How Economy Affects Our Hobby?

[Garage Dog 65]

I had wondered the same. Cost for energy going up - has trickled into just about everything from shipping - to production of raw materials. Everyone is feeling the pain of that RIGHT now. (I also agree that the media is BSing a ton of this - but maybe I'm just 'bitter'.... )

One other area that I wonder will be affected (not by energy) is labor in our hobby.

Background: In manufacturing and recently in aviation - the final squeeze to get costs outta the product have been labor. In manufacturing it's been completely moved South or to Asia. In aviation, labor was maintained in the airline - but at a very high cost. Over the past 5 years labor has been contracted out to small vendors and Repair Stations that pay their folks about 2/3rds what airlines paid - and they also receive reduced benefits - lowering charged labor costs even more. Airlines simply couldn't compete with those lower labor costs. China is right on the verge of producing small and large transport category aircraft with a very small labor component in the price. (Boeing and Airbus will get slammed)

So I wonder when that trend/effect will come into our hobby ? Or can it like we've seen in Manufacturing and Aviation examples above ?? Who are already vending labor to other countries to build parts/products. How do you pro shops deal with constant increases in labor (and underlying rise in benefits costs) while still getting those craftsman/artisans that everyone wants. Does anyone see a day where labor in our hobby will come from South or even overseas ? Will it be cheaper to 'crate' a completed project from someplace like China ? (fill out the form - pick the build specs - pick your color combo and put 50% down...) Will the cost of energy at the shop level eventually price your services into extinction ?

As a (now unemployed) business manager - I have tons of these types of questions of our industry/hobby ......

Jim

[awr68]

Was just watching a show yeasterday, HP I think it was and Vic Jr was saying that he knows he could have his products manufactured over seas for less...but the will NEVER happen.

I wonder how much is really saved (with the rising fuel/shipping costs) by the time they ship the contaners (parts) from Asia to the US?

At least with an OD trans. and for many EFI in our cars we get much better MPG than some other forms of hot rodding!

Good topic guys!

[byndbad914]

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

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).

[Mick Mc]

Originally Posted by byndbad914

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

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).

A twisted soapbox yes
But everyone has their own view, and I am glad to hear it.

I am an Economist so don't get me started.

By the way, the soapbox of Hillary and O'bama seem to end in happy times with everyone holding hands and singing 'cum ba ya'. They have the answer to make everything rosy again, so don't worry the election is only months away. Everything will be fixed and allll better.

Don't mind the bigger government, more taxes. We're from the 'government' and we're here to help you, since you can't help yourself (like we (O'Bama and Hillary on everone else in that circle) went to Harvard, did you?)))

Mick

[rocketman]

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]

Originally Posted by byndbad914

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

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

[Garage Dog 65]

Heard today that analyst expect oil at $200 barrel by the end of the year. The trickle down of that increase into all things oil (and supported by oil) will increase right along with it. That will put a real crimp in the car hobby.

I'm planning to run my Porsche 356G on switch grass.....

I also heard today that Toyota is now officially the largest auto manufacture.

Jim

[sniper]

Originally Posted by Garage Dog 65

Heard today that analyst expect oil at $200 barrel by the end of the year. The trickle down of that increase into all things oil (and supported by oil) will increase right along with it. That will put a real crimp in the car hobby.

Not to blame a party but Since Pelosi promised to reduce the cost of fuel in and around the 06' election, oil prices have risen nearly 70%.

While there are many mitigating factors for the cost of oiland fuel, american politics are screwing us over royaly, from oil prices and a lack of refineries to being abstinent on nuclear power.

[ProTouring442]

Originally Posted by sniper

Not to blame a party but Since Pelosi promised to reduce the cost of fuel in and around the 06' election, oil prices have risen nearly 70%.

While there are many mitigating factors for the cost of oil and fuel, American politics are screwing us over royally, from oil prices and a lack of refineries to being abstinent on nuclear power.

On the other hand, a recent article in The Economist points out that crude oil prices, when corrected for various inflationary factors, still has a long way to go to reach the previous high set in 1980. According to a study conducted by Deutsche Bank, crude prices will need to be somewhere between $134 to $150 per barrel to beat the 1980 High.

The biggest culprit in the US lack of reasonable growth in energy production, those who have so vigorously pushed the scare of "uncontrolled man-made global warming" have probably done the most harm. With recent policy discussions, as well as actual policy, centering on our reduction of fossil fuel dependence, you can hardly blame industry for their lack of enthusiasm for increased investment in production capability.

Radical environmental groups continue to block nearly every form of energy production, including so-called "green" energy such as wind and solar. Add to this their previous failures at policy influence regarding the previous CAFE standards that led to the SUV craze, as well as the standards for low-sulfur diesel and its impact on the US diesel market and it is not hard to see why we should marginalize these voices rather than cling to their rhetoric. Even today, much of the rise in food prices can be attributed to the push for bio-fuels and the conversion of too-large a percentage of world food production sources to bio-fuel crops.

In the end of course, we need to take a balanced approach. However to do so will require complex policies that encourage existing industries to diversify their energy production processes. Oil is and will continue to be a vital raw material in the US economy as it is not only a nearly irreplaceable energy source, but also the source of many other products from plastics and solvents to medicines, the price of which is dependent upon the oil futures market.

Shiny Side Up!
Bill

[T Bell]

protouring442, you bring up a lot of good valid points. You got any references? Not calling you on it but I'd like to see some of the info you've read or heard.