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I miss "CARS".

You know - engine, transmission, battery, steering linkage, four wheels, a radio with 6 pre-sets for AM/FM and a tape-deck, no computer anything.
After this whole discussion about all the problems with newer cars the last couple days, I really miss older cars with simpler mechanics.
So do I

I have deeply Luddite tendencies. I look around at all the "just in time" food and everything delivery systems. Or heating, freshwater, fuel, electricity, etc. It's all controlled by super complicated computers.

It'd only take a modern Al Qaeda to devise a particularly sticky virus and we're back in the stone age.
There's no turning the clock back fifty years to pre computers, and just doing everything by paper accounting and telephones.
Because none of that exists anymore. There is no non computerised communication/telephone system, fuel delivery or anything.

We've put all our eggs into one fragile basket. We'd be back in the stone age within 1 month, it'd be Megadeath, literally.

All that from tape decks, and simpler mechanical only cars. I told you I was a luddite, and deeply cynical obviously...
 
For my luddite needs, I have a 1988 Honda "Hawk" ("Bros" in other markets) NT650 GT. Carbs, few electronics. Fairly basic vehicle and is the one I am not afraid to work on. The BMW bike and both cars go to shops for service. However there are those who would criticize my bike for 1) CDI instead of points ignition, and 2) liquid cooling instead of air...
 
Chris, saw this article about supply chain crises and thought of you.

Yeah, this is my life, too... I work with freight forwarding services, instead of dealing directly with shipping companies, and this is the email we received today:

Hi Mike,​
I'm afraid we are starting to see another spike in rates to the USA for ocean freight, there are public holidays in China and Hong Kong over the next few weeks which have meant that the shipping lines have announced 3 weeks of 'blank sailings' and the next available departures will now be in early October. This will of course create a huge back log of stock, further vessel availability issues and inevitably an increase in container prices.​
I have however been offered a container which we could potentially use for your below orders, but the service is premium so I wanted to check the rate with you before we proceed with this.​
[Proprietary stuff, including pricing at 500% of what it was even 6 mos ago, when we were budgeting shipping...]​
Please let me know if you would like to proceed, or if you prefer to hold until later in October and see if the rates come down at all?​

And I mean, what are we supposed to do? They got us over a barrel - we need product to sell, especially considering the upcoming holidays - and no indication that pricing will go down or schedules will be any better.

So... Chinese Holidays in the middle of all the shenanigans outlined in that article, combined with Western Christmas shipping season, extending into next year's Chinese New Year and USA Superbowl... Really, I'm not forecasting anything getting better, anytime soon. Maybe by 2023? But don't hold your breaths...

The above message is regarding 3 jobs a colleague is working on, and one for a company we distribute. I currently have 7 jobs in process, including 4 which just docked over the past couple days, in either Baltimore or NYC. I thank my lucky stars that most of our production is USA-domestic, with much being digital production (trade books) right out of our warehouse. Also lucky that we are generally dealing with consolidated shipping - multiple products in one container with other people's stuff - rather than trying to source shipping for whole or multiple containers.

So when you see bare shelves and pricing on the rise, it's far less about politics, and much more about JIT manufacturing/low inventory capitalism...
 
NTH watch question. Should the 22mm Viton Strap fit on the new Devil Rays? I ask because I just spent the better part of 30 minutes trying to fit the orange Viton to the orange Devil Ray. I could get one side to stay put, get the pin inside the other lug, but no amount of manipulation would get that opposite side pin to hit the lug hole…almost like I couldn’t push the rubber hard enough against the case. Same happened on both sides of case and regardless of which lug I started with.

I just want to verify it’s supposed to fit before going at it again.
 
I miss "CARS".

You know - engine, transmission, battery, steering linkage, four wheels, a radio with 6 pre-sets for AM/FM and a tape-deck, no computer anything.

In 1992, after I fell asleep behind the wheel and wrecked my early-'80's Datsun 200sx, my Dad bought me a sort-of-blue-but-mostly-primer-gray '76 Chevy Nova with a 305ci V8, automatic 4-speed, with vinyl interior, a half-rotten dashboard, and no sound insulation.

