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-   -   How Economy Affects Our Hobby? (https://www.lateral-g.net/forums/showthread.php?t=14593)

surreyboy 04-19-2008 11:51 AM

i think with so many nice cars coming out now people are realizing that to pay guys 400k in labour for less then a years work might not be worth the money.Not putting down these shops, they build amazing cars and nobody can tell them to charge 30 bucks an hour when people are willing to pay hundreds.I dont think the high end market for cars will be effected, after all, a bad economy doesnt effect rich people, they always do well.These recent "lower prices" if you can even call them that,reflect a saturated market not a downturn in the economy, imo.

chrismoe 04-19-2008 06:07 PM

Great Topic
 
Great topic. I am anxious to hear from folks in the car biz. IE..builders, press, etc. I am a car hobbyist. Have been for several years and I love it.

There seems to be many opinions about the current state (and future state) of the economy. "On this had we could be heading into a recession....on the other hand this is just a slight correction". I believe that is where the famous Truman line came from: "What I need is a one handed economist".

Whatever you believe about the economy I think it is hard to argue that building and (especially) buying a nice pro-tour and\or hot rod is done with disposable income. Money that we are OK spending without risk of not being able to pay a bill, feed savings, etc. And, people are simply more cautious today about how they, or if they, spend their disposable income. This has and will continue to effect the hot rod market IMO. The effect is not not all negative. Here is what I mean:

It is possible today to buy a very nice pro-tour and\or hot rod for less then it would have cost to buy the exact same car this time last year. I am driving around in proof of that statement. The quality has not decreased (not that I have seen) but the simple fact is that people are unable and\or unwilling to spend 100K to 200K on a trophy car these days. So, if sellers want to sell, they are selling cheaper. One result is more folks are able to buy into the car hobby. I have a friend that has been sitting on the sidelines of this hobby for years, saying it was cost prohibitive to get into the car hobby. He recently bought a very nice PT Camaro for a song. And, all things considered, the seller felt OK about the sale. And this same seller is now onto his next car project. So, we can count one more member amongst us car guys and car gals.

At the end of the day there are people with money who are going to be willing to pay a lot of money for a high-end build. Just fewer of these people then there was 1 or 2 years ago.

My 2 cents.

Chris

Fluid Power 04-19-2008 07:08 PM

I own an Industrial Distribution company that handles Pneumatic and Hydraulic equipment. We supply basic repair parts to full blown machines. My work for food manufacturing companies has exploded over the last 4-5 years as that industry has gone really high tech. With that being said, I deal with several window manufacturers, automotive and appliance manufacturers as well. The one saving grace for me has been the fall of the dollar. It has made capital goods obscenely inexpensive compared to the European equivalent. The enemy I fought before (moving production overseas) might be the ticket that pulls the rust belt out of the dumps. The machine manufacturers that remain here are lean, mean and understand the global economy..

Jegs is a customer of mine, I will ask next week to see how the business climate is....

An interesting read on China and pricing.

http://www.jimpinto.com/writings/chinapricing.html


Darren

tgvettes 04-19-2008 08:42 PM

byndbad914
Just one comment about your friend, I don't of course know who he is or anything about his business but are you sure the dealers that he has been selling to just haven't gone elsewhere for their business? If you had had 3-4-5 businesses doing the same thing and they all say business is down I would totally agree with you but having one business loosing a lot of their revenue might not be enough to say business in general is down in that particular industry.
chrismoe,
Totally agree with what you are saying, my comment on that would be that people should be more careful with how much money they spend on something. I used to buy my daily drivers with almost nothing down, but my next car I will at least put 30-40% down on. I would not again buy a car if I can't put a lot down on it.

Tonny

byndbad914 04-20-2008 10:33 PM

he has more than just a couple of dealers he works with, so for them to all go elsewhere doesn't completely add up, but is always possible (can't be ruled out). He has had long term relationships with them so I doubt they would all just up and somehow make the same decision at the same time tho'.

