[Elecraft] Price increases - I feel loved....

[James Duffey]

Bruce - You wrote:

> Elecraft and other American companies have been taking a real hit  
> lately with the weak dollar. A lot of their business comes from  
> overseas, and they get less for their fine products when the dollar  
> drops vs other currencies.
We must have had different economics courses. As I understand it, the  
weaker dollar makes American goods more attractive to overseas buyers,  
not less attractive.  Elecraft and other companies that price their  
rigs in dollars receive the same income in dollars when they sell a  
rig overseas as when they sell it here. But as the rig is effectively  
cheaper overseas, they sell more and their income in dollars goes up.

Consider the following:

A G land ham wants to buy a K3. To do so, he must purchase dollars  
with pounds. For the sake of argument, say the K3 he wants to buy  
costs $2000. If the exchange rate is say $1.75 per pound, then he must  
use 1,143 pounds or so to purchase the $2000 he needs to buy the K3.  
If the exchange rate is a weaker $1.90 per pound, then he must use  
1,053 pounds to purchase the K3. The rig is clearly more attractive  
with the weaker exchange rate and it is likely that Elecraft will sell  
more rigs with the weaker dollar than they will with a stronger dollar.

Conversely, the foreign rigs, say the infamous Yaecomwood, will  
increase in price in dollars in this country as the dollar becomes  
weaker. In order to keep their income the same in Yen, they must  
increase the price in dollars. Again, Elecraft rigs become more  
attractive to American buyers in comparison to foreign rigs when the  
dollar is weaker. Again, Elecraft and other American companies benefit  
from this situation as their sales increase.

Now some of this is offset if components of the rig are purchased  
overseas, as are many electronic components in the Elecraft, but I  
suspect that a large portion of the rig's cost originates in this  
country; labor, sheet metal, and mechanical components immediately  
come to mind.

I suspect that the success of the K3 among overseas buyers is due in  
some part to the weaker dollar. Elecraft benefits from this.

In some sense it is a self regulating system. A weaker dollar  
generates more overseas sales, which in turn generates a stronger  
trade balance, which in turn generates a stronger dollar. But make no  
mistake about it, as far as overseas sales go, American industries  
directly benefit from a weaker dollar.

At least that is the way I learned it from Dr. Glover at SDSU some 40  
years ago. Granted it was part of an ill fated experiment using TV to  
teach large basic classes and involved a 0730 class, but I did retain  
a bit. In that case, I learned much more from the book, Samuelson,  
than I did in class.

There are other perhaps more serious problems with a weak dollar, but  
they don't directly relate to Elecraft or this list. Dr. Megacycle  
KK6MC/5
--
KK6MC
James Duffey
Cedar Crest NM