Cheap Days Over

[Foulounoux]

Dave,

 

having spent nearly all my career in the motor industry - although not in the manufacturing side - I think some of that that is a major over simplification.

 

If you are talking about Nissan as the major UK manufacturer, doesn't Renault own about 45% of it and the CEO is the same guy that runs Renault (a Frenchman called Gosn).

 

The Chinese have just bought Volvo and TATA (India) have just acquired Jaguar/Land Rover - but then Ford messed them up as did GM did to Saab! If you saw the recent progamme about Detroit, you might share my belief that the US motor industry have levels of incompetence that left the UK in the shade.

 

Jol

Not such an oversimplification I think

 

 

Having spent the last 10 years as a supplier to Japanese OEMS

 

Renault may have a share in Nissan but the latter is still run to Japanese standards so there is still a different approach. Sunderland is far more efficient than the French plants.

 

Same with Honda the Swindon factory is more japanese than the motorbike factories in Italy and until this year Spain.

 

 

 

 

Colin

[Fat Controller]

In the short term, prices of Far-eastern imports are more likely to be affected by the considerable hike in transport prices from the region. Perhaps ironically, this is a result of economy measures by the shippers and container leasers. The former have had a policy of 'slow-steaming' for the last couple of years, as well as mothballing numbers of ships, so that cycle-time for boxes has increased, and so more are required for a given volume of traffic. At the same time, the leasers bought virtually no new boxes last year, so that the supply of boxes was further diminished. The result is that supply of boxes is less than demand and, following classical economic theory, a price hike is inevitable. Container lines are already charging premium rates for pre-booked (and presumably pre-paid) transits.

[Ravenser]

In the short term, prices of Far-eastern imports are more likely to be affected by the considerable hike in transport prices from the region. Perhaps ironically, this is a result of economy measures by the shippers and container leasers. The former have had a policy of 'slow-steaming' for the last couple of years, as well as mothballing numbers of ships, so that cycle-time for boxes has increased, and so more are required for a given volume of traffic. At the same time, the leasers bought virtually no new boxes last year, so that the supply of boxes was further diminished. The result is that supply of boxes is less than demand and, following classical economic theory, a price hike is inevitable. Container lines are already charging premium rates for pre-booked (and presumably pre-paid) transits.

 

Speaking as someone in the container industry (recently made redundant by a carrier due to the state of the market and now taken on by a forwarder ) transport prices are not a significant factor on the final total cost of the goods. While the westbound (import) rates may have risen by perhaps USD2000/40 in the last 18 months, (from "nothing plus surcharges" in some cases) , they aren't back to the levels of mid 2007 yet. And USD2000-USD2500 spread across 40-50 cubic metres of OO locomotives is not a lot per loco

 

Slow steaming (and diversion round the Cape) should not be exaggerated - they added perhaps 2 days onto a transit of 28-30 days . That could be readily compensated by a modest squeeze on the typical freetimes for boxes in the waste trade (though the said trade would scream blue murder) (not to mention the fact that you lose 7 days anyway if you can't get the cargo on the first vessel cos its full) . Tonnage has been mothballed because volumes went into a nose dive while new buildings poured out of the yard. While the squeeze on box availability is real , we are still 4-6 weeks from any crunch point at which carriers start to run short of equipment in China . And when you consider that 50% of the global container fleet is owned by lines, and much of the rest is on long term lease , the impact of spot leasing rates is small. Especially as daily equipment costs are very low and one of the smaller cost elements . And it is worth remembering that seafreight is only one part of the through cost from Shenzhen to Barwell or Margate - inland haulage and terminal charges m

ake up a surprisingly large part of the total.

 

In other words, the shipping costs of anything are not a major element of the total cost , unless you're talking about something like waste paper, and the gyrations of the freight market have little effect on overall economics of where goods are produced. Never underestimate the ability of the shipping industry to destroy its own revenue and defy economic gravity

 

I am only aware of one carrier trying on a priority fee on the export trade ,(in my view not a very sensible fee) though possible the idea may have been floated at the other end, and in any case the economics would normally work like those for rail / air tickets - book early and get a cheap rate, turn up at the last minute, pay up and hope there's space left. Prebooked would only mean prepaid in the specilist shipping industry sense , where "prepaid" simply means "paid at origin" as opposed to "collect" - paid at destination. "Prepaid" could well mean 14-30 days credit after sailing in many cases

 

A more likely effect is some modest supply chain disruption as both ship space and equipment become restricted , and shipments are delayed awaiting release of a container. That would result in arrival dates and release dates for new models slipping a few weeks, rather than significant price hikes

 

Currency changes are much more significant in terms of prices - and it must be remembered that inflation is running at relatively high levels in China so that wages and costs are rising steadily anyway

 

I can't see too much radical change in where things are made. After all China and India jointly account for about 2.5 billion of the world's 6 billion people - which makes it rather hard to find substitutes for them. It's all about shifts at the margin in the medium term

[darren01]

Having brought some Maunsell coaches recently, I can say they are being made in India, as the box had stickers saying made in India over the made in china.

