16th March 2007, 03:55 PM
We are collectively in a difficult position, because as an industry as what we effectively sell is labour, knowledgeable labour admittedly, but still labour. Therefore the vast majority of pricing is very sensitive to changes in labour costs, more than a manufacturer of goods or anyone who has other areas such as raw materials which form variable amounts of the cost of theor product. I would also say from experience that most archaeological contractors operate on small margins, except in rare and fortunate circumstances. Each 1% rise in labour cost has a very direct and proportional effect on the price and the erosion of margins. Businesses have to have some element of trading profit given by these margins to maintain cashflow and viability and the risk of this disappearing is what drives many running the companies.
A solution? The history of capitalism almost inevitably demonstrates a move towards monopoly, or provision by several large producers, who thereby effectively control the pricing of their goods themselves, removing the competitive market from the equation. Looking at it in a hard-nosed and unemotional way, one of our biggest problems is the sheer number and diversity of providers, all fighting competitively. Take some out, merge others and prices can rise by the absence of competition. The flipside is of course that larger companies ultimately tend to try to drive down labour costs to maximise return from their sales. But then, as I said before, we're not all b*****ds, and of course this wouldn't happen in archaeology, would it?
Didn't say it would be a popular solution!
A solution? The history of capitalism almost inevitably demonstrates a move towards monopoly, or provision by several large producers, who thereby effectively control the pricing of their goods themselves, removing the competitive market from the equation. Looking at it in a hard-nosed and unemotional way, one of our biggest problems is the sheer number and diversity of providers, all fighting competitively. Take some out, merge others and prices can rise by the absence of competition. The flipside is of course that larger companies ultimately tend to try to drive down labour costs to maximise return from their sales. But then, as I said before, we're not all b*****ds, and of course this wouldn't happen in archaeology, would it?
Didn't say it would be a popular solution!