It was an in-progress "project car" that my Dad's mechanic had been working on for some time, and he only wanted $500 for it. It's the car Schwarzenegger drove into the police station in "Terminator". It was a tank. When my Jewish uncle saw it, he said (and I quote), "I think Hltl3r invaded Poland in one of these..."

It was terrible in the rain, worse in the snow, deafening on the highway, nothing to look at inside or out, had zero fuel economy, and the engine growl would scare small children as it passed, but it was one of the best cars I've ever owned.

It never broke down, had stump-pulling torque, and was an absolute hoot to drive. I drove the hell out of it for a year or two before I foolishly sold it for exactly what my Dad paid for it.

After this whole discussion about all the problems with newer cars the last couple days, I really miss older cars with simpler mechanics.
I suddenly want to go buy something with a carburetor
 
Discussion starter · #9,816 · (Edited)
Chris, saw this article about supply chain crises and thought of you.

Yeah, this is my life, too... I work with freight forwarding services, instead of dealing directly with shipping companies, and this is the email we received today:

Hi Mike,​
I'm afraid we are starting to see another spike in rates to the USA for ocean freight, there are public holidays in China and Hong Kong over the next few weeks which have meant that the shipping lines have announced 3 weeks of 'blank sailings' and the next available departures will now be in early October. This will of course create a huge back log of stock, further vessel availability issues and inevitably an increase in container prices.​
I have however been offered a container which we could potentially use for your below orders, but the service is premium so I wanted to check the rate with you before we proceed with this.​
[Proprietary stuff, including pricing at 500% of what it was even 6 mos ago, when we were budgeting shipping...]​
Please let me know if you would like to proceed, or if you prefer to hold until later in October and see if the rates come down at all?​

And I mean, what are we supposed to do? They got us over a barrel - we need product to sell, especially considering the upcoming holidays - and no indication that pricing will go down or schedules will be any better.

So... Chinese Holidays in the middle of all the shenanigans outlined in that article, combined with Western Christmas shipping season, extending into next year's Chinese New Year and USA Superbowl... Really, I'm not forecasting anything getting better, anytime soon. Maybe by 2023? But don't hold your breaths...

The above message is regarding 3 jobs a colleague is working on, and one for a company we distribute. I currently have 7 jobs in process, including 4 which just docked over the past couple days, in either Baltimore or NYC. I thank my lucky stars that most of our production is USA-domestic, with much being digital production (trade books) right out of our warehouse. Also lucky that we are generally dealing with consolidated shipping - multiple products in one container with other people's stuff - rather than trying to source shipping for whole or multiple containers.

So when you see bare shelves and pricing on the rise, it's far less about politics, and much more about JIT manufacturing/low inventory capitalism...
Random thinks in no particular order...

When oil prices go up, people switch to natural gas, which makes the price of gas go up. I've been reading and hearing similar things about people switching from sea freight (which I don't use) to air freight (which I do).

Air freight is and always has been more expensive, but obviously a lot faster and easier to arrange for a small business like mine. For smaller shipments like mine, the cost isn't (or at least, it wasn't) so high that it made sense to consider switching to sea freight.

But now, a lot of companies are switching to air freight, despite the insanely higher costs recently, simply because they absolutely must have their goods received in a timely way, more timely than they can rely upon sea shipping companies to deliver.

That's part of the reason air freight costs have been rising so dramatically - the switch from sea freight. But I think I also read or heard about fewer flights, because fewer crew, or whatever.

...

That article, and most like it, tend to focus on the logistics involved in getting finished goods from one point to another. But more troubling is a similar article I read not long ago, which pointed out that the log-jam in international shipping is creating lots of delays in getting raw materials.

You can't get plumbing fixtures from your factory in China if the factory can't get the raw materials they need from wherever.

The article predicted we'd see MASSIVE product shortages and price inflation, by the end of this year, just when the holiday shopping season kicks into high gear.
...

Over three years ago now, I predicted a sea-change (no pun intended) in the watch industry would take place in 2020, bringing about higher costs, and higher prices. It had nothing to do with Covid.


