[TheForge] RE: Steel prices making us obsolete?

[Andrew Vida]

Ries Niemi wrote:

> Blacksmiths, with our constant volume approach, and with our years of 
> experience before we learn not to hit our own thumbs, have a distinct 
> advantage.

	Within the context of which you write, I agree.  The question is how 
large will this context, and hence the market, ultimately be.  That will 
speak for the opportunities that present themselves.  Then there is the 
question of who will be able to take advantage of them.  Blacksmiths and 
other artists are notoriously poor business people, on the whole.  All 
the smithing talent and experience in the world means nothing without 
the basic acumen for running a business.  I will also go so far as to 
say that said acumen is far and away more important than the actual 
smithing abilities in many cases.
> 
> When steel costs go up, you raise your prices.
> Materials costs on high end work should be below 10% of the price, anyway.
> And materials costs get passed on to the customer.

	Yes.  For high end work, the material costs should be almost negligible 
in the grander scheme of a job.

	What I find interesting is the disparity in the relative inflation 
rates between materials and labor.  Material costs are rising far more 
rapidly than those of labor in the US.  This is probably due to a glut 
of over-priced (on the global scale) labor in the USA.  Considering the 
global market for labor, there is a clearly unnatural arbitrage 
opportunity that exists.  For anyone unfamiliar with the term, 
"arbitrage" is where you buy a commodity in one market and sell it in 
another at a higher price.  E.g. if I can buy gold on the London 
exchange for $299/ozt and sell it in Tokyo for $300, this represents an 
"arbitrage opportunity".  The first rule of free market arbitrage is 
that opportunities are VERY short-lived.  The global labor opportunity 
is therefore "unnatural" in that the prices of labor in China and India 
have not risen significantly to reach global equilibrium.  That is good 
for them (they get lots of business) and bad for us (we lose jobs).  If 
the market were truly free, I believe that the labor rates would have at 
least approached US minimum wage by now.  I could be wrong on this, but 
if not, then I can only conclude that the respective governments are 
interfering with the free market in order to keep labor rates 
artificially low, to the detriment of everyone but those occupying the 
highest positions of the food chain.  Given the stakes, this would not 
surprise me in the least.
> 
> If you can make wonderful things, there will always be a market for em.

	Making them is only part of the equation.  Marketing them is even more 
critical.  Sound marketing can sell water to a drowning man.  The best 
made products in the world are likely to remain on the shelf without 
proper marketing.

> Now I just gotta practice enough that some of what I make turns out 
> halfway wonderful.

	Har har har...  very funny.
> 
> By the way, I am a member of the Finnish Diaspora- my finn great 
> grandparents came over to Minnesota in the teens, fleeing wars, the 
> russians, poverty, and expensive booze.

	I grew up surrounded by Finns and Norwegians.  Then there was Uncle 
Bengtsson... he was from Sweden, but we never held that against him. :)