But when I hear that from him, sales drops from my friend in the perf supplier market and now another friend has a Dad that works auto sales and he said it has been slower in recent months too for him. Three different people assoc with either the auto sales market or aftermarket and they are seeing a drop may not be a global representation by any means, but a trend IMO.

It'll be interesting to see if Jeg's gives an answer or not. Even then, hard to say how true the statements are in a biz relationship... the ones I mentioned are personal relationships so I know I am getting the real story there and no generalizations. Most biz owners are smart enough to keep tight lipped about financial issues with the public so it would be in Jeg's best interest to not say things are bad even if they truly are.

ProTouring442 04-21-2008 03:26 AM

Quote:

Originally Posted by Garage Dog 65 (Post 146036)
So if industry moves manufacturing to non-US - and I think it's inevatable (God BLESS Vic on his stance and determination - it will be a tough road for sure) - will labor have to do the same ? Example: the US Auto manufacturing industry in standing on the cliff right now due to it's labor and benefits costs - will the US resolve to keep it here and pay the price (I say not likely) - or buy global companies cars.

Will pro shops start using contracted labor like other industries (verses internal) and will/can it ever be on a global level. (I'll leave out the home hobby guys - because, well we'll do stuff even when it will lose money in a big way - ME included...)

Is the car culture limited to a few countries - making it a small market that won't get targeted (G/PT types being an even small component of the overall culture - maybe hot rodding would go first, if at all) How about some of our member from non-US jumping in who are doing G/PT cars there. I'd be interested in what additional costs they see - even while they buy US cars and products and incure the shipping too.

Maybe SEMA and other assns are already discussing this stuff. Is there a member here from one of those ?

Great topic - Man I could talk about this one all day...

Here's an interesting read - look for the story on SkyBus. Talk about reducing/removing costs. Almost no employees beyond the Board and a few key internal indivuduals. Everything was leased and/or contracted out resulting in a true virtual airline model. It recently failed due to (the ecomomy) energy costs.

Do not forget, however, that with the reduction of the value of the dollar against most foreign currencies, the price of overseas labor just increased significantly. In many cases, it just doubled.

This holds true for the price of gas/diesel. If the dollar is only worth approximately 50% of what it was worth 1 year ago, then the price of oil is relatively the same as a year ago, as is the price of fuel. By keeping the dollar low, but holding inflation at a minimum, the Fed is applying a de facto import tariff on overseas goods.

Shiny Side Up!
Bill

Fluid Power 04-21-2008 07:38 AM

"It'll be interesting to see if Jeg's gives an answer or not. Even then, hard to say how true the statements are in a biz relationship... the ones I mentioned are personal relationships so I know I am getting the real story there and no generalizations. Most biz owners are smart enough to keep tight lipped about financial issues with the public so it would be in Jeg's best interest to not say things are bad even if they truly are."

I will leave it at the guy I know at Jegs will be very honest with me....:unibrow:

Darren

jeff s 04-21-2008 08:51 PM

As a business owner, It depends on who your customer base is.
I've got a european customer spending $10,000 each way to ship his car by air freight to me real soon.
Diversification of your business helps.
The dollar being down helped my overseas sales some last year.
In 2007 I did more business with 2 customers in the Czech republic than I did with all of my customers in Chicagoland. My hourly shop rate is the same for all customers (and a lot cheaper than the pontiac dealer across the street).
I experienced huge growth last year and this year is looking good too.

Here's few tips to save on gas, turn your freaking car off when waiting in line at the drive throughs, railroad crossing gates, etc. maybe dont use your remote start 10 minutes before you leave and your average mpg will go up a lot! I park my truck at the shop and commute on my motorcycle.
Also why is everybody ok with spending $10 a gallon on water that you can get for free?
Thanks

rocketman 04-21-2008 09:23 PM

If we all keeping buying car parts, new cars, houses, hell just weekly trips to Wal-Mart buy your kid a new toy, you a new shirt whatever there wont be any economy problems the wrong thing to right is save alot of money(yeah save alittle), the money in this flows in a big circle if it stops anywhere the problems start. and as americans stop listening to all the BS on TV, and live life.

bill amsley 04-24-2008 07:17 PM

Quote:

Originally Posted by byndbad914 (Post 146030)
I don't think the media is really BSing that much. Sure, I am amazed at what gets sensationalized and how, but that said, relevant to this hobby:

one friend does accessory sales and installs in SoCal and had a ton of dealers as clients. He says he has hardly made a dime since Oct!!! (just talked to him a couple days ago) and that as far as car sales goes, no extras whatsoever and it seems that everyone is buying the cheapest, smallest ****box cars due to fuel prices.