My reasoning was pretty simple - I foresaw Swatch Group cutting off supply of ETA movements to third parties in 2020, when the WEKA/COMCO agreement expired, and possibly worse, cutting off the likes of Selitta from access to ebauches and nivarox hair springs. I figured that would cause a big shift towards Japanese or Chinese movements, and we'd see their prices and lead-times rise, the same way they did in 2015.

The Japanese have an aging and shrinking workforce, so they can't just "make more". It's not that easy for them to increase production capacity when there's an increase in demand. I figured supply would remain pretty level, and might even shrink, but it definitely wouldn't increase dramatically.

Meanwhile, during my trip to China, earlier that year (2018), my vendor explained the rising wages and cost of living in the industrialized parts of China would inevitably lead to higher production costs for businesses like mine.

I wasn't really thinking about what Chinese movements would cost, just thinking about all the other parts and assembly. But logically, if whatever Swatch is doing leads to people seeking out alternative movements (like the Chinese-made ETA clones now becoming more commonplace), and the cost of Chinese labor is going up, we shouldn't be surprised if Chinese movements aren't as cheap as they were four or five years ago.

I figured 2020 would be the year the fit hit the shan, and everyone - brands and consumers alike - would simply have to adapt to higher watch prices. I was just waiting to see all brands gradually acknowledging reality, by raising their prices, starting sometime in 2020.

That didn't really happen. Not exactly.

I'm sure ETA movements are harder to come by, and they're more expensive, as are Selittas and Miyotas and Seikos. I think we probably are dealing with higher labor costs, at least somewhat.

I know we're definitely seeing longer lead times, though I'm not exactly sure why that is. Perhaps it's logistics - factories need more time to get raw materials due to longer shipping times, and / or they have smaller workforces due to Covid, maybe.

Case in point - I'm looking at an email exchange between Rusty and our vendor, about the new Atticus models (Daedalus and Pharos). The major parts that take longer to produce (cases and bracelets) are already made. Two years ago, getting new dials made, and watches assembled, when you already have the cases and bracelets on the shelf, might take 60 days. Now, they're saying 75-80, and to expect delays on top of that. So, basically, we're talking 90 days, or 50% longer than it used to take.

But the "silver lining" (if you can call it that) with Covid seems to be the fall-off in demand from a weaker economy. It's hard to raise prices when sales are slower, due to weaker demand. If your financial situation hasn't been hurt by Covid, it's been a great time to buy watches.

I'm not gonna lie - I see it, I feel it, and I think a lot about it. My costs have gone up, and I haven't raised prices much, if at all, for the simple facts that A) I'm not seeing a lot of my competitors raising prices yet, and B) I haven't felt like I have to raise prices because we can't keep up with demand.

For the moment, it seems like our prices are "correct", at least judging by inventory levels and turnover. They're definitely not "too low", using those metrics. But the truth is I'm working harder now, a lot harder, than I was two years ago, but I have less to show for my efforts. I'm back to being under-paid for what I do, and it sucks.

I don't think I'm alone. I think most small businesses are in the same boat. I've been paying attention to the signs - literal and figurative. I see a lot more empty commercial spaces, and even when a business is there, they seem to be short-staffed, or reducing the hours they're open, and incrementally raising prices, but from what I hear, not really enough.

There's a sandwich chain that recently started here, "Nick Filet". I met the CFO and co-founder when he was filling in behind the counter one day, a few months back. He was telling me that they couldn't get any lobster to make lobster rolls, at any price, the week before, and his steak prices recently went up 40%. I looked at the menu, and noticed sandwich prices only went up 20% from my previous visit.

40% wholesale cost increase. 20% retail price increase. That's all he thought they could do, without it hurting sales.

I felt his pain. I recently re-ordered UV torches. My total costs went up 70% from two years ago. I only raised prices on them 40%, from $5 to $7. I'm just eating the other 30%.

It's in everything - the little plastic cards and those silicone "smart wallets" we include with every watch cost me more now, to buy and ship, than they did 2 years ago. They're a tiny component in my total cost of the product, but it all adds up.

My shipping costs on the latest shipment of leather travel cases were 4x what I paid two years ago. The boxes themselves only went up by about 20% in that time, but together, I'm looking at a major cost increase. That last shipment of boxes basically cost me double what they cost me when I started my business, just 8 years ago.

