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Victoria 3 - Dev Diary #5 - Production Methods

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Hello again and happy Thursday! Today we will be taking a deeper look inside Buildings to explore Production Methods. These determine the functions of the building, its inputs and outputs, and what employee types it requires to operate.

Many management games let you upgrade a building to increase its efficiency or expand its functionality. In these games, after the upgrade investment has been paid the impact is permanent and nearly always superior in every way to the building's previous functionality. But in Victoria 3 there are no actions without reactions, and novel innovations don't just make buildings better with no side effects. Improving industrial processes over time is to be expected, but in some cases those improvements might require goods as input that the country has scant access to, while others permit the output of a new type of end product at the expense of the old one. As a result, buildings in Victoria 3 require more flexible upgrade paths than what's afforded by permanent, linear, “no-brainer” improvements.

All buildings have several categories of Production Methods, usually between 2 and 5. Only one is active at any given time in each category. Most categories fall into one of these types:

Base: governs the general "tech level" and efficiency of the building, produces goods typical for the building type
Refining: reduces output of typical goods in favor of output of specialized or luxury goods, sometimes adding a special input
Automation: adds industrial goods as input to reduce the building's unskilled workforce requirement
Ownership: determines who owns shares in the building; typically governed by Laws

With the right technologies Food Industries can make Groceries from both Grain (Bakeries) and Fish (Canneries). They can also refine Grain and Sugar into Liquor (Distilleries). With advanced technologies Food Industries can be partially automated, drastically reducing the need for unskilled labor. Simple Food Industries are operated by Merchant Guilds (Shopkeepers), while more advanced and profitable Food Industries are owned by Capitalists who reinvest some of their dividends.

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As one example, an Iron Mine's base Production Method determines if miners use only picks and shovels or if they also use some sort of engine-driven pumping mechanism. There are several different pumping technologies which also determine what fuel is used. The more advanced the pumping mechanism the more deposits can be accessed and the faster Iron can be mined, but the more Coal or Oil is used in the process. With higher tech pumps comes a requirement for more Engineers and Machinists to be on-site to control and oversee its operation. This creates more demand for qualified workers and also opens up a number of better paid positions to those Pops who meet the qualifications.

The revolution in chemical sciences of the era also enabled the use of explosives in mining, which is a secondary Production Method category used only in mines. Once Nitroglycerin is invented, it can be used in mines to generate even more minerals, at the expense of Explosives produced by the Chemical Industry but also with a higher rate of workplace accidents. By researching less volatile Dynamite, even more minerals are extracted at the expense of even more Explosives, with the additional benefit that far fewer workers will blow themselves up on the job.

Once invented, portable Steam Donkey engines can be deployed at mining sites to drastically reduce the amount of manual labor required just for hauling. This costs the building some money in the form of Coal and Engines, but reduces the amount of money they have to pay in wages. Perhaps more importantly it frees those Laborers up to do other work in other buildings if the state is running low on workers. But if wages are already very depressed it might not be a great idea to purchase expensive industrial goods just to increase the unqualified labor pool further, so this might not be a no-brainer decision for a player to make.

In most countries, simple mines are owned and operated by Merchant Guilds at game start. These are small-time purveyors of the goods produced represented by Shopkeepers. Once mines start to industrialize, Capitalists step in to take over ownership. In most cases these Capitalists will come from Shopkeepers promoted to these newly created positions, but some might come from other Pops in the state, even other Capitalists in buildings not quite as lucrative as these new mines. There are fewer Capitalists than Shopkeepers but they draw a higher wage, and more importantly they will reinvest some of their earnings into the country's expanding industry depending on how much profit their workplace is generating for them. As new ideas spread across your society you might be able to make the mining industry publicly traded instead of privately held, and later on in the game perhaps even nationalize them to be run by government bureaucrats or turn them into cooperatives where profit is split between workers.

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Production Methods aren't limited to consuming and producing goods. Government Administrations employ Bureaucrats and Clerks who use Paper to produce Bureaucracy, one of the game's Capacities that let you govern more people and extend more state services to them. Railways consume Engines and a fuel such as Coal to produce both Transportation and Infrastructure, the former which is sold on the market and the latter which allows the state to support more buildings without loss of Market Access. Universities employ Academics that let the state guide research and development of new technologies and ideas. Virtually any kind of currency, modifier, or effect can be produced by Production Methods in buildings and can be applied in a variety of ways to the country, state, or even the building itself.