[Jol Wilkinson]

Not such an oversimplification I think

 

 

Renault may have a share in Nissan but the latter is still run to Japanese standards so there is still a different approach. Sunderland is far more efficient than the French plants.

 

Same with Honda the Swindon factory is more japanese than the motorbike factories in Italy and until this year Spain.

 

 

 

 

Colin

 

Colin,

 

that'l be the same Japanese standards that brought about the recent Toyota (and Nissan) recalls, then.

 

While it is interesting that car manufacturers, especially the far eastern and Japanese, provide long term warranties to promote their reputation for quality, the same does not extend to other consumer products made in the east (I've just bought a fairly expensive Canon camera which carries only a 12 month warranty). Does that say more about product quality, marketing or customer perceptions?

 

 

Jol

[The Stationmaster]

Colin,

 

 

 

While it is interesting that car manufacturers, especially the far eastern and Japanese, provide long term warranties to promote their reputation for quality, the same does not extend to other consumer products made in the east (I've just bought a fairly expensive Canon camera which carries only a 12 month warranty). Does that say more about product quality, marketing or customer perceptions?

 

Jol

 

 

It probably reflects the fact that the next model upgrade will be released in about 6 months time

[Bernard Lamb]

 

 

While it is interesting that car manufacturers, especially the far eastern and Japanese, provide long term warranties to promote their reputation for quality, the same does not extend to other consumer products made in the east (I've just bought a fairly expensive Canon camera which carries only a 12 month warranty). Does that say more about product quality, marketing or customer perceptions?

 

 

Jol

 

 

On the other hand there are examples in other fields that offer a life time guarantee. Just a couple of items that I have experience of are a modem and a bike frame. Customer perception I would say. Product quality ultimatly depends on the market and the perceptions of the punter. Or should do in a well run company. It would be very interesting to see the projections for Hornbach of various lower acceptable reject levels set against increased production costs.

Bernard

[28XX]

Yes, bicycles. The last truly maintainable consumer product. I'm not a cycling fan, but as machines, this fact alone gives satisfaction.

 

Chloe:"I want a new bike"

 

Me:"Why, what's wrong with your old one?"

 

C:"The brakes/chain/saddle/tyres/grips(delete as appropriate) are no good"

 

The Next Day

 

Me:" Fixed it! Ha Ha Ha!"

[Foulounoux]

Colin,

 

that'l be the same Japanese standards that brought about the recent Toyota (and Nissan) recalls, then.

 

While it is interesting that car manufacturers, especially the far eastern and Japanese, provide long term warranties to promote their reputation for quality, the same does not extend to other consumer products made in the east (I've just bought a fairly expensive Canon camera which carries only a 12 month warranty). Does that say more about product quality, marketing or customer perceptions?

 

 

Jol

 

I think you will find Toyota forgot its Japanese standards and went Western Europe commercial growth mode its now realising it should stick to what it built its reputation on - quality.

 

Warranties Tend to also reflect price and the article so a camera if anything does go wrong will be visible early on whilst in a car issues can appear later - I wish our Morgan had a Japanese warranty 3 years old and 2500 miles on the clock - low mileage being due to inability to fuel for the first 18months - a design flaw or as us Morgan owners call it a characteristic, just had service and it needs a new radiator - although in mitigation that may also be due to the lack of use.

 

I welcome any move to India for the past 10 years we have used Indian software programmers and they are head and shoulders above the competition in terms of price and service.

 

Talking of lifetime warranties remind me of the chinese watch lasts a lifetime when the mainspring goes it severs your wrist

 

Colin

[Karhedron]

Us old farts who watched diligently while dad changed the elements in the toaster, kettle and iron can smirk at their discomfort.

Assuming you can find spare parts that is, they are frequently hard to find and almost as much as buying new. My bike needs a fair bit of work after 5 years of hard riding however the cost of a new gear and chain set is almost half the cost of a new bike.

[Guest Max Stafford]

I don't know, that sort of thing just seems completely wrong to me. In an age where we have six billion people on our little world, we ought to be making far more intelligent use of our resources. The culture of planned obsolescence and disposability really has run its course and needs to be declared obsolete in itself!

 

Dave.

[The Stationmaster]

I don't know, that sort of thing just seems completely wrong to me. In an age where we have six billion people on our little world, we ought to be making far more intelligent use of our resources. The culture of planned obsolescence and disposability really has run its course and needs to be declared obsolete in itself!

 

Dave.

