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Why are finished goods larger than inputs?

Author
Heathkit
Pator Tech School
Minmatar Republic
#1 - 2012-04-09 19:17:41 UTC
I was looking into building fuel blocks to sell locally in my particular region of null. I'd hoped that by using locally sourced coolant and EU I could produce blocks at a lower cost than importing them from Jita. However, when I did the math I was surprised - each block takes 5.7 m3 of inputs to produce a 5 m3 unit

I looked up more blueprints, and in general almost anything you can produce results in a module smaller than the needed inputs. Given this, why would anyone produce subcaps and modules outside of empire? Producing generally requires two trips to a market - one to trade for the inputs you can't get cheaply, and a trip to sell your goods. Ideally, you'd make the more expensive of these trips as short as possible. Since inputs more volume than finished goods, this means everyone is best off clustering around a central market like Jita and only producing there

This isn't an issue of shipping being too easy or cheap - the point is that it's always cheaper to ship finished goods than inputs. Manufacturers are always going to be better off producing close to the largest raw goods market, then shipping finished goods elsewhere if they want a better price

Surely I'm not the first person to realize this. Has this come up before? What's the usual justification for the current system? It seems like it was designed to encourage large centralized markets like Jita.
Styth spiting
Brutor Tribe
Minmatar Republic
#2 - 2012-04-09 19:48:07 UTC
Heathkit wrote:
I was looking into building fuel blocks to sell locally in my particular region of null. I'd hoped that by using locally sourced coolant and EU I could produce blocks at a lower cost than importing them from Jita. However, when I did the math I was surprised - each block takes 5.7 m3 of inputs to produce a 5 m3 unit

I looked up more blueprints, and in general almost anything you can produce results in a module smaller than the needed inputs. Given this, why would anyone produce subcaps and modules outside of empire? Producing generally requires two trips to a market - one to trade for the inputs you can't get cheaply, and a trip to sell your goods. Ideally, you'd make the more expensive of these trips as short as possible. Since inputs more volume than finished goods, this means everyone is best off clustering around a central market like Jita and only producing there

This isn't an issue of shipping being too easy or cheap - the point is that it's always cheaper to ship finished goods than inputs. Manufacturers are always going to be better off producing close to the largest raw goods market, then shipping finished goods elsewhere if they want a better price

Surely I'm not the first person to realize this. Has this come up before? What's the usual justification for the current system? It seems like it was designed to encourage large centralized markets like Jita.


1. pretty sure you can't make subcaps in empire.

2. its cheaper / easier to manufacture the items in your null/low sec system (pos, station, watever).

3. with ice blocks as an example you can generate far far more pi materials in null than in high sec (it's like 10x more from my experience). Meaning you can buy cheap ice and transport it in, use the silly amount of PI you're generating, and use your own POS to manufacture the items, and transport into highsec (or use it in the system, which is what I'm guessing would happen).

4. What you said in your 2nd paragraph is pretty much what does happen..
Heathkit
Pator Tech School
Minmatar Republic
#3 - 2012-04-09 20:22:35 UTC
Styth spiting wrote:

1. pretty sure you can't make subcaps in empire.

subcaps - ie, battleships and below. Of course, when people produce caps and supers, they "compress" the minerals by first building a T1 module, shipping that out, then recycling the module, which always struck me as a little silly.

Styth spiting wrote:

2. its cheaper / easier to manufacture the items in your null/low sec system (pos, station, watever).

Not really. You need to factor in fuel costs to run a POS. Stations in nullsec are faster, but you have to factor in the risk of moving materials. Plus, the point of all this is that you have to pay to import at least some of the inputs. Since shipping is on a per m3 basis, and inputs are always larger than finished goods, it's always more expensive to import minerals and build than it would be just to import from Jita.

Factory slots are pretty cheap everywhere. Whether in empire or in null, most of the cost of production in the shipping, not in renting the actual factory slot. In fact, I think when you factor in the time bonus, it costs about the same to run a production job in most null stations as it does in, say, Perimeter.

Styth spiting wrote:

3. with ice blocks as an example you can generate far far more pi materials in null than in high sec (it's like 10x more from my experience). Meaning you can buy cheap ice and transport it in, use the silly amount of PI you're generating, and use your own POS to manufacture the items, and transport into highsec (or use it in the system, which is what I'm guessing would happen).