A basic Government Administration consumes 10 Paper and produces 50 Bureaucracy per fully-staffed level, but each additional level beyond the first adds a +2% Throughput bonus due to economy of scale. This increases both consumption of Paper and output of Bureaucracy, yielding more productivity from each of the Pops that work the building.

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This of course adds a tremendous capacity for modding in new Buildings and Production Methods! Embassies that increase your Influence, but which can also be configured to consume Wine and Meat at state expense to increase the speed at which you Improve Relations? Shantytown Temples that can only be built on coastlines, that consume Fish and create jobs for pops qualifying for the Deep Ones profession, increasing state mortality but also the weekly rate of the global cthulhu_rising counter? We can't wait to see what madness you unleash!

If tweaking multiple Production Methods across several categories on every single building in the game sounds a bit complex compared to linear building upgrades - you're right! Thankfully we've built a number of tools to help with this process. Foremost among these are the Buildings panel, where you can get an overview of all buildings in your country organized by major and minor type. For example you could get an overview of all Rural buildings, or all Furniture Manufactories, or all Ports. If you have buildings of the same type in several different states, you can break it down further to view the individual building. On each level you can see how profitable the building is and adjust its Production Methods. You can even set all Production Methods for a certain building type to a specific setting all across your country with one click.

From the Buildings panel you can get a birds-eye view of all industries in your country and see at a glance how they’re doing financially. You can change Production Methods on an individual building or on all of them at once. You can even expand buildings directly from this screen if you so choose, or click on one to get an in-depth view of its balance sheet and workforce.

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To minimize the requirement for mental math we have also created prediction tools that give you a breakdown of what to expect from choosing a certain Production Method, based on profitability predictions taking adjusted production and consumption into account, and summarizing which new job positions will be created and which will disappear. While it may on the surface seem obvious to just enable the Production Methods that make the buildings more profitable, keep in mind the societal effects as well - are there enough Pops in the state that qualify for the more advanced jobs this new process requires? Will the wage for these new jobs be sufficient to entice those Pops to switch professions? Will you inadvertently create a whole new class of well-to-do Machinists that may have pro-labor union sentiments? Or will the increased profits not lead to higher wages in the building because they're already competitive and fully employed, and will simply result in more dividends for the shareholders which will be funneled into increased luxury consumption? Which you choose might depend on your population’s social mobility, what politics you favor in your country (a socialist uprising may not be in your plans!) and whether you're able to supply luxuries yourself without benefiting your rival. More profitable domestic industries are never bad, but should be far from the only consideration when building your society.

Predictive tooltips will explain the anticipated impact on the building’s Balance as a result of changes in production, consumption, and wage requirements, as well as the changes in employment that could also impact the country’s politics over time. You will also be forewarned if there aren’t enough qualifying Pops to take on any new professions created, as this could limit your industry’s effectiveness.

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That is all for this week. We will return to discussing more economic intricacies later, but for the next little while we'll be exploring domestic politics - starting next week when Martin will be presenting Interest Groups!
 
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"Private sector is more efficient!" is a Big Lie pushed by the private sector, privatization advocates aiming for fat payouts from private sector, and private sector workers embittered public sector aren't as overworked and underpaid as them.
I remember reading a breakdown analysis of assorted privatization efforts of public services in Europe to assess validity of efficiency gains and it essentially concluded that overall efficiency changes were small enough to not be statistically significant. Cost savings were there (which is not the same as being more efficient) though those were largely accounted for simply by a reduction in the wages of workers.

(can be seen here if you're interested. It was interesting since I typically just accepted "it's innately more efficient" as well)
 
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The problem with the public sector is that many areas can only be assessed at the long-term level of the economy, but only to a limited extent at the micro-level. I can keep the youth welfare service pretty cheap. But then later I have higher costs in terms of prisons. Dead people in a non-existent health system do not pay taxes later.

The private sector works in a more fragmented way. But even there, some areas are always in deficit. No matter what I do, the security of my super market will not give me any black numbers. It will always only generate costs.

I can only assess the public sector by comparing it with the public sector of another country. Or when I make the comparison with several private sectors with reference to the societal impact. The great idea of dumping garbage in the river might be great from the numbers of privately operated garbage disposal and the people who buy this service might not mind this practice, but the overall effects are not that great.

