Komachi wrote:Um... yeah.
Anyone care to explain the phenominon to those of us who are not holders of degrees in economics?
I would imagine the opposite would be true, lower sales would lead to lower profit (or lack thereof). (Although, I can see Sir Ray's point of loss per sale/profit in volume...)
It makes absolutely no sense what-so-ever...unless the CN-Railpower contract was a loss-leader contract (first 35 sold for cost or below cost, whatever) to help increase future sales both for CN and other companies and act as demostrators. Or, and this is even more a stretch in Railpower's case, if the need to construct these 35 units in parallel with other production which is already maxing out their production capacity, so that Railpower would have had to lease additional resources (facilities and labor) to complete the CN contract on time.
However, as far as I understand, either is NOT the case.
Very sad, as Railpower does have a decent idea and apparently viable idea, and seems like it had decent sales potential too. Lets hope management can get it's act together fast before the railroads give up completely and add Railpower to the scrapheap of failed second-tier locomotive builders...
(The 'make up in volume' quip is a very old joke, which was of course resurrected in 1999 for some of the dumber 'dot-com' business models)