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Bill Tsafa




Location: Brooklyn, NY
Joined: 20 May 2004

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PostPosted: Mon 06 Oct, 2008 7:16 pm    Post subject: Swords should be getting cheaper.         Reply with quote

Futures prices on industrial metals are falling.

For a long time we have been hearing that raw metal prices are going up and swords are getting more expensive. That is no longer the case.

http://bloomberg.com/markets/commodities/cfutures.html

Commodities prices are falling. That means steel is going to be cheaper. Economic recessions, as they are engineered in the US, are a catharsis. It's a reset button that checks inflation. This also puts downward pressure on labor costs.


Futures prices have been set back to were they where a year ago.
Don't be afraid to bargain for cheaper swords!

No athlete/youth can fight tenaciously who has never received any blows: he must see his blood flow and hear his teeth crack... then he will be ready for battle.
Roger of Hoveden, 1174-1201
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Stu C




Location: Western Australia
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PostPosted: Mon 06 Oct, 2008 8:32 pm    Post subject: Re: Swords should be getting cheaper.         Reply with quote

Vassilis Tsafatinos wrote:
Futures prices on industrial metals are falling.

For a long time we have been hearing that raw metal prices are going up and swords are getting more expensive. That is no longer the case.

http://bloomberg.com/markets/commodities/cfutures.html

Commodities prices are falling. That means steel is going to be cheaper. Economic recessions, as they are engineered in the US, are a catharsis. It's a reset button that checks inflation. This also puts downward pressure on labor costs.


Futures prices have been set back to were they where a year ago.
Don't be afraid to bargain for cheaper swords!


Even if you are right (and I'm not sure that you are), there will be a lag between the start of the recession and any reduction of labour costs (caused by increased unemployment/labour force availability and the resultant increased employer bargaining power). I'm guessing that labour costs probably play a bigger role than the raw steel in the cost of most quality swords. Sadly, my guess is that the more likely result of the current economic situation in the short term is simply small manufacturing businesses going under because potential customers' non-essential spending will be cut right back as they grapple with the destruction of their pension funds, house values, jobs, etc. There might be a few cheap swords for a while, but then there might be no swords at all (other than Chinese/Pakistani junk), so you should be careful what you wish for!

That said, the impending recession and probably depression in the US, the UK and a bunch of other places was an inevitable result of a whole generation of people trying to make money from doing absolutely nothing other than taking on debt. It's just a bit unfair that real people who manufactured real things will probably get burned the most. That said, I'm no economist, so the last two paragraphs might be a load of rubbish...

Stu
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Douglas G.





Joined: 30 Mar 2004

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PostPosted: Mon 06 Oct, 2008 11:12 pm    Post subject:         Reply with quote

I think Stu nailed it. The bad economic slide makes me worry the bad old days of crap swords will come back
as discretionary spending comes under closer scrutiny. It makes sense to skip the $8 coffee grabbed on the way
to work and make good old drip grind at home. It's just that there is no substitute like that with swords. I do hope
the good blade makers can weather these times.

Doug G.
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Bill Tsafa




Location: Brooklyn, NY
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PostPosted: Mon 06 Oct, 2008 11:32 pm    Post subject:         Reply with quote

Here is my opinion of the current economic state, how we got here and why:

The weak dollar is what all this whole credit crunch recession is about. Governments don't say this, but beside taxing and borrowing they have another way of raising money. They print it. Lots of it. If they didn't print more paper, it would appreciate in value just land which is fixed. They are only suppose to print enough new money to keep up with the population growth rates. Sitting administrations usually print money way beyond population growth rates and they need to clean this up before they leave. This is nothing new, Clinton did the same thing and then tightened the purse strings at the end too. I don't think they will go overboard. They have brought commodity prices down to a year ago. I think they might want to bring them down another 15%. That is my guess. Then the new administration starts the process all over again.

No athlete/youth can fight tenaciously who has never received any blows: he must see his blood flow and hear his teeth crack... then he will be ready for battle.
Roger of Hoveden, 1174-1201
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Chad Arnow
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PostPosted: Tue 07 Oct, 2008 5:34 am    Post subject:         Reply with quote

While the discussion of what raw materials prices may to do sword prices is on-topic, discussions of the wider economy and government policies are not.
Happy

ChadA

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Allan Senefelder
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PostPosted: Tue 07 Oct, 2008 7:50 am    Post subject:         Reply with quote

Just bought a 4' x 8' sheet of 16 gauge steel and hour ago, same price as the sheet I got last week, same price as it was after the last increase I posted about at the begining of the summer. Ordered brass rivets Monday, brass is still the same price as I posted about as well.
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Craig Johnson
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PostPosted: Tue 07 Oct, 2008 8:20 am    Post subject: Sword Economy         Reply with quote

Hi Vassilis

I think the economics of making a sword would not support the speculation that a reduction in the overall commodity price of steel will affect the average price of a sword. The types of steel that most sword makers use are not connected to the base price of a ton of steel on the commodities market. Rather they are specific products made for production and are affected by mill operation, demand, raw material supply and material specifics. This is of course just a small function of the equation that is the sword price when you purchase it. Other factors to name a few are shipping, material manipulation, labor costs, insurance, maintenance, training, sales, customer support, research, development, accounting, tax preparation, tech support, and quality control.