I can also do without the building regulations. The collapse of buildings will not be readable from the statistics of the construction companies. On the contrary, I will have lower costs than a country with such regulation.
One other problem is the way efficiency is measured. The private sectors externalize a lot of costs and internalize profits. Then people will point how efficient they are. However, someone needs to build and maintain infrastructures, educate the population, keep the workforce healthy etc. There are industry sectors that cannot survive without state support (even in the US where part of the private sector effectively needs to be subsidized to survive).

If you look at efficiency at the society level. Europe seems to have a much better mix than the US. You will have a way better living standard as an average European than as an average American. One could infer that privately run companies may not be producing the "best" or "most efficient" outcome. Just create a situation where they generate the highest dividend short term. This is then used as a measure of efficiency.

On a side note, you can also find very successful states-owned companies: EDF is owned by the French states and as a virtual monopoly there... but also run powerplants in the UK, China and in the US (actually the largest nuclear operator there) among many countries they operate in. There is nothing inherently inefficient with the state owned sector and they can compete against privately-owned companies. You also have a large part of European industrial sectors being partly state-owned. For example, I think Airbus states share has been going down over the years, but is still around 25% state ownership. It is not clear that Airbus became any more (or less) efficient as states' control decreased.
 
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Depending on the resources transferred in the split different types of buildings would also be transferred, along with the Pops attached to that building.

It's worth noting here that state regions split only under relatively rare circumstances. Most of the time when territory changes hands it's entire states (which could be a sub-state) from one country to another.
How big are the states? This makes me a bit scared that territorial changes when they happen will be more of the big and sudden kind rather than gradual.
 
Germany actually got their navy on in the pre-dreadnought era (but well after the broadside ironclad/central-battery-ship period) and then carried it through to dreadnoughts, but agree that scripting will probably be important here :) What would be cool would be to make sure the scripting doesn't necessarily always do the same thing every time (ie, isn't predictable for players) - so a British player may need to counter a somewhat irrational German naval build-up (Germany building a navy makes sense, Germany trying to match the RN in most situations was a bit silly), or Germany might decided to focus a bit more on its army (creating headaches for its continental neighbours, and Britain if it wants to help them contain Germany).
Germany historically never tried to build a navy bigger than Britain’s. The German planners believed in the “risk theory” of seapower, which was that they needed a navy large enough that any other power (that is, Britain) could not fight them without the risk of unacceptable losses that would imperil their position in the world. Germany in 1912 proposed a treaty to Great Britain that would have limited their navies to a 5:3 ratio, thinking that a navy 60% the size of the Royal Navy would suffice to defend its interests. However, the agreement foundered on a different issue: the circumstances under which Britain would have to commit not to go to war against Germany. As the British pointed out, the country that declares war first is not always the aggressor.

In a different timeline, who knows what opportunities might arise?
 
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An early example is France (the name obviously comes from there) liberalization of "grains" (in EU4 trade good terms :p) trade. Other examples, during the Revolution, is the abolition of the guilds that controlled certain trades. I think it is probably very close to classic liberalism (state enforces the law, private actors run the economy).
Thank you; this is helpful. The French Third Republic had strict regulation of its financial sector that led to the Paris exchange (the second-largest in the world, after London) investing 80% of its savings in government bonds. (There was also a black-market in stocks that collapsed at the end of the 1800s and eventually moved to Brussels.) This gave the French government a great deal of control over where the French people invested their savings, and much of them was directed to railroad construction in Russia, the Ottoman Empire, Africa and the Americas in part for political reasons. The majority of those investments were wiped out by the Great War and Russian Revolution, but German indemnities prevented another financial collapse like the ones in 1882 and 1895.

Both the examples I’ve been given of what historical model a “laissez-faire” economy is supposed to represent had free trade, and therefore did not use tariffs as a means of encouraging investment in a sector.
 
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I think you mis-interpreted the Dev's response. My reading was centralisation was LIMITED by infrastructure. If your central bureaucrats can't physically travel to the outskirt provinces then they aren't doing providing any bonus.

Think of their multiple local markets explanation. Early in the game East USA might not be the same market as West USA, and all the colonies of Europe definitely wont be the same market as their 'home' countries. As such the (limits of the) infrastructure require an amount of decentralization. As you tech up and improve your railroads / transport capabilites then, over time, centralisation might occur.
But from what we have been shown so far, Bureaucracy is not a Good or Service, that has to be consumed by a state. Instead in it a nation-wide Capacity. If market effects come into play, then yes, it could provide many of the requirements for "local" administration that I am looking for, but that just isn't the impression I've gotten so far.

