Brass Prices Set to Go Up - by 33%??

[CME & Bottlewasher]

Hi Guys :wave:

I have just had a quick look on the Tower Models website here on the interweb and they have just announced that San Cheng are to increase their prices by 30% by the 1st Jan 2011, that with the VAT increase will be 32.5% (so let's call it a 1/3rd then ).

Whilst I wasnt planning - unless the lottery came up - to buy one of those nice San Cheng RTR locos, I was wondering if such increases are the sign of things to come As a little aside I saw a very nice Black 5 - all lined out by the master Alan B - for sale on fleabay recently and that would have been bargain when compared to the pending price hike.

I had heard that brass was going up in price a couple of years back as the developing economies were buying up raw material stocks etc. and was set to overheat the market, yet I took such with a pinch of salt.

The question is will brass be going up in price by such an amount in general or is it that San Cheng have increased labour costs too?

I have endeavoured to future proof myself as much as possible against the VAT rise and I have chosen to focus on what is in hand in terms of models to be made - as much as possible - yet one can only buy what one can afford at the time and I wouldnt want to - even if I could - stock-pile kits just so as to beat a price increase.

My other thought is that if brass is set to go up in price, I wonder if lost wax brass castings etc. will do the same, making detailing of models costly too?!
I have recently purchased some for my 7mm NG locos and some for SG locos and whilst they are superb when they arrive you look at em and think there aint a lot there for ?15! - dont tell or show SWMBO (bless them, IMHO the fairer sex never understand such qaulity and the price thereof, yet they always seem to know the market price of diamonds, gold, white gold, silver etc and measure ones love for them by such :laugh: :lol: :twisted: ). I hasten to add that I am very lucky in this regard (I was told to say that, I am so glad that I wear the trousers in this house it gives me a real feeling of wellbeing :lol: )

If the aforementioned price hike/magnitude of such (33%) is true then at the start of next year, our beloved 7mm/O gauge will become even more challenging to those of us on a tight budget :scratch:

Of course my other - long term - theory may be coming to the fore at the worst possible time (recession), yet I have some doubts, in that the Chinese, as did the Japanese before them, have aquired knowledge, technologies and good market share which now = control for them. In terms of our beloved models, so much of the market is manufactured by China, that the lever of power may have finally swung in their favour and they now feel that they can call the shots in terms of price and availability - yet any market place will only bear so much, and if my theory/scenario is true, then it will be intresting to see if the UK market will tolerate such a price increase (that depends on the desire/will and means/ability of 7mm modellers to pay for such models).

I feel for the likes of Tower as they are now in an awkward position.

The question to my mind is; who controls this particualr supply/value-chain, who is in the driving seat?

Business mode OFF now :lol:

Sorry to be the bringer of - possibly - bad news!

Comments please.....

Cheers,

CME :wave:

 

[adrian]

Sorry I don't really follow the brass economy so I can't really comment on any price increases.

However if that is the case then it's likely to push more manufacturers into producing stuff in resin and the like, much like JLTRT. From a builders point of view I don't really like brass sheet, I'd much prefer kits in nickel-silver, like MOK. In fact there are a couple of David Andrews kits that I like and he offers the kits in nickel silver rather than brass and it's a premium that I think is worth paying. Perhaps the premium in the future will be for the brass etches. As for the lost was castings I'd have thought that the material costs of the brass are only a very small part of the cost. The price of the getting the pattern made and the casting process it's self being the principle cost.

Regards

Adrian

 

[Phill Dyson]

We have been at the mercy of world markets since we decided to stop having our own manufacturing industry, the increases in kit & RTR brass will only work if people are willing to buy them...........I don't think the price of RTR brass will affect me though as I couldn't afford it at the old price either.............so they can put it up 400% for me :laugh:
I will as always buy what I can afford & if manufacturers want to price themselves out of the market, It will not affect my line as I will just do more & more kitbashing & scratchbuilding & less & less buying :scratch:
:scratch: What worries me far more though is if this recession is going to get a lot worse ?...........& more than likely those of us in the Midlands & the north will probably get the worst of it in the UK (no change there then :x ).............we shall see.

