Welcome to English as a Second Language podcast number 952, Dealing with Rising Production Costs.
This is English as a Second Language podcast episode 952.
I'm your host, Dr Jeff McQuillan, coming to you from the Center for Educational Development in beautiful Los Angeles, California.
Go there, become a member of ESL Podcast, and download a learning guide for this episode.
This episode is a dialogue between Giovanni and Melanie.
It's a business-related episode about the increasing cost of making things in a business.
There are no two ways about it.
We have to raise prices.
We can't.
We already raised prices earlier this year.
Doing it again risks alienating our customers.
What else can we do?
Our production costs have risen nearly 15%.
We've tried absorbing them and offsetting them but nothing has worked.
Our profit margin continues to shrink and we don't have any other choice.
What about lowering the quality of our raw materials?
We could use a cheaper supplier.
That's a sure way to lose customers.
If we start cutting corners on quality, our customers will leave in droves.
Not enough.
We either raise prices or stop production altogether.
There is one other option.
What?
We could reduce our workforce.
You mean fire people?
That's off the table.
Our dialogue begins with Giovanni saying to Melanie, there are no two ways about it.
This expression there are no two ways, W-A-Y-S about.
It is used when you are telling someone there is only one answer or one solution to some problem that you have.
There are no other options.
There's only this one possibility.
Giovanni says there are no two ways about it.
We have to raise prices.
The price P-R-I-C-E of something is how much it costs.
To raise R-A-I-S-E prices means to increase prices.
The opposite would be to lower prices.
Melanie, however, says we can't, we cannot raise prices.
We already raised prices earlier this year.
Doing it again risks alienating our customers.
To risk means to put in danger of or to possibly cause a bad situation to happen.
Melanie says if they raise their prices again, they may alienate their customers.
To alienate A-L-I-E-N-A-T-I-N-G means to make someone feel unwelcome, to make someone feel excluded.
To alienate someone more generally means to make someone mad, to make them angry so angry that they don't want to be part of your group anymore or, in this case, they don't want to buy anything from you.
Giovanni says, what else can we do?
Our production costs have risen nearly 15%.
The cost of something is how much money you have to spend to do it.
Production, P-R-O-D-U-C-T-I-O-N, comes from the verb to produce, which means to make something.
Production costs refers to how much it costs to make something, usually a physical object, although it could also be something like a movie.
We talk about movie production costs here in Los Angeles all the time.
Well, I don't.
Some people do.
Giovanni says that he and Melanie have tried absorbing these costs and offsetting them, but nothing has worked.
To absorb A-B-S-O-R-B here means to take care of or to accept increased costs in a business without making the prices higher for the customers, without raising the prices.
So, for example, if something that you need to make your product that you sell increases in price, you don't increase the price that you charge your customer.
You absorb it.
Basically, you're going to make less money.
Giovanni says they've tried absorbing the increasing production costs as well as offsetting them.
To offset O-F-F-S-E-T means to make up for often to do the opposite of something in order to have some sort of balance.
In this case, it probably means that they've decreased the costs elsewhere in their company.
They've tried to save money in another part of their business in order to make sure they can still make money on the product they're selling.
Giovanni says our profit margin continues to shrink.
We don't have any other choice.
Your profit, P-R-O-F-I-T, is how much money you make.
It's when you take in more money than you spend.
When you receive more money from your customers than you spend to produce what you are selling to your customers.
Don't confuse this prophet with P-R-O-P-H-E-T.
That sort of prophet is someone who predicts the future.
You hear that term often in relation to the Bible.
But there's nothing biblical here.
We're talking business.
And Giovanni is talking about profit margins.
Your profit margin, M-A-R-G-I-N, is the actual percentage that you make.
Giovanni says, our profit margin continues to shrink.
Shrink, S-H-R-I-N-K, means to become smaller.
In this case, it means to be lowered.
The profit margin is less and less.
Melanie says, what about lowering the quality of our raw materials?
To lower the quality means basically to use things that aren't as good as raw other things that you might be able to use.
The quality of your product is how good it is, how well made it is.
Raw, R-A-W, materials are the things you use to make the product that you sell.
