Re: What is the Value of "Made In USA" for SD Pickups? (Part II)
I don't know that you're assuming it, but you seem to be at least implying that lowering the retail price would be the goal in outsourcing, and that lowering cost is necessarily tied to lowering retail price. Perhaps loosely, but not as a rule. I've seen dealer margins change on lines in other industries; this often means that the dealer pays more (to the manufacturer) while the retail price stays the same. (Sometimes it goes the other way.)
The goal of outsourcing is almost always lowering costs. You lower costs by being more efficient. With lower costs, you can almost always lower retail/purchase prices. Whether or not you're going to want to lower prices is another matter. What I'm just saying is that, if SD Co. play their cards right, they can and will be able to do it.
I don't see that Seymour Duncan has an obligation to make their products more accessible financially.
I agree, Duncan has NO obligation whatsoever.
Looking at how they continuously expand their product lines -- vertically and horizontally -- SD Co. seems to want to reach out to more people.
In many ways this would equate to them getting paid less for the same work or the same product. They could ask their dealers to take some of the hit, which would certainly spread the joy around.
This is exactly why many companies try to lower costs, and why many companies go off shore or outsource. Nobody needs to take the hit.
People who don't want to pay full price for Seymour Duncan pickups have options. There is the used market, which would seem to be pretty healthy based on the posts here on the forum. There is the Duncan Performer line, which is more aggressively priced. And there is competitive Internet pricing, which rewards vendors for shipping product at the lowest price.
Yes, except that SD Co. don't really get anything from people buying used. Unless of course the seller buys a new Duncan pickup. A Duncan Performer is a Duncan Performer. It's not a Seymour Duncan. I'm not sure how that business is growing, if it is at all.
Do you have an projections on how changes in retail price would impact sales figures? Maybe you should schedule a meeting with the SD management team.
No I don't. But I believe if SD Co. starts slashing 10USD off the retail prices, their sales figures are going to go up. Walmart is one of the biggest companies in the world by adopting an everyday low price strategy (of course they have among the best, if not the best, supply chains). Low prices work, for as long as the quality is there. The only issue with low prices is that perception that lower prices mean lower quality.
Because maybe they were thinking they'd just pocket the production savings.
They could certainly do that. Nothing wrong with that as well. Although, like I said, with their ever expanding product lines, I believe SD Co. is not thinking about just pocketing whatever cost savings they get.
How about happiness? What's your forecast for that?
You took "happiness" too literally. I was not thinking about a feeling of elation or whatever. What I was pointing out is that people are going to be happier if a product that they want was more accessible. For example, I haven't bought me a Slash Alnico 2 Pro because the prices are still up there. Give me 20% off and I'm going to buy one via Amazon right now.
Can you map the global migration of human happiness from Santa Barbara to Qingdao?
I think now you're touching the issue of taking away American jobs. This does not have to happen if you offshore to China. You might not add more jobs in Cali, but you don't necessarily need to fire the workers in Cali once you have the China facility up and running.
One must remember, that the concept of a "national" economy is essentially a goner now. It is now a global economy. And if I have to mention it, that was also the work of the USA (remember the WTO and GATT?). Where do you think SD Co. buy their Copper, Ferrite materials and plastics?
That said, I'm pretty sure a HUGE chunk of SD's business is still with the continental USA, so I guess the company can still do the same things they're doing and be happy with it.
Dealers don't always benefit when the price of an item drops. They make less money per unit that they sell, so they have to work harder and sell more units to make the same money that they made before the price drop. Shipping doesn't get cheaper, nor do rent, utilities, employees, insurance, etc.
That is all true when you can't lower costs.
If we take for example, just the material costs (which I would think is over 50% of the cost of any pickup), if you slash 10% of that, you can always slash 10% of the retail/purchase price without paying less the employees.
The key is maintaining the perception of quality. You could have all the quality you want; you could have the same or better quality with overseas manufacturing, but if people assume, think, or read online that the quality has dropped, it won't do you much good.
I don't totally agree with this. Quality is quality. The end user will always find out sooner or later. Sure, if by lowering prices or moving manufacturing facilities create that perception of lower quality, the sales could take a hit. In the long run however, and with smart marketing strategies, you could almost always recover and come out stronger.
The opposite of course is a disaster. What if a Company makes an inferior product, but through marketing, creates the perception of a superior product? They will likely get some short-term gains, but sooner or later, the inferior product will catch up on them and they will surely fold if they don't do anything to improve quality.
How do you know this? Do you have a business plan for them?
I don't have a business plan, but by judging the minimum wages in Cali versus minimum wages say in Baoan, China, SD Co. can hire more people to wind pickups. Again, the key is quality -- and I believe you can get the same quality copper wire, magnets, pole pieces and plastics in China.
I can't help but think of Celestion Speakers. They were able to pull it off. Of course you know that most of your electronics are being made in China -- including the computer you're typing on right now, and the TV you use to watch your fave shows.
Yes, but could the Seymour Duncan Company do it? Do they even want to?
Only Duncan management will know. I'm just saying, they can do so.
Just playing devil's advocate here. Some companies choose to grow by going public, and it's a big, big topic. It's harder to talk about being small and family-owned after the IPO. As a consumer, I find it a little harder to feel good about a company when I know that all or most of the people who own it don't work there. That they often buy into companies because of speculation on the stock price and not because they care what goes on there.
That's the beauty of Limited Liability Companies (LLCs). Sure, the owners (shareholders) need not really care about what goes on inside the company (they're not liable anyway) for as long as they get a reasonable ROI. However, that is not always bad. The key is getting the right people to run the company, i.e. top management down to the factory workers. There are so many advantages in going public, but it is mainly the access to capital which is the biggest one. More capital allows you to fund R&D, expand product lines, increase volume and sales, etc. etc. Meanwhile, many private or family-owned companies go under because they don't have access to capital.
BTW, I'm sick of this topic. If I come back here, Evan has my permission to repo my A2P.
I understand. This is probably my last post in this matter as well. I just thought I needed to respond.