Cheers Phill :wave:

 

[28ten]

I don't believe it is just the cost of brass, they probably feel they can command a higher price for those of you who follow business theory it is a case of Porters 5 forces in action and the suppliers are a more powerful position. I can see this sort of business going to India in a year or so.
As someone who does about half a dozen commission builds a year, I noticed a drop off when Chinese models first appeared but as prices have risen enquiries have increased so its good news for homegrown builders and kit makers.

 

[CME & Bottlewasher]

Sorry I don't really follow the brass economy so I can't really comment on any price increases.

However if that is the case then it's likely to push more manufacturers into producing stuff in resin and the like, much like JLTRT. From a builders point of view I don't really like brass sheet, I'd much prefer kits in nickel-silver, like MOK. In fact there are a couple of David Andrews kits that I like and he offers the kits in nickel silver rather than brass and it's a premium that I think is worth paying. Perhaps the premium in the future will be for the brass etches. As for the lost was castings I'd have thought that the material costs of the brass are only a very small part of the cost. The price of the getting the pattern made and the casting process it's self being the principle cost.

Regards

Adrian

Hi :wave:

I find NS easier to work with too.

I had always thought of brass - before getting back into the hobby - as a cheap and er nasty material Perhaps the prices of NS and brass will even out now :scratch: .

The production costs maybe the issue. I have a theory that once any country has MacDonalds and/or Coca-Cola then the prices of it's once cheap export goods go up - in other words captilism takes a hold :lol:

Cheers :wave:

 

[CME & Bottlewasher]

We have been at the mercy of world markets since we decided to stop having our own manufacturing industry, the increases in kit & RTR brass will only work if people are willing to buy them...........I don't think the price of RTR brass will affect me though as I couldn't afford it at the old price either.............so they can put it up 400% for me :laugh:
I will as always buy what I can afford & if manufacturers want to price themselves out of the market, It will not affect my line as I will just do more & more kitbashing & scratchbuilding & less & less buying :scratch:
:scratch: What worries me far more though is if this recession is going to get a lot worse ?...........& more than likely those of us in the Midlands & the north will probably get the worst of it in the UK (no change there then :x ).............we shall see.

Cheers Phill :wave:

Hi Phill :wave:

+1

I dont want to appear pesimistic, yet at the moment I am seeing some markets go up and down like a kindergarden roller coaster, with a general lack of confidence by sellers and buyers alike, hirers and firers too, as each govt annoucement is outed. The acid test for the tentive recovery of the economy, will be this autumn and again in Jan 2011, when VAT rises. I think the whole recession thing is a con perputrated by TPTB, to syphon off money for there own coffers, look at British Gas, the Banks, Goldman Sachs et al. they all play with computer money, move it about, loose it, then rifle it away to a Swiss bank account and turn it into real money or turn into gold (literally). Then blame everyone else and make the poorist members of society pay twice for TPTB nicking it all in the first place! Betting on share prices or money going up and down should be made illegal too IMHO

All the best,

CME :wave:

 

[CME & Bottlewasher]

I don't believe it is just the cost of brass, they probably feel they can command a higher price for those of you who follow business theory it is a case of Porters 5 forces in action and the suppliers are a more powerful position. I can see this sort of business going to India in a year or so.
As someone who does about half a dozen commission builds a year, I noticed a drop off when Chinese models first appeared but as prices have risen enquiries have increased so its good news for homegrown builders and kit makers.

Ah a blast from the past;- Porters 5 forces , which is a very competent and useful codification of some of the key factors - from without the organisation - which are imbedded within all markets and which have a contingent influence on strategic focus.