Another has a performance sales biz that does pretty darn well with nationwide sales (and some international). I withhold the name as many here may know the place. Anyway, Jan and Feb are his worst months at around $120K gross sales with typical monthly sales around $180K-$200K. This Jan was down over 70%!!! Feb was down 50%!! March was shaping up to be pretty weak as well (talked to him right at the end of the month and it wasn't looking great). So he is REALLY seeing the affects.

As for me I work in aerospace and my job is questionable at this point. It is starting to feel like the early to mid-90s when nobody in that industry could find a job. Gov't is cutting spending in the BILLIONS which is big cuts in that industry. In my tiny section of LockMart (300 people in the group) there were 9 of us in my area of expertise, there are 4 now since Jan due to work being cut and I am the next guy on the block. The other 3 are looking for work that appears steady, so they may dwindle down by attrition anyway, but point is we HALVED our staff in 3 months, one guy senior to me runs out of work in about 3 months as his current program finishes, and my charge # is 'til about August or so and rumors of cuts to that are looking to not be rumors at all as of last week.

So get ready folks, things are going to get worse before they get better IMO. We are in a war that we can never finish, Standard & Poor and Moody were allowed to rate essentially junk debt at A grade and yet there are no repercussions to them (some people should be going to jail for rating debt that was mostly sub-prime notes at 100%+ value borrowed at A-grades, there were hands in pockets there), then you have the gov't spending even more of our tax dollars bailing out a potential $29 BILLION dollars of that debt when I busted my butt, moved to another state because homes were too expensive in CA, and so forth to buy a home on a 30yr fixed, conforming loan because I knew how completely stupid people were to use ARMs, etc and instead of letting the banks take a big suck on those notes... there goes my hard earned tax dollars to fix those loans. Tax dollars that essentially support my industry, so watch me lose my home cuz I lose my job while the gov't uses money they should use on tech to bail out banks that hung themselves and of all people should KNOW better.

While getting my MBA at UCLA, around 2002 or early 2003 a gal from Countrywide came into my fixed income class - the only thing they were hiring was RISK ANALYSIS because they were trying to figure out how much risk was really assoc with those BS loans. Yet sold them right up until BK last year... you gonna tell me that there isn't something criminal to that??? They KNEW by 02, and really knew all along (how could you not!) that debt was very risky and were trying to game how much they were going to win v. lose with risk analysis. That gambling is fine in the markets, but why the gov't starts bailing out banks for gambling... WTF is with that!?

My 10yr plan of looking outside of the US has become a 5 yr plan, and if my job goes away, maybe a 1 yr plan. Fires me up cuz I know vets all the way back to WWII and one that ended up in a concentration camp fighting for this country and we are giving it all away to the illegals (actually the white m%$# f#@$#@s that employ them) and the stupid. When exactly did capitalism become socialism, in fact communism anyway??? I have no desire to work at my potential so everyone that doesn't can have a piece. If that is how it will be, then I will go elsewhere; somewhere I can reap the benefits of the socialism I pay into.

wow, that was a soapbox if I ever saw one :unibrow:

Long story short, the economy IS hurting the hobby. I paid $4 for diesel here in CO the other day and it is more elsewhere, so that alone cuts into how much I spend on other stuff. I have been eating at home more too (fiancee works in restaurants and they are slowing down too BTW). I didn't race a couple weeks ago just out of concern for spending $500 on a one day deal ($150 just fuel in the truck as it is a tank down and back).

wow that was pretty intense, but right on the money. i think the reAL problem is with our weak dollar. bill


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