In other words the price you pay for a piece encompasses the totality of what it takes to deliver that item to you in a condition that you find acceptable. At that point it becomes your choice to balance wether what you are willing to pay for a sword equates to what is available at that price range.

The sad truth of it is that any reduction in steel prices we may see (I doubt they will decrease at all unless we go into a full blown recession and then it will be even worse) have already been chewed up in fuel surcharges we have been paying on freight and shipping over the last year.

Very few domestic sword makers decide what price they want to sell a sword for then develop that sword. Rather they are struggling to keep prices as low as they can and stay in business. With the credit market completely shut down and the demand to finance production over time this will only get more difficult. The nature of this business is a difficult structure to make work and the current economic situation will only increase those challenges.

Best
Craig
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Doug Lester




Location: Decatur, IL
Joined: 12 Dec 2007

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PostPosted: Tue 07 Oct, 2008 8:40 am    Post subject:         Reply with quote

This whole thing is a two edged sword (absolutely no pun intended). The major part of the price of a finished sword, knife, or other cutting edged weapon is not the raw material that it is made from but the labor that goes into it. More important things are happening with the possible impending recession. With the fall in value of various currencies, not just the US dollar, it will take more money for people to supply their basic needs; read less disposable income. Also credit is harder to get causing credit card limits being reduced and new card harder to get. For the collector, this may mean lower prices, maybe even some fire sale bargains. For the maker, it may well mean not being able to move their creations. This financial crisis that were in my well be a wind that blows very few good.
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Paul Watson




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PostPosted: Tue 07 Oct, 2008 12:18 pm    Post subject:         Reply with quote

I dont see the quality sword companies out there all of a sudden offeing their skilled artisans less money. And if they decrease their prices perhaps they should hold off on the decreases as long as they held off on the increases which is usually a substantial amount of time.

Some sword manufacturers have ridiculously low prices anyway (Angus Trim comes to mind especially given the performance of his swords).

I do not love the bright sword for its sharpness, but that which it protects. (Faramir, The Two Towers)
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Joe Fults




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PostPosted: Tue 07 Oct, 2008 5:43 pm    Post subject:         Reply with quote

It could put downward pressure on prices in time but only if there is robust competition for market share. Otherwise the material price decreases will be used to recover previously lost margin when commodity prices went up, at least for a time. Everything always lags at the consumer level as cost and savings work through the chain.

Overall I'd be very surprised if we (in the US) notice much difference unless the (US) dollar suddenly gets very strong.

"Our life is what our thoughts make it"
-Marcus Aurelius

"Those who make peaceful revolution impossible will make violent revolution inevitable."
-John F. Kennedy


Last edited by Joe Fults on Tue 07 Oct, 2008 7:40 pm; edited 1 time in total
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Taylor Ellis




PostPosted: Tue 07 Oct, 2008 7:32 pm    Post subject:         Reply with quote

Well the nose dive of the Aussie dollar over the last week has added several hundered dollars to my next purchase already. I just hope to God it stabilises very quickly...
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Bill Tsafa




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PostPosted: Wed 08 Oct, 2008 1:39 pm    Post subject:         Reply with quote

My company imports LED lights from china. The CPU chips made in US and exported to china to be sold back in finished LED lights. I am the chief financial consultant. We are seeing significant drops in material costs and labor costs both in the US and overseas. Locally we are letting go of people who recently got raises in July and rehiring at lower wages. The price in capital equipment is also falling. I think that the drop in commodity prices is wide enough so it is resetting prices across the board. We have not dropped our retail prices yet and are actually more profitable at the moment, but we are negotiating with costumers when pressed. That's how business is done. I don't think any industry is outside this trend.

The sword and armor industry is a very small fish is a massive commodities market. They will go in whatever direction the much larger market pushes them if they choose to participate. Non-participation is a whole other issue. If someone is at a point in their lives that they don't need to work that is a whole other story.