That's what I thought I would do. However, a single fuel block is 4.7m3 of ice products. If I sourced all of the PI goods locally and imported ice to make blocks, it would be slightly cheaper than importing finished blocks. However, then I'd have to produce Mech, Oxygen, and Robotics instead of producing the more valuable materials.

This is the point. You always have to import some products - typically, those products that you can't source locally or don't have a comparative advantage towards producing. However, since the finished good is smaller than the inputs, it makes more sense to just build in empire, then import.

Styth spiting wrote:

4. What you said in your 2nd paragraph is pretty much what does happen..

That's my point. I think it would be better if there were more market hubs, rather than having everyone cram into a single system. However, the current ratio of volumes promotes centralization
Stella SGP
#4 - 2012-04-10 07:41:16 UTC
Styth spiting wrote:
1. pretty sure you can't make subcaps in empire.

2. its cheaper / easier to manufacture the items in your null/low sec system (pos, station, watever).

3. with ice blocks as an example you can generate far far more pi materials in null than in high sec (it's like 10x more from my experience). Meaning you can buy cheap ice and transport it in, use the silly amount of PI you're generating, and use your own POS to manufacture the items, and transport into highsec (or use it in the system, which is what I'm guessing would happen).

4. What you said in your 2nd paragraph is pretty much what does happen..

Murphy's Law
Tauranon
Weeesearch
CAStabouts
#5 - 2012-04-10 11:58:36 UTC
Heathkit wrote:
Styth spiting wrote:

1. pretty sure you can't make subcaps in empire

subcaps - ie, battleships and below. Of course, when people produce caps and supers, they "compress" the minerals by first building a T1 module, shipping that out, then recycling the module, which always struck me as a little silly.


Its something in the region of 400 player hours to mine the actual mineral basket for a 300 hurricane welpfleet. Or 1 goo flight with maybe a couple of jump freighters returning with railgun compressed minerals that scores of anonymous bears have mined at 5-15mil/hr. ie one allows an alliance to choose for everyone to pvp, the other sends LOTS of players to the coalface, when they probably don't want to do that, and there ARE people in empire that do want to work in a fantasy coalmine and will do so for peanuts.

Even if you were inclined to mine, you'd surely mine and rorqual compress highends, and trade those to empire for lowends and come back with some module that is good at compressing lowends. On alliance scale levels you must be able to sort out the travel logistics profitably for all concerned.

Quote:

Styth spiting wrote:

2. its cheaper / easier to manufacture the items in your null/low sec system (pos, station, watever)

Not really. You need to factor in fuel costs to run a POS. Stations in nullsec are faster, but you have to factor in the risk of moving materials. Plus, the point of all this is that you have to pay to import at least some of the inputs. Since shipping is on a per m3 basis, and inputs are always larger than finished goods, it's always more expensive to import minerals and build than it would be just to import from Jita.


jump bridge network. alliance stations. opportunity cost of having better farmable resources waaaaay outweighs an increase in cost in returning with low ends.
Skorpynekomimi
#6 - 2012-04-10 15:25:53 UTC
They're hollow. and don't stack as well as ingots of tritanium or whatever.

Ships particularly; they're extremely hollow. LOADS of empty space, protrusions, the lot.

Economic PVP

lol fourm troll
Doomheim
#7 - 2012-04-10 16:04:03 UTC
Because goons want people to stay in one area so they dont have to hunt down players for there occupy jita bs.
Heathkit
Pator Tech School
Minmatar Republic
#8 - 2012-04-10 16:43:29 UTC
Tauranon wrote:

Even if you were inclined to mine, you'd surely mine and rorqual compress highends, and trade those to empire for lowends and come back with some module that is good at compressing lowends. On alliance scale levels you must be able to sort out the travel logistics profitably for all concerned.

Exactly correct. People are going to mine the most valuable product they can find locally, then use what they need and sell the rest. It's that last step, where you build the lowends into some module that compresses well which infuriates me. I'm saying compression is broken - the volume of minerals needed to build something should be less than the volume of the good you produce.

