DBT85":8nz14yid said:
thetyreman":8nz14yid said:
they are possibly the most grotesque looking tools I have ever seen regardless of price, it shows that they were not truly high end if they can afford to slash prices and still make profit, even if I was a multi billionaire I don't think I'd want one.
The definition of high end is huge profit margins. A £900 phone puts at least £300 straight in the manufacturers pocket.
With margins like that it's easy to slash prices, especially if you've just moved manufacturing from somewhere like the US to China as well.
we have the modern version of this, which is the coach wallet example that Joel Moskowitz once gave. Coach wallets were about $300 here in the states and made in one of the New York burgs, which is a tough place to do business and avoid the government making you go broke!!
The wallets at $300 allowed the business to survive and the tradition and methods made the wallets great (the rest of this below is my spin on it -but what I've seen in other types of businesses).
At some point, someone wants to sell the business (common in small privately owned names where someone retires, becomes divorced, whatever it may be, and looks for a buyer). Nobody can afford to purchase the business in the US and run it the same as the prior owner who didn't have a huge after-tax loan to pay off. So the brand gets marketed by a specialist if needed and 20 turnip suckers offer 5 or 10 times what the owner thought they'd ever get, they make some empty promises and tie the owner to a 3 year contract (to make it look like the brand is still the same - "look, mr. coach is still there!! it's the same thing!!!"). The new owner promises to change little to the public, makes vague statements and already has a business plan to cease making wallets in the US before the original owner's contract ever runs out. Then, the original owner who may have been naive is stuck sitting and watching his brand go to rubbish, but he has to be there so that the company says "look, same thing -we make them in china now, but still look at them at HQ, quality is the same. And we're cutting the price by 10%"
Some loyal buyers who really are into the details (10% maybe), stop buying - complain - and 2 new buyers for each that have left buy a coach wallet because "they've never seen them on sale before".
Several wallets start being made that don't look like a coach product, but they have the brand on them. they're not that great, but they're 10% less than the old wallet that was 10% off already. social media influencers get free versions (who cares if they cost $10, give as many away as you can - cheaper than real ad space), and some of the new profit buys videos from bigger influencers. They talk about how stuff in the new wallet is much cooler. The prior owner barfs because he knows they're rubbish - he throws a wallet down on on the new owners' desk or sends a scathing email and the new owner sends him text from his agreement reminding him that he can be held legally liable if he doesn't go along with it. Eventually he leaves, the market gradually realizes the brand is just an upscale third world brand and goes to google to check the website for the wallets still made in the US (they must still make them there, right?). The website gives very little specific information about anything, but it's really colorful - no wallets are made in the US.
HOWEVER.....
I don't think this story is quite the same - I don't buy BCTW but suspect that this kind of work has been done in China for John E for a LONG time because he gets offers through the email or at trade shows to help him improve his product line. He's not had by it, he's part of it. The $900 plane was probably $150 of china plane, that much in US overhead and everything from there on is horribly ugly bug-eyed tools made almost entirely of metal, and looking like they were designed by sketch-up hints.
I doubt they were very "made in the USA" for a long time.
I often see people selling small businesses here. They started from nothing, paid other people as little as possible and then they want the moon when they decide to sell because they're "giving someone else a turn key business - I wish someone had done the same for me". Of course, when they started, they scoffed at anyone selling a business like the one they're selling. They give the same fib to their employees, half the time, their customer list is all the buyer wants and the employees get laid off after the original owner's contract term ends.
Think it's unlikely that half or more of the buyers won't care about made in china?
Three years ago, I gave this coach routine above in the office where I work. Two ladies who I wasn't talking to were eavesdropping. I heard one of them say " are you f __ g kidding me?". She had inside-outed her coach bag to find the label to see that it was made in China. It was $400 (probably would've been $800 if it was US made). She had been getting coach stuff for a long time and couldn't fathom the idea that a $400 bag could be foreign made - so she never checked. I don't think she's bought any more, but now since they have bags that cost 10-25% (guess) of what they sell for, they can spend on marketing and influencers and buy more.