No athlete/youth can fight tenaciously who has never received any blows: he must see his blood flow and hear his teeth crack... then he will be ready for battle.
Roger of Hoveden, 1174-1201
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www.poconogym.com
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Steven Reich




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PostPosted: Wed 08 Oct, 2008 3:42 pm    Post subject:         Reply with quote

Vassilis Tsafatinos wrote:
The sword and armor industry is a very small fish is a massive commodities market. They will go in whatever direction the much larger market pushes them if they choose to participate. Non-participation is a whole other issue. If someone is at a point in their lives that they don't need to work that is a whole other story.

How many manufacturers have you talked to (i.e. A&A, Albion, etc.)? The price of metal is just a drop in the bucket compared to the work involved in making it into a sword (unless you want the mass-produced stuff of mediocre quality).

Re-read Craig Johnson's post--he is one of the premier manufacturers (A&A), and I think he told us why the cost of steel is only a small piece of the equation.

Steve

Founder of NoVA-Assalto, an affiliate of the HEMA Alliance
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Gavin Kisebach




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PostPosted: Wed 08 Oct, 2008 5:22 pm    Post subject:         Reply with quote

I think the reason why people make a correlation between steel prices and sword prices is that when manufactureres do raise prices, steel is inevitably at the top of the list of reasons why; something like "sorry guys we really don't want to raise prices, but the price of steel went up again......" which is probably true, but certainly does not cover all of the little bits that are actually responsible for the increase.

I've seen the same thing happen in the 28mm minuatures hobby; Reaper wrote thier customers a page long apology explaining how Indonesia had be racheting up the price of pewter and left Reaper with no choice but to charge $5 instead of $3 for a miniature. I doubt that pewter prices were the single driving factor, but that's a lot easier to explain to consumers than launching into a complex logistics lesson.

It's not suprising then that people who are obsessing over thier next sword (people like me) watch steel prices almost as closely as the makers themselves, thinking that if steel would just drop, I could get that sword...

Even if steel drops considerably, cost of living increases in the meantime might just sweep in to fill the gap. Nature does abhor a vacuum.

There are only two kinds of scholars; those who love ideas and those who hate them. ~ Emile Chartier
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Joe Fults




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PostPosted: Wed 08 Oct, 2008 6:05 pm    Post subject:         Reply with quote

Vassilis Tsafatinos wrote:
Locally we are letting go of people who recently got raises in July and rehiring at lower wages.


Because its the right thing to do, business being business and all that, right?

"Our life is what our thoughts make it"
-Marcus Aurelius

"Those who make peaceful revolution impossible will make violent revolution inevitable."
-John F. Kennedy
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R D Moore




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PostPosted: Wed 08 Oct, 2008 6:12 pm    Post subject:         Reply with quote

Joe Fults wrote:
Vassilis Tsafatinos wrote:
Locally we are letting go of people who recently got raises in July and rehiring at lower wages.


Because its the right thing to do, business being business and all that, right?


Right on, Joe!
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Craig Johnson
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PostPosted: Wed 08 Oct, 2008 7:03 pm    Post subject: Q for Vassilis         Reply with quote

Hi Vassilis

I fear it may be that you see the world as a buyer and seller in the modern industrial process. While it is true we are a tiny, tiny fraction of any subset but our very own. If you think we operate under the same principles and guidelines as modern manufacturing on any level it is sadly not true.

I have two questions that can illustrate this for you. On a product you sell can you give me an idea of what your cost to price ration is? i.e. very roughly if you purchase for x what do you times it buy for an average retail price to sell on? Or if you do produce an item what is the factor you times for your retail. This just needs to be rough ideas I am not searching you to reveal any proprietary knowledge here.

Or if you prefer answer these questions and I can give you an idea of what the sword you would like to see would be priced in today’s market.

Produced in the US or Overseas?

Construction Type?
Historical
Semi Industrial
Industrial Process

Finish?
Low
Medium
High

Customizeable?
None
Some
Everything

Design?
SLO
Sword of a type
Sword based on several examples
Reproduction of one sword
Custom reproduction of Individual swords

Sensibility?
Modern
Authentic

Overall?
Exceptional
Custom
Production
Mass production
Home shopping Network

Shop?
One Man
2 to 5 people
6 to 15 people
Over 15 people


This is not an exact thing but I can give you a good idea? Happy

Best
Craig
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Bill Tsafa




Location: Brooklyn, NY
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PostPosted: Thu 09 Oct, 2008 12:27 am    Post subject: Re: Q for Vassilis         Reply with quote

Craig Johnson wrote:


I have two questions that can illustrate this for you. On a product you sell can you give me an idea of what your cost to price ration is? i.e. very roughly if you purchase for x what do you times it buy for an average retail price to sell on? Or if you do produce an item what is the factor you times for your retail. This just needs to be rough ideas I am not searching you to reveal any proprietary knowledge here.