The Five Forces, from; Competitive Strategy; Creating and Sustaining Superior Performance (1980) and; Competitive Strategy ; Techniques for Analyzing (sic) Industries and Competitors (1985) by M.E Porter. Before this great work, the emphasis within such/similar literature, was based upon analysis of business success through; anecdote, descriptive case studies and broad generalisations - (based on limited cases).

I shall do my best to avoid using phrases such as 'paradigm shift', P.E.S.T and S.W.O.T! :lol: :lol:

The Five Forces are; Buyers, Suppliers, Potential New Entrants, Substitues and Competitive Rivalries (Porter 1985) - ".....the five invariant factors which always impact on companies within competitive markets and in all contingent circumstances." (Cox., A. 1997). This assumes that all companies, within markets will experience competitive rivalry and the threat of substitute products and/or services. All operating within market places comprising of buyer and supplier relative power.

Although Porter, did management practitioners - and acedemics - alike, a great service, with his work, there is a theoretical problem with his approach. Porter's theory does not work in all circumstances. In short Porter focuses on 'markets' only and not 'value and supply chains', thus he only achieves a certain level of fit, in doing so Porter, in my humble opinion, fails to adequately understand and thus acknowledge the 'value chain' - this tyranny comes from an over focus on the market and market fit - this limited view then causes one to under-estimate the full range of contingent circumstances which organisations, and indeed individuals, face with such external forces.

I shall get me coat and go and have a lie down in a darkened room now! :lol:

The Chinese et al. may have indeed underestimated the ability of their 'golden goose' to continually lay, and indeed the British (7mm & 10mm scale model buying) public, and as you say such business could go to India and I would suggest possibly; Korea or Malaysia et al. also. Such a change of base is dependant on mobilisation costs, willingness/need to change, barries to exit and entry, set up/tooling costs vs lost business etc. etc., it could mean a return - either interim or longer term - to, and employ of, UK model-makers/builders - more power to your/their elbows if that is the case! If there is a significant a change in costs and the exchange rate etc. we could see a radical turn around and less so called outsourcing - the question will then be have we still the skills in the UK to cater for such, or do we help develop - or exploit - another developing country until such times as they get MacDonalds and Coco-Cola :scratch:

It would be interesting to know if Tower et al. have a lever of power over San Cheng or vice versa (i.e. who is the bigger/more powerful, the buying organisation(s) or the manufacturer/selling organisation(s))?

Thanks

All the best,

CME :wave:

 

[28ten]

I agree that like all academic models Porter has it shortcomings, but when used sensibly it is a good indicator where the power lies, the problems begin when too much importance is placed on theoretical concepts, or when they are incorrectly applied by 'experts' and 'consultants' !
Anyway, I suspect the ultimate power lies with the consumer. after all the attraction of RTR brass is the 'affordable' instant gratification. when the affordability wains the market demand drops and in theory the balance shifts. Personally, I think rising Chinese prices are good news for the home producers who were here before cheap brass imports. But if brass prices are indeed rising by 33% then brass kits will also be rising by similar amounts, and I suspect that combined with the VAT increase there will be a lot of 'higher than inflation' price rises in January.
Oh and FWIW i prefer N/S as well

 

[Phill Dyson]

With most O gauge traders already grumbling about a downturn in sales at the Guild shows a massive price increase for whatever reason is not going to help matters :scratch:

 

[hoppy504]

Since I first purchased brass models in the 60s the manufacturing has moved from Japan to Korea to China, so I agree India appears to be a good bet for future production.
In fact production has already started on Indian 16mm NG products, these are being sold by a dealer in Cleethorpes.

Although Tower Models would have to confirm this I believe they will not be commissioning any further Gauge 1 Models. I hope this information is wrong .