If it were easier to ship minerals, people would import the raw materials they need and build the finished goods close to where they need them. Of course, people would still ship finished goods - maybe there's not enough factory capacity where they want to sell, or they don't have good production skills. Under the current system, with the abundant and cheap factory capacity in empire there's no reason to manufacture anywhere else, unless you happen to already have the materials local.

Quote:

They're hollow. and don't stack as well as ingots of tritanium or whatever.

Ships particularly; they're extremely hollow. LOADS of empty space, protrusions, the lot.

I think good game mechanics are more important than "realism", but that's a good point. Raw materials should be more dense, so it also doesn't make sense that a drake is actually bigger than the minerals needed to make it.
Heathkit
Pator Tech School
Minmatar Republic
#9 - 2012-04-10 16:45:00 UTC
lol fourm troll wrote:
Because goons want people to stay in one area so they dont have to hunt down players for there occupy jita bs.

That is one advantage of the current system. Concentrating all the industry in a single system makes it much more easy to mess with people.
Tau Cabalander
Retirement Retreat
Working Stiffs
#10 - 2012-04-11 01:09:40 UTC
Haulie Berry
#11 - 2012-04-11 01:23:52 UTC
Quote:
Raw materials should be more dense, so it also doesn't make sense that a drake is actually bigger than the minerals needed to make it.


What the ****? Raw materials ARE more dense than a drake. Density is mass/volume. It's the same mass of materials interspersed with a lot of empty space, which increases volume, which reduces density.

It makes PERFECT sense that a drake is much, much bigger than the minerals needed to make it.
Heathkit
Pator Tech School
Minmatar Republic
#12 - 2012-04-11 06:41:45 UTC  |  Edited by: Heathkit
Haulie Berry wrote:
Quote:
Raw materials should be more dense, so it also doesn't make sense that a drake is actually bigger than the minerals needed to make it.


What the ****? Raw materials ARE more dense than a drake. Density is mass/volume. It's the same mass of materials interspersed with a lot of empty space, which increases volume, which reduces density.

It makes PERFECT sense that a drake is much, much bigger than the minerals needed to make it.


Sorry, I misspoke. I meant to say it makes no sense that a drake is more dense than the minerals needed to make it. A packaged Drake is 15,000m3 and is built from 35,000m3 of minerals. This is my point - for some reason, finished goods in Eve are more dense than the materials they're made from.

Mineral compression for most ships and modules seems to range anywhere from 1:2 to 1:20. It used to be much worse.

But any kind of mineral compression is stupid. Not only is it counter-intuitive (as was just demonstrated) - it encourages the centralization of trade hubs.
Heathkit
Pator Tech School
Minmatar Republic
#13 - 2012-04-12 18:06:39 UTC  |  Edited by: Heathkit
I consider this to be gamebreaking. I've heard that CCP Greyscale wants to encourage producers to spread out more, and was considering making shipping more difficult (ie, by reducing the range of JF or keeping them out of empire). However, not only would this approach **** people off - it wouldn't solve the problem.

Producers compete with importers. Being able to source all the raw materials you need locally isn't compatible with the goal of having a rich production tree and diverse space - producers will always need to import. No matter how difficult shipping becomes, if you need to import more volume than the finished good to produce it, everyone's just going to produce in Jita and ship the finished goods out. The issue is that producing outside of empire is not economically viable, because it requires moving more volume than the finished goods.

There are a number of ways to solve this problem, but until this is addressed the majority of production will cluster around a few systems in empire. Possible solutions include

1) Enable or compression jobs to run at any industry facility
2) Allow the Orca to do ore compression
3) allow the "ore hold" on the orca and rorqual to also hold minerals
4) introduce a new "raw goods" hauler class of ships with an oversized cargo bay that can only hold minerals, or perhaps all items in the "Materials" marketgroup

There was that leaked screenshot a while back of an overpowered veldspar mining crystal that would be banned in empire. I think this solution would be counterproductive. While it would enable non-empire production by allowing lowends to be sourced locally, it would also reduce trade with empire. A better solution would be something that makes it economically viable for empire to export low end minerals - either with a new ship type, explicit compression mechanic, or something else entirely.