But I worry most customers simply wouldn't understand, if those cost increases found their way into my prices. The market is still partying like it's 2019.

It's not sustainable. No business can maintain for very long when materials costs go up 40%-70%, and shipping costs go up 300%-500%, but they don't raise prices, because they feel like they can't.

Welcome to the "new normal", maybe. I wouldn't get too used to it. My gut tells me there's at least one more shoe yet to drop.

I can slow down on production, and wait for the market to catch up. But even doing that, it means I'll be replacing what we didn't make today with something that costs even more to produce next year, and which will need to sell at an even higher price.
 
Discussion starter · #9,817 ·
NTH watch question. Should the 22mm Viton Strap fit on the new Devil Rays? I ask because I just spent the better part of 30 minutes trying to fit the orange Viton to the orange Devil Ray. I could get one side to stay put, get the pin inside the other lug, but no amount of manipulation would get that opposite side pin to hit the lug hole…almost like I couldn't push the rubber hard enough against the case. Same happened on both sides of case and regardless of which lug I started with.

I just want to verify it's supposed to fit before going at it again.
They will fit, albeit, with greater effort, due to the shorter lug length. I'd recommend using the thinner 1.5mm spring bars supplied with the straps, rather than the thicker 1.8mm spring bars from the 2K1's bracelet.
 
Random thinks in no particular order...

When oil prices go up, people switch to natural gas, which makes the price of gas go up. I've been reading and hearing similar things about people switching from sea freight (which I don't use) to air freight (which I do).

Air freight is and always has been more expensive, but obviously a lot faster and easier to arrange for a small business like mine. For smaller shipments like mine, the cost isn't (or at least, it wasn't) so high that it made sense to consider switching to sea freight.

But now, a lot of companies are switching to air freight, despite the insanely higher costs recently, simply because they absolutely must have their goods received in a timely way, more timely than they can rely upon sea shipping companies to deliver.

That's part of the reason air freight costs have been rising so dramatically - the switch from sea freight. But I think I also read or heard about fewer flights, because fewer crew, or whatever.

...

That article, and most like it, tend to focus on the logistics involved in getting finished goods from one point to another. But more troubling is a similar article I read not long ago, which pointed out that the log-jam in international shipping is creating lots of delays in getting raw materials.

You can't get plumbing fixtures from your factory in China if the factory can't get the raw materials they need from wherever.

The article predicted we'd see MASSIVE product shortages and price inflation, by the end of this year, just when the holiday shopping season kicks into high gear.
...

Over three years ago now, I predicted a sea-change (no pun intended) in the watch industry would take place in 2020, bringing about higher costs, and higher prices. It had nothing to do with Covid.


My reasoning was pretty simple - I foresaw Swatch Group cutting off supply of ETA movements to third parties in 2020, when the WEKA/COMCO agreement expired, and possibly worse, cutting off the likes of Selitta from access to ebauches and nivarox hair springs. I figured that would cause a big shift towards Japanese or Chinese movements, and we'd see their prices and lead-times rise, the same way they did in 2015.

The Japanese have an aging and shrinking workforce, so they can't just "make more". It's not that easy for them to increase production capacity when there's an increase in demand. I figured supply would remain pretty level, and might even shrink, but it definitely wouldn't increase dramatically.

Meanwhile, during my trip to China, earlier that year (2018), my vendor explained the rising wages and cost of living in the industrialized parts of China would inevitably lead to higher production costs for businesses like mine.

I wasn't really thinking about what Chinese movements would cost, just thinking about all the other parts and assembly. But logically, if whatever Swatch is doing leads to people seeking out alternative movements (like the Chinese-made ETA clones now becoming more commonplace), and the cost of Chinese labor is going up, we shouldn't be surprised if Chinese movements aren't as cheap as they were four or five years ago.

I figured 2020 would be the year the fit hit the shan, and everyone - brands and consumers alike - would simply have to adapt to higher watch prices. I was just waiting to see all brands gradually acknowledging reality, by raising their prices, starting sometime in 2020.

That didn't really happen. Not exactly.