If I am selling tables or chairs made of wood, the raw materials would be the wood itself and nails and perhaps paint and anything else I use to make the chair.
The final product is the chair, but the chair is made from raw materials.
Raw normally means not cooked.
We talk about raw meat.
That would be meat that has not yet been cooked, has not yet been put over a fire or placed in an oven.
Here, however, it just means materials that are not in their final form.
I was watching a program on television a few nights ago and there was this young girl, maybe 15 years old, singing
She had a wonderful voice.
Her singing wasn't perfect, but she had a lot of what we would describe as raw talent, raw skill, raw ability.
It's something she needs to make better.
It's something she needs to work on to refine R-E-F-I-N-E to make it so that it is a final product.
Melanie says, we could use a cheaper supplier.
Cheaper means less expensive, something that doesn't cost you as much money.
A supplier S-U-P-P-L-I-E-R is someone who sells you raw materials or sells you things that you use in your business and helps you sell your product or make your product to sell.
Giovanni disagrees with Melanie.
He doesn't think they should use a cheaper supplier.
He says that's a sure way to lose customers.
That's a sure way to lose customers, means that's a guaranteed way or that's something that will definitely result in losing customers?
He says if we start cutting corners on quality, our customers will leave in droves.
To cut corners means to do something more quickly or less expensively, more cheaply, but at a lower quality.
To cut corners means to do something in such a way that you're getting it done, but it is not as good as it could be or should be.
To leave in droves, D-R-O-V-E-S, means that many people will leave.
Droves here refers to a large group of people.
To leave in droves means that most of your customers are going to leave.
That's what Giovanni says will happen if they cut corners on quality.
Melanie then asks, what if we discontinue manufacturing some of the less popular items?
To discontinue, D-I-S-C-O-N-T-I-N-U-E, means to stop doing something, to no longer do something.
Manufacturing comes from the verb to manufacture M-A-N-U-F-A-C-T-U-R-E, which is Another verb for to produce, to make.
Melanie is suggesting they stop making some of the less popular items, the products they make that don't sell as much.
That would save us some money, she says.
Giovanni says not enough, not enough money, he means.
We either raise prices or stop production altogether.
Altogether, A-L-T-O-G-E-T-H-E-R, means entirely or completely.
Don't confuse that with two separate words, all, A-L-L, and together.
When someone says, we're going to do this altogether, He means we're going to do it all as a group.
We are going to each do it at the same time.
But all together as one word with one L means completely, entirely.
Melanie says there is one other option.
Giovanni says what?
Melanie replies, we could reduce our workforce.
To reduce means to lower the number of.
Workforce, W-O-R-K-F-O-R-C-E, one word, refers to the people who work for a company.
Melanie is suggesting that They get rid of a few of their employees, basically.
Giovanni says, you mean fire people?
To fire means to tell someone they no longer have a job at your company.
Giovanni says that's off the table.
The expression to be off the table, T-A-B-L-E, means it's not an option.
It's not under consideration.
We might say it's out of the question.
You're not even going to consider that as a possibility.
Now let's listen to the dialogue, this time at a normal speed.
There are no two ways about it.
We have to raise prices.
We can't.
We already raised prices earlier this year.
Doing it again risks alienating our customers.
What else can we do?
Our production costs have risen nearly 15%.
We've tried absorbing them and offsetting them, but nothing has worked.
Our profit margin continues to shrink and we don't have any other choice.
What about lowering the quality of our raw materials?
We could use a cheaper supplier.
That's a sure way to lose customers.
If we start cutting corners on quality, our customers will leave in droves.
What if we discontinue manufacturing some of the less popular items?
That should save us some money.
Not enough.
We either raise prices or stop production altogether.
There is one other option.
What?
We could reduce our workforce.
You mean fire people?
That's off the table.
A sure way to improve your English is to listen to the dialogues written by our wonderful scriptwriter, Dr Lucy Say.
Thank you, Lucy.
From Los Angeles, California, I'm Jeff McQuillan.
Thank you for listening.
Come back and listen to us again right here on ESL Podcast.
English as a Second Language Podcast is written and produced by Dr Lucy Say, hosted by Dr Jeff McQuillan.
Copyright 2013 by the Center for Educational Development.
