Factories and margins again....

[Erostratus]

I have a fishing structure...Its a weak one, and Im trying to get my head around it. I have searched the interwebs and have failed to find what I'm looking for in the manual as well.

I have a fishing structure and when it is on
1 Capital expended=1 fish produced and a margin of 1.

Is the margin gross or net?
So if its gross, the margin washes out the 1 capital expense.
If it is net, it means that I have a gross of 2 capital with a net of 1 margin capital from 1 capital expensed.

[loki100]

In theory a fish level #1 should use 5 capital to run and produce 4 fish, the upgrade uses 6 capital and 2 coal for 8 fish. Yours maybe less productive due to the development level, transport links or missing workers (fish 1 needs 20 peasants).

way to think about this is can you sell the fish, either domestically or internationally. At its best fishing is pretty much a 1-1 relationship between inputs and outputs. If you can sell, then you gain (a) population contentment (as part of a balanced diet) and (b) taxes (either domestic or tariff). If you can't sell, then you gain nothing.

To mildly adapt Marx's language, fish has no value till it has a buyer (exchange). At its best, its a means (relatively cheap in the first version) to generate some food you need (or can trade), at its worst its a loss of PC in the production of a good you can't sell. Even in the best case, its not really a money maker (which makes sense, pre-industrial fishing is a pretty brutal business with very little scope for long term capital accumulation).

By contrast, cereals, even in their first version take 5 PC and produce 8 units (also populations tend to like this more), so while its not going to fuel your economic expansion, cereals are a means to address an immediate need (food) and build up long term capital gains.

[Lemoni]

Loki,
you mean by that that when an industry is in the red (loss) it is because you can 't sell or because the world market price is low so you are running a loss in Private Capital no matter the taxes or tariffs

[Erostratus]

Firstly thank you Loki for taking some time on this. It is true that fish factory is in a region that is such that the factory is not as productive by default. But the margin is positive, even given it is less productive. I am just trying to understand what margin in the games description is. In the last thread regarding factories production and margin, you and I agreed that any inputs=outputs+margin, where the margin represented that was something separate and did not include the assumed trade of the product. So if it worked that keeping a factory open generated a negative margin, if I then took the output and sold it, it was alright because the money from the sale of the output covers the margin loss in most cases. Maybe I am wrong on this, but I also draw this conclusion because I watch pricing change on all sorts of products turn for turn, but most of the time my factory's margins stay the same.

In vicky 2 as a comparable, it was much more convoluted in a sense cause you didn't get to decide what to do with your output, instead it is put into the total profitability of the factory versus what I describe above. So you didn't care in a micro sense. Your responsibility to make the factory profitable by improving tech, increasing employees, or eating loss via subsidies.

That being said. There are times where you don't care if you have a margin loss, if you need a product, prestige, etc. And then there are times where there is a fantastic margin and something you can sell or use, etc. And then there is a grey area where you could import the product from some one else versus produce it yourself for use, trades sake, good will, greater global economy etc.

Does this sound right?

Edit: [color="#FFFF00"]This is not right, margin is the total sum of inputs costed and products sold whether you sold them or decided to use them.[/color]

[uglyr]

I think it's all simple: [color="#A52A2A"]Marign = Sum(OutputM*PriceM) - Sum(InputN*PriceN)[/color]

Prices changes over time by "unknown" reasons, so one day your factory can have positive margin and next day negative with same quantities. So it's not very reliable value. Sometimes I had negative margins for manufactured good factories, but couldn't buy any from "global market". Sometimes other profitable resources are produced too much for internal usage and can't be sold to other countries, so the margin is positive but you have to close factories to avoid wastage.

So I rarely look this number and use simple strategy: luxuries group to make money, everything else to be self sufficient. If you rely on buying 30 coal/iron and next month you can't buy any - your economy collapse.

[loki100]

Loki,
you mean by that that when an industry is in the red (loss) it is because you can 't sell or because the world market price is low so you are running a loss in Private Capital no matter the taxes or tariffs

Firstly thank you Loki for taking some time on this. It is true that fish factory is in a region that is such that the factory is not as productive by default. But the margin is positive, even given it is less productive. I am just trying to understand what margin in the games description is. In the last thread regarding factories production and margin, you and I agreed that any inputs=outputs+margin, where the margin represented that was something separate and did not include the assumed trade of the product. So if it worked that keeping a factory open generated a negative margin, if I then took the output and sold it, it was alright because the money from the sale of the output covers the margin loss in most cases. Maybe I am wrong on this, but I also draw this conclusion because I watch pricing change on all sorts of products turn for turn, but most of the time my factory's margins stay the same.

In vicky 2 as a comparable, it was much more convoluted in a sense cause you didn't get to decide what to do with your output, instead it is put into the total profitability of the factory versus what I describe above. So you didn't care in a micro sense. Your responsibility to make the factory profitable by improving tech, increasing employees, or eating loss via subsidies.

That being said. There are times where you don't care if you have a margin loss, if you need a product, prestige, etc. And then there are times where there is a fantastic margin and something you can sell or use, etc. And then there is a grey area where you could import the product from some one else versus produce it yourself for use, trades sake, good will, greater global economy etc.

Does this sound right?

Edit: [color="#FFFF00"]This is not right, margin is the total sum of inputs costed and products sold whether you sold them or decided to use them.[/color]

as a direct answer uglyr is right, price does change by event, you'll see this in the turn log (I think its random rather than a reflection of real demand and supply mechanics).

You can make a loss for one of two reasons ... cost of inputs outweigh the value of the products - that is when you see the factory as red in the detailed screen. Or, in theory you have a profitable enterprise but you can't sell either domestically or internationally. So you pay the production price but don't gain the sales value.

The complication is a factory in the red can still make a profit indirectly. To the actual sale value (which is simply the global price*vol of the outputs) you have taxes/tariffs (which return as state income). So generating something the world wants (like manufactures late game) can still be a good idea even if the actual production process is in the red. More than the final price, you need to watch for scarce inputs and manage production around these.

The other reason to keep a factory open is the prestige produced. The early game shipyards are an example here, unless there is a big war with high demand for new ships and replacements, it will be loss making, but its also the only first generation factory to generate prestige.

Erostratus is right, your industrial policy is not simply about profit/loss at the point of production. Early game you really need to watch this as private capital can be rare but later on making losses, as such, is not that big a problem.

It took me some time to work out that V2 abstract economy is actually quite a barrier to understanding how PoN's more realistic economy works. From Victoria (both versions), its so easy to assume that various fantastical concepts developed for ease of play in a real time strategy game are not reflective of anything realistic.