Most of our imports from china have a 100% sales markup. No labor. We use to buy for $40 and sell for $80. Now buying for $30 and still trying to sell at $80, but will sell for $60 when pressed. Fixtures built locally are sold for an 800% markup. Ratios between material costs and labor will vary depending on the job but the margin is the same. Ratio often averages 50-50. We use a large variety of materials all of which we are getting cheaper in the last two months. The cheapest was this past week. Overall I would call this a low volume high mark up business.

I can not give you more detail. First because there is a lot of variety in the products we import and the custom jobs we do locally. Second... this is my real name here, I probably should have kept my mouth shut as it is. However, I do appreciate and respect your position and your thoughts on this subject.

During the recession of 2001 I was a financial consultant for a building supply company. The margins there were much slimmer. Buy something for $70 sell it for $100. I saw no slow down in that business. Cost and retail prices stayed stable in this high volume low mark up business. That was the recession that never really happened. Dot-coms went out of business, but they never should have been in business. Terrorist attacks and Enron corruption caused fear and uncertainty. The company I was working for at the time used the opportunity scale back wages. The difference was an increase in the bottom line. That recession was a blessing because in 2000 I was having serious staffing issues in my office. I could not even get accountants to come in for an interview. They wanted to be paid almost what I was making and were people with half my experience. The recession rebalanced all that.

No athlete/youth can fight tenaciously who has never received any blows: he must see his blood flow and hear his teeth crack... then he will be ready for battle.
Roger of Hoveden, 1174-1201
www.poconoshooting.com
www.poconogym.com
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Peter Johnsson
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PostPosted: Thu 09 Oct, 2008 1:54 am    Post subject:         Reply with quote

If I were using the same mark up as you do on your locally built fixtures (perhaps most closely comparable to a custom sword smith shop?), my most basic swords would start at around 16 000 USD, not including a scabbard. That is also not including taxes, VAT or social security fees. With those included the price would more than double.
This is counting the very bare minimums of costs for production, material and rent plus a minimal wage for the worker (me). The rest (the mark up) would be profit for my business that I could invest in marketing, research and development, plus a savings fund for my old age.
...Hey, this sounds like a very good idea!

Anyone interested in buying?
...And it´s hand forged!
Wink

...I guess sword making is not a low volume high markup business, after all.Worried

A reality of the market is that many fledgling sword makers start out as hobby makers, who only barely need to cover the costs to be able to continue exploring their passion. There are many dedicated and talented people who want to establish themselves as custom makers. Many do so by asking prices that are not very different from production swords or perhaps even imported SLO´s. In effect this prevents them from fulfilling a professional career as their customer base has come to expect prices that are impossible to support one self on.

On a market where there is very cheaply produced swords (or SLO´s) mixed with varying degrees of hobby production, it is a challenge for serious professional makers and small scale quality production companies to build an understanding among customers that a good sword has to fetch a certain price.

As makers we need to push the level of quality and keep expanding the market so that an appreciation of the craft of the sword and its qualities get more general appreciation.
Pushing for cheaper swords (while understandable) results in a market that only has room for the most basic compromises barely worth the name of sword.
Making swords in this time and age is an anachronism. It is about making available in physical form something that is the stuff of dream and myth. It will always be as much an art form as it is a business, even if you go about it very seriously and professionally.
This makes it difficult to fully compare sword making to your normal run of the mill business.
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Bruno Giordan





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PostPosted: Thu 09 Oct, 2008 4:28 am    Post subject:         Reply with quote

Vassily, don't expect people doing work for virtually nothing, as chinese laborers do.

A skilled european or US artisan will never work for the same wage as an unskilled chinese worker. Social conditions are also extremely different in China and in the Western world.

Why should people sell unique pieces for a pittance? Are we back to the times of Leonard being paid in burning wood?

Plus, the credit crunch is more than likely a big damage to the real economy: we are entering a long recession, a depression.

And under such conditions a niche market like that of specialized sport items as swords are is certain to be suffering, as customers, being generally impoverished, will concentrate themselves on buying essential stuff like food, housing and will save just for necessary future goals.

In Italy already before this recession most people couldn't afford a 600 euros sword, or had difficulties at doing it.

Now our little industry is likely to suffer even more, and the rest of Europe is going in the same direction.

Reenactors from most group I know are dressing themselves with homemade junk, and tend to make themselves SLO objects,as they have to save: they wouldn't buy a weapon costing more than 200 euros.

As a consequence our gathering are starting to look like well made carnivals.

And subsidies from the State for such feasts, once common, are dwindling, while people will not even think of paying a ticket for seeing an event.
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