 

[adrian]

I shall do my best to avoid using phrases such as 'paradigm shift', P.E.S.T and S.W.O.T! :lol: :lol:

House!! Yes buzzword bingo is alive and well in our organization too. Nobody wins an award any more it's always a "prestigious award" etc.
Adrian

 

[28ten]

[quote=""CME & Bottlewasher"":3kwr4oxi]
I shall do my best to avoid using phrases such as 'paradigm shift', P.E.S.T and S.W.O.T! :lol: :lol:

House!! Yes buzzword bingo is alive and well in our organization too. Nobody wins an award any more it's always a "prestigious award" etc.
Adrian[/quote:3kwr4oxi]
Would that be part of 'job enrichment' ? :laugh: :laugh:

 

[Jordan]

.....I don't think the price of RTR brass will affect me though as I couldn't afford it at the old price either.............so they can put it up 400% for me :laugh:

:lol: :lol: :lol: You & me both, there...

I will as always buy what I can afford & if manufacturers want to price themselves out of the market, It will not affect my line as I will just do more & more kitbashing & scratchbuilding & less & less buying :scratch:

I do wonder sometimes at just how big the market for RTR Brass in 7mm & 10m really is, considering what a small percentage of the whole hobby these scales are supposed to be anyway?
A pretty good guide to 'demand' IMO is the likes of Ebay... once people have what they want, then anyone else trying to sell a similar item will struggle to get their price for it. There's been a couple of Brass 24/25s on there recently, and at ?450-ish Buy-it-Now they just aren't moving; it applies beyond brass too - Heljan Hymeks are a case in point - they barely reach ?250 these days, anyone putting a higher start price won't sell, and yet you see retailers still advertising them at over ?300... and wondering why there's no demand..? A Heljan Class 20 went for about ?330 last week- massively down on even the "Discount" retail prices!!. Yes we all know about the silly prices some things reach on Ebay at times, but for what people are prepared to pay, as opposed to what sellers would like, I think it's quite a good guide.
The area I think might suffer from this brass price increase would be the wagon & coach market; few of us will ever have the means to fund a fleet of RTR brass locos (or even one!!), but wagons and coaches are things we all need if we want to model any resemblance of a real railway... & going back to Ebay, I do wonder at the prices wagons reach sometimes..!!

 

[CME & Bottlewasher]

Since I first purchased brass models in the 60s the manufacturing has moved from Japan to Korea to China, so I agree India appears to be a good bet for future production.
In fact production has already started on Indian 16mm NG products, these are being sold by a dealer in Cleethorpes.

Although Tower Models would have to confirm this I believe they will not be commissioning any further Gauge 1 Models. I hope this information is wrong .

Hi Hoppy :wave:

Korea still does some of this work, for the likes of Golden Age et al. as they are reputed to be the best Brass-Masters/Smiths(?) in the world, this is another aspect of Porter's theory too in other words Differentiation Strategy, which Porter defines as; "...to be unique in its industry along some dimension which are widley valued by buyers....." as opposed to the Cost Leadership Strategy of the Chinese i.e. the Low Cost Producer etc....

Indeed India looks like the next great hope of the 'Low Cost strategy' - yet there are cultural issues to take into consideration and I would argue, although possibly already in place after UK companies dealings with China, that quality control will have to be tight. It was a little different for outsourcing to Japan and Korea back in the day, because in the main of cultural ethics etc.......

I understand that Vulcan(?) used to make 7mm scale kits/models, which were rather akin to 'Airfix' kits, perhaps this would be a consideration in such a market place, one which is akin to JLTRT kits, yet more cost effective - this method of course depends on tooling costs relative to the size of the market/profits etc.......

Sadly I think that you are right about Tower and G1, with the qualification of; commissioning any more G1 models from China.......

Cheers,

CME :wave:

 

[CME & Bottlewasher]

[quote=""CME & Bottlewasher"":t3w4nusm]
I shall do my best to avoid using phrases such as 'paradigm shift', P.E.S.T and S.W.O.T! :lol: :lol:

House!! Yes buzzword bingo is alive and well in our organization too. Nobody wins an award any more it's always a "prestigious award" etc.
Adrian[/quote:t3w4nusm]

