capital and the ability to feel good about oneself, which is not chopped liver.

OK. Back to the coal mine.

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