 

I quite agree - having recently taken to the recycling site a breadmaker which was less than 3 years old and had a broken nut dispenser tray (which we didn't use anyway - herself opened it for the first time and it disintegrated!). Even if bought off the 'net a replacement part would have cost more than a new breadmaker.

 

Also off went a microwave cooker which was probably about 8-9 years old - 'we can't get parts for those any more and even if we could it would be cheaper to buy a new one'. All I can hope is that both really do get at least some of their parts reycled instead of filling up yet more of an increasingly overcrowded tip site.

[magic_monkey09]

the price of Models and pretty much anything that has VAT on top of it will go up now that the Conservative/Lib-dem coalition is raising VAT to 20% for their "emergency budget"

[Coombe Barton]

The VAT rise is going to mean an extra £2.13 on an item now costing £100 inc VAT.

[Coombe Barton]

Quite, not much at all really. Less than the average cost of a pint of beer.

 

They built Tornado on pints of beer

[Pennine MC]

Quite, not much at all really. Less than the average cost of a pint of beer.

 

You mean I'll have to cut back on a pint every time I buy a loco Bloody expensive hobby this, they're pricing me out

[PhilH]

Quite, not much at all really. Less than the average cost of a pint of beer.

 

Which is Ok as long as toy trains are all you have to buy. Unfortunately most of us have to buy other things as well.

[PhilH]

It is interesting how there is a definite cycle to this. It goes something like this - production moves from recognised manufacturing country to cheaper one to save costs. This country starts manufacturing, it's usually rubbish, quality improves, improves again, wages go up, just as acceptable quality goods are regularly produced manufacturers move to different country. Cycle starts again.

 

I can remember when Taiwan was a byword for manufactured rubbish. Things gradually improved there, as did wages, so it all moved to China. Same story there, rubbish at first, now a lot of it is pretty damn good - I've just bought an amazing Fender guitar amp which was made in China. The quality, as in build, sound and parts, is second to none. I've also bought a Les Paul copy guitar which my guitar tutor reckons is only slightly inferior in build and sound quality compared to the real things (of which he owns three)at something like a sixth of the price.

 

And now it looks as if we could be going back to the start of the cycle again.

[Pugsley]

You mean I'll have to cut back on a pint every time I buy a loco Bloody expensive hobby this, they're pricing me out

You think it's bad up there, you want to try drinking down here - I've been priced out of the pub! Model trains are cheap by comparison...

[Bernard Lamb]

 

I can remember when Taiwan was a byword for manufactured rubbish. Things gradually improved there, as did wages, so it all moved to China.

It didn't all move to (mainland) China. There are some very exotic products currently produced in Taiwan. In my experience they don't do too badly when it comes to customer service either.

re the price of beer. £2 a pint in Pitlocry, The Kingfisher Bar, the other day. Rather more expensive now I'm back further south.

Bernard

[Jol Wilkinson]

You mean I'll have to cut back on a pint every time I buy a loco Bloody expensive hobby this, they're pricing me out

 

 

Look at it like this. You stop supporting the Chinese economy by buying their toy trains and drink more beer (not lager). This supports the UK economy and gets the country back on it's feet, which is what the government want.

 

And if you are feeling a bit paranoid and that "they" are trying to price you out of this hobby, go to see a NHS phsyciatrist quick, while you can still get treatment.

[Guest Max Stafford]

Sod it, I'd rather pay for a good-sized loco fleet than a good-sized abdomen...!

 

Anyway boys, let's keep our predicament in proportion - it's tough, but it's hardly 1942 is it?

 

Dave.

[Pennine MC]

And if you are feeling a bit paranoid and that "they" are trying to price you out of this hobby, go to see a NHS phsyciatrist quick, while you can still get treatment.

 

'Twas a joke, Jol, just a joke...

 

(Not so long ago, we had regular threads with folk claiming that (for instance) Hornby pricing was driving them out. Dangerous game, sarcasm).

[Jol Wilkinson]

'Twas a joke, Jol, just a joke...

 

 

And my reply was in the same vein (get it? alcohol in the bloodstream)

[28XX]

It is interesting how there is a definite cycle to this. It goes something like this - production moves from recognised manufacturing country to cheaper one to save costs. This country starts manufacturing, it's usually rubbish, quality improves, improves again, wages go up, just as acceptable quality goods are regularly produced manufacturers move to different country. Cycle starts again.

 

................

 

And now it looks as if we could be going back to the start of the cycle again.

 

Exactly! It started after the war with East Germany, then Japan, then Hong Kong, then Korea and Taiwan. What do we do when we run out of countries? Perhaps we will find some aliens on another planet to enslave to satisfy our greed for cheap stuff, or maybe, just maybe, we will have to make it ourselves. What, you did what to the British manufacturing industry? Oh dear....