SPAM: Re: [TheForge] RE: Steel prices making us obsolete?

[Ries Niemi]

Andy- Its true that many smiths are not great business people, but 
historically, and today, the ones that actually make stuff HAVE TO BE.
The guys who did all the work for Gaudi, or Miccelucci and Mazucatelli 
in Italy, or Yellin in Philly, all are still remembered because they 
found ways to market their work.
Today, I could probably name, with a bit of research, 50 to 100 smiths 
that are doing great work, on a large scale- and yes, you are right, 
one thing they all have in common is either business skills, or the 
sense to hire somebody who has em.

But isnt this true in any business?
If you dont have the personality for it, you end up an employee, no 
matter if you are a lawyer, a cook, or a blacksmith.

As for wage scales and arbitrage, I think you are dead on- but I also 
see the temporary imbalance of wages changing. It may take 10 years, or 
20, but wages in China and India are going up almost monthly. I have a 
friend who manages injection mold buying for big companies- he spends 2 
weeks a month in China, but also spends time at machine shops in 
eastern europe. He says the best Chinese shops are now bidding 10% 
below american prices for moldmaking. And paying their guys 600$ a 
month, plus free room and board, and a company ping pong table.
Skilled chinese workers are constantly moving to new companies for 
higher salaries- already several chinese companies are building 
factories in Vietnam, because chinese wages are too high.
And several chinese companies are buying or building factories in the 
USA, because its cheaper in some cases to make it here, and pay US 
wages, then ship from China.

Haier, which is one of the worlds largest appliance makers, is working 
on its third US factory.
The worlds largest manufacturer of universal joints and driveline 
parts, a guy who started as a blacksmith in China in the 60's, and now 
does 3 Billion a year in business, has been buying american companies 
in the midwest, 2 or 3 a year lately.

It all will equalize out, eventually.
Which is not to say a lot of individuals wont get hurt on the way- the 
macro economic system doesnt care about individuals.

ries


On Dec 29, 2006, at 8:20 AM, Andrew Vida wrote:

>  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. 
> :)
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Ries Niemi
Industrial Artist

http://www.RiesNiemi.com