I'm sure ETA movements are harder to come by, and they're more expensive, as are Selittas and Miyotas and Seikos. I think we probably are dealing with higher labor costs, at least somewhat.

I know we're definitely seeing longer lead times, though I'm not exactly sure why that is. Perhaps it's logistics - factories need more time to get raw materials due to longer shipping times, and / or they have smaller workforces due to Covid, maybe.

Case in point - I'm looking at an email exchange between Rusty and our vendor, about the new Atticus models (Daedalus and Pharos). The major parts that take longer to produce (cases and bracelets) are already made. Two years ago, getting new dials made, and watches assembled, when you already have the cases and bracelets on the shelf, might take 60 days. Now, they're saying 75-80, and to expect delays on top of that. So, basically, we're talking 90 days, or 50% longer than it used to take.

But the "silver lining" (if you can call it that) with Covid seems to be the fall-off in demand from a weaker economy. It's hard to raise prices when sales are slower, due to weaker demand. If your financial situation hasn't been hurt by Covid, it's been a great time to buy watches.

I'm not gonna lie - I see it, I feel it, and I think a lot about it. My costs have gone up, and I haven't raised prices much, if at all, for the simple facts that A) I'm not seeing a lot of my competitors raising prices yet, and B) I haven't felt like I have to raise prices because we can't keep up with demand.

For the moment, it seems like our prices are "correct", at least judging by inventory levels and turnover. They're definitely not "too low", using those metrics. But the truth is I'm working harder now, a lot harder, than I was two years ago, but I have less to show for my efforts. I'm back to being under-paid for what I do, and it sucks.

I don't think I'm alone. I think most small businesses are in the same boat. I've been paying attention to the signs - literal and figurative. I see a lot more empty commercial spaces, and even when a business is there, they seem to be short-staffed, or reducing the hours they're open, and incrementally raising prices, but from what I hear, not really enough.

There's a sandwich chain that recently started here, "Nick Filet". I met the CFO and co-founder when he was filling in behind the counter one day, a few months back. He was telling me that they couldn't get any lobster to make lobster rolls, at any price, the week before, and his steak prices recently went up 40%. I looked at the menu, and noticed sandwich prices only went up 20% from my previous visit.

40% wholesale cost increase. 20% retail price increase. That's all he thought they could do, without it hurting sales.

I felt his pain. I recently re-ordered UV torches. My total costs went up 70% from two years ago. I only raised prices on them 40%, from $5 to $7. I'm just eating the other 30%.

It's in everything - the little plastic cards and those silicone "smart wallets" we include with every watch cost me more now, to buy and ship, than they did 2 years ago. They're a tiny component in my total cost of the product, but it all adds up.

My shipping costs on the latest shipment of leather travel cases were 4x what I paid two years ago. The boxes themselves only went up by about 20% in that time, but together, I'm looking at a major cost increase. That last shipment of boxes basically cost me double what they cost me when I started my business, just 8 years ago.

But I worry most customers simply wouldn't understand, if those cost increases found their way into my prices. The market is still partying like it's 2019.

It's not sustainable. No business can maintain for very long when materials costs go up 40%-70%, and shipping costs go up 300%-500%, but they don't raise prices, because they feel like they can't.

Welcome to the "new normal", maybe. I wouldn't get too used to it. My gut tells me there's at least one more shoe yet to drop. I can slow down on production, and wait for the market to catch up, but even doing that, it means I'll be replacing what we didn't make today with something that costs even more to produce next year, and which will need to sell at an even higher price.
Similar situations occurred during/after the financial crisis and against after Hanjin abruptly shuttered.

End customers everywhere are ready to get back to "life as normal" yesterday. That has every business (from those mining raw materials all the way through to the supply chain to B2C outlets) scrambling to catch up.

In a business world heavily built on demand based modeling ERP systems, often backwards looking, and limited human intervention with regards to forecasting beyond the computer (due to the dreaded upper management asking short sighted questions such as "so you think you're smarter than the computer?")it becomes inevitable when there is a SNAP back. Many are almost certainly over buying right now due to the panic and inflated lead times (one of the few data points the people manipulate). That causes massive constraints everywhere, and it will take well into 2022 (if not '23) to sort out.

