RE:RE:RE:CEWS distortionIt is a smart move to use govt subsidies and take advantage of it. This company and the entire sector are desperate to show revenues at any cost. When You cut workers the production and revenues will go down for the grow sector company and they cannot afford that because they depend on dilution and high share price for funding.
This company is getting top-heavy. They have not yet fired all the top executives of acquired companies who draw the biggest salary.
The point being discussed is that Labour cost is a very important component of manufacturing. It will determine if any company or a business model can become viable . Current sal cost indicates big trouble and that it is not sustainable in the long run at current margins and volumes.
Gross margin and volumes would have to increase very substantially and at the current pace it may take a very long time and big bucks to sustain the losses in the meantime. Prices of retail products may have to increase too. The black market and big taxes can be a factor in a price increase. There is a shortage of labour and inflation is rampant. Companies have a serious challenge.
Why is all the manufacturing done in China and other countries? The main reason is that the cost of labour is very low in those countries. Labour cost is usually the main factor to determine where manufacturing is done. The labour cost is very important and cannot be ignored.
If manufacturing companies do not control their cost of labour in time they can go out of business very fast because it is a big expense.