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[a letter from askfleck. note emphasis in 3rd paragraph added by me]
An extremely important
point seems to be being missed in all of this talk of deflation: when
evaluating the price (or price change) for a purchased product or service,
one must first determine if the spending is essential or discretionary. Is
it a coincidence that the items mentioned by the writer of the last post as
examples of price going down - a new harp, KFC, Applebee's, cell phone
minutes and a DVD for his kids - all represent discretionary spending? On
the other hand, essential spending items such as food, fuel, taxes and
utilities are all on the rise for everyone, whether we like it or not.
The industrial fastener industry services all manufacturing and maintenance
applications from aerospace to automotive to construction to the guy
building a fence in his backyard. Our industry reflects the pulse of the
productive side of the economy. The sad reality is that demand is WAY off
despite the immediate effect of the stimulus program which was specifically
in the auto sector. On the other hand, costs keep rising: raw materials,
freight, taxes, insurance, utilities, etc. I should also add, with regret,
that one cost center in my business is half of what it was a few years ago:
labor. I know for fact that I am not the exception.
It is not good out here in the heart of industry so it is no surprise that
one can find goods for cheap when they are in someone's inventory. I'll sell
you anything that I have in stock for less than my replacement cost because
I need the cash flow. On the other hand, if you need something that has to
be produced because inventory ran out, there is NO way that you'll pay as
little as you did a year ago.I assure you that this is the case with
virtually anything being made;
An extremely important
point seems to be being missed in all of this talk of deflation: when
evaluating the price (or price change) for a purchased product or service,
one must first determine if the spending is essential or discretionary. Is
it a coincidence that the items mentioned by the writer of the last post as
examples of price going down - a new harp, KFC, Applebee's, cell phone
minutes and a DVD for his kids - all represent discretionary spending? On
the other hand, essential spending items such as food, fuel, taxes and
utilities are all on the rise for everyone, whether we like it or not.
The industrial fastener industry services all manufacturing and maintenance
applications from aerospace to automotive to construction to the guy
building a fence in his backyard. Our industry reflects the pulse of the
productive side of the economy. The sad reality is that demand is WAY off
despite the immediate effect of the stimulus program which was specifically
in the auto sector. On the other hand, costs keep rising: raw materials,
freight, taxes, insurance, utilities, etc. I should also add, with regret,
that one cost center in my business is half of what it was a few years ago:
labor. I know for fact that I am not the exception.
It is not good out here in the heart of industry so it is no surprise that
one can find goods for cheap when they are in someone's inventory. I'll sell
you anything that I have in stock for less than my replacement cost because
I need the cash flow. On the other hand, if you need something that has to
be produced because inventory ran out, there is NO way that you'll pay as
little as you did a year ago.I assure you that this is the case with
virtually anything being made;
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