As for infrastructure, we haven't seen that dev diary yet, so obviously I am just speculating off very limited clues, but based on the clues so far, then infrastructure is a soft limit how much you can build in a given state. So yes, the infrastructure of your capital area may limit how many administrative buildings you can build there, but the low infrastructure of the outback is not a limit on how well it receives that administrative input. Again, I may have misunderstood something there, but if this understanding is correct, then it seems fairly backwards to me, in terms of making it hard to govern poorly developed areas.
 
the low infrastructure of the outback is not a limit on how well it receives that administrative input
Not going to get deep into details about this yet, but while low infrastructure is not a limit on how well Bureaucracy is utilized, it does impact the ability for remote Government Administrations to buy Paper from the market at a good price. In effect, without an incentive to centralize, the optimal play strategy would be to construct fully self-sufficient local economies by constructing a variety of building types in every state. This would mean lacking Infrastructure wouldn't matter.

This is a valid strategy for a number of reasons, but we don't want fully distributed industry to be overwhelmingly optimal as this is neither fun nor realistic. Economy of Scale bonuses simulates how centralization can be beneficial (assuming the Infrastructure is there to optimally deliver input and distribute output goods), makes it easier for the player to keep track of which of their states do what, and makes for more interesting political gameplay, without invalidating a more decentralized strategy or artificially limiting the number of building types by "slots" or similar. We think it works pretty well.
 
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How big are the states? This makes me a bit scared that territorial changes when they happen will be more of the big and sudden kind rather than gradual.
State size varies since they're intended to mostly follow historical cultural/legal/administrative boundaries rather than be based on geography or target size. Territorial changes where a state changes hands can very well be big and sudden, yes. That is fully intentional, since the game is not about slow and steady expansion of territory but rather slow and steady growth inside your borders and major upheaval as one potential outcome of conquest. Of course the Pops in the states always change over time, though.
 
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State size varies since they're intended to mostly follow historical cultural/legal/administrative boundaries rather than be based on geography or target size. Territorial changes where a state changes hands can very well be big and sudden, yes. That is fully intentional, since the game is not about slow and steady expansion of territory but rather slow and steady growth inside your borders and major upheaval as one potential outcome of conquest. Of course the Pops in the states always change over time, though.
Interesting! So I assume the system of land changing hands is pretty similar to Victoria II, except added possibility of splitting states in special (relatively rare) cases such as treaty ports. What I would be most interested in knowing is what you intend to do in cases where administrative boundaries and cultural/linguistic boundaries are in conflict. Such as Bohemia-Moravia, for example?

And thanks for a most interesting and promising dev diary!
 
Do capitalists have to be located in the same state as the building they own? If so, how is international capital modelled, including foreign investment?

Shopkeepers are middle class pops that are made obsolete in large numbers when you switch away from the early production methods, which is how we simulate this effect.
This is in response to a question about artisans. Does that mean that artisans no longer exist? Or am I missing something?
 
Germany historically never tried to build a navy bigger than Britain’s. The German planners believed in the “risk theory” of seapower, which was that they needed a navy large enough that any other power (that is, Britain) could not fight them without the risk of unacceptable losses that might their position in the world. Germany in 1912 proposed a treaty to Great Britain that would have limited their navies to a 5:3 ratio, thinking that a navy 60% the size of the Royal Navy would suffice to defend its interests. However, the agreement foundered on a different issue: the circumstances under which Britain would have to commit not to go to war against Germany. As the British pointed out, the country that declares war first is not always the aggressor.

In a different timeline, who knows what opportunities might arise?

I said matching not exceeding, but you're quite right - Tirpitz/Wilhelm weren't trying to match, just be big enough to make Britain not want to go to war with them.

Not going to get deep into details about this yet, but while low infrastructure is not a limit on how well Bureaucracy is utilized, it does impact the ability for remote Government Administrations to buy Paper from the market at a good price. In effect, without an incentive to centralize, the optimal play strategy would be to construct fully self-sufficient local economies by constructing a variety of building types in every state. This would mean lacking Infrastructure wouldn't matter.