The beauty of the broken ERP driven world is this....

Once they DO catch up, the massive multi-nationals will pull back the reigns to get inventory back in line. This will almost immediately create breathing room everywhere else in the supply chain, and prices for everything from raw materials to freight will come back down

Obviously pending another pandemic, $120/barrel crude, etc...
 
Discussion starter · #9,819 ·
Similar situations occurred during/after the financial crisis and against after Hanjin abruptly shuttered.

End customers everywhere are ready to get back to "life as normal" yesterday. That has every business (from those mining raw materials all the way through to the supply chain to B2C outlets) scrambling to catch up.

In a business world heavily built on demand based modeling ERP systems, often backwards looking, and limited human intervention with regards to forecasting beyond the computer (due to the dreaded upper management asking short sighted questions such as "so you think you're smarter than the computer?")it becomes inevitable when there is a SNAP back. Many are almost certainly over buying right now due to the panic and inflated lead times (one of the few data points the people manipulate). That causes massive constraints everywhere, and it will take well into 2022 (if not '23) to sort out.

The beauty of the broken ERP driven world is this....

Once they DO catch up, the massive multi-nationals will pull back the reigns to get inventory back in line. This will almost immediately create breathing room everywhere else in the supply chain, and prices for everything from raw materials to freight will come back down

Obviously pending another pandemic, $120/barrel crude, etc...
Some of this reminds me of that ABTW article a couple years back, regarding the Morgan Staley report on the watch industry, and what I think they dubbed the "whiplash" effect.

In a nutshell, and as they seemed to see it - if an AD sells 3 watches, they assume there's demand for 5, so they order 5. But the distributor sees that from every retailer, so they order even more. The brand sees that, from every distributor, and produces even more. Pretty soon, you have a glut of unsold inventory.

I never really bought into that explanation. I look at MOQ's as part of the problem, as well as the need "luxury" brands have to increase prices faster than inflation, and various other long term trends as being better explanations than the brands foolishly listened to what ADs said. From what I've seen, the brands don't listen to the AD's at all.

I do wonder about the current housing market, and car market, and various other markets for other products and commodities. How long can the auto-sales industry survive without having cars to sell, because "microchip shortage"?

Okay, fine, they can raise the price, but...just like with watches, people can't buy what they don't have enough money to buy. There's a practical limit to how much debt people can take on, in order to live in a house or drive a car. Eventually, people decide to live in smaller houses, or find another way to work.

Markets seem to naturally prefer equilibrium. I get nervous when things seem out of balance. When I run into a guy I've known for a while in the grocery store, but who doesn't strike me as being particularly smart, and he starts telling me to "invest" in crypto-currency*, all the whistles and bells on my "trouble ahead" system start going off all at once.

(True story, by the way - happened about 6 months ago.)

I sort of look at prices of most goods the same way I look at government spending. It never goes down. If an industry can survive after raising prices, why would that industry willingly allow prices to come back down?

The only answer I can think of is "competition". Competition is the one thing that tends to keep most businesses honest, so long as we're not talking about monopolies or massive collusion to engage in price-fixing.

For instance, I know that if I was massively over-charging for my product, and making an insane profit, then inevitably, someone would figure out how to replicate what I'm doing, and do it for just a lot less. This is why replica watches exist. It isn't hard to make a convincing replica of a luxury watch and sell it at a decent profit, it's just illegal. You can make a very convincing Rolex rep and sell it for about $700-$1500, apparently.

Competition is a major factor in why I haven't raised my prices already, even though I honestly feel like they need to be higher.

If watch brands are FORCED to raise prices, or go out of business, then they'll have to raise prices. If the market isn't willing to pay more for the product, then a lot of brands will go out of business anyway.

But the ones who survive aren't likely to lower prices after the dust settles, UNLESS our costs come down enough for new competitors coming online to think they can be successful under-pricing us. Competition will keep everyone honest.

But that can't happen if our costs don't come down.

So...I dunno. If costs come down, good. If they don't come down, but the market catches up, good. But if the costs keep going up, and the market demand doesn't catch up soon enough, it's bad, I think for everyone.
 
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