This is a valid strategy for a number of reasons, but we don't want fully distributed industry to be overwhelmingly optimal as this is neither fun nor realistic. Economy of Scale bonuses simulates how centralization can be beneficial (assuming the Infrastructure is there to optimally deliver input and distribute output goods), makes it easier for the player to keep track of which of their states do what, and makes for more interesting political gameplay, without invalidating a more decentralized strategy or artificially limiting the number of building types by "slots" or similar. We think it works pretty well.

This is another of the things about water - overland transport requires a lot of infrastructure, whereas overwater transport is a bit more low-infrastructure-friendly.
 
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Wages are set by each privately owned building independently by balancing trying to achieve full employment with trying to minimize wage costs. The short version of the logic is that each week a building that require labor will check if it can afford to raise wages to attract more workers, and will only do so if it's able. The effect of this is that qualified labor shortage will drive up wages for as long as buildings can afford to pay, while a healthy supply of Peasants will keep wages depressed and dividends high.

Government wages are based on an average of private industry wages across incorporated states but can be controlled to a limited extent by the player.
I'm obviously quite late to the party now but this doesn't sound quite right to me, or perhaps I'm misunderstanding you. It sounds like private buildings are trying to maximize employment as long as they remain profitable, but shouldn't they be trying to maximize dividends instead? That is the goal of private business in the real world after all.
 
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I'm obviously quite late to the party now but this doesn't sound quite right to me, or perhaps I'm misunderstanding you. It sounds like private buildings are trying to maximize employment as long as they remain profitable, but shouldn't they be trying to maximize dividends instead? That is the goal of private business in the real world after all.
 
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This is a validstrategy for a number of reasons, but we don't want fully distributed industry to be overwhelmingly optimal as this is neither fun nor realistic. Economy of Scale bonuses simulates how centralization can be beneficial (assuming the Infrastructure is there to optimally deliver input and distribute output goods), makes it easier for the player to keep track of which of their states do what, and makes for more interesting political gameplay, without invalidating a more decentralized strategy or artificially limiting the number of building types by "slots" or similar. We think it works pretty well.
I hope you’ll tell us more later. Economies of scale are a real thing (up to a point), and you also ought to have local economic specialization, like Paul Krugman won his Nobel in Economics studying. When we think of wines from France and beer from Belgium, that’s not something Champagne and Flanders could just switch to making overnight without a fuss (although immigrants could bring some of that know-how with them, creating opportunities for the player, and some randomization). When you look at why Ford, General Motors and Chrysler all located in Detroit, it’s largely because the suppliers they all needed were there.
 
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I'm obviously quite late to the party now but this doesn't sound quite right to me, or perhaps I'm misunderstanding you. It sounds like private buildings are trying to maximize employment as long as they remain profitable, but shouldn't they be trying to maximize dividends instead? That is the goal of private business in the real world after all.
But is it setting prices like a monopoly, a monopsony or a perfectly-competitive collection of small businesses?
 
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I've got a question about how Luxury Production Methods like this work. If I have a silk shortage but not a shortage of the raw material necessary to make Clothes, will that reduce the output of just Luxury Clothes, or will Clothes output fall as well? I know in a situation like that, it would probably be optimal to switch away from Craftsman Sewing either way, but it would be odd if losing access to Chinese silk also meant my factory workers weren't using locally produced cotton to make clothes.
 
But is it setting prices like a monopoly, a monopsony or a perfectly-competitive collection of small businesses?
Well I guess that depends how many buildings you have and how many unemployed/farmer pops. My point is just that if the goal of private business in game is different from the real world, you might get some unintuitive or strange results. Vernichtere linked a good post altough my concern is not so much with labour supply being greater than demand in which case you might expect wages to fall to subsistence farming, and that seems reasonable to me. I'm more concerned with the demand being greater because in this case it seems like you can expect wages to rise until all profits are wiped out which would not be like reality at all.
 
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I'm super happy to read that ! Was afraid Victoria III would be a dumbed-down game. Count on me for the next revolution, devs ! Thank you for your time !
 
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I see nothing wrong with including BOTH mechanics in the game. Maybe there should be an option at the game start to
A. Play as "the spirit of the nation"
B. Play as the government

The latter option has so much roleplay potential.
Oh nice idea! But please include Game over if another party wins the election, because your government will be replaced by a different government. Logically this should be a game over if you are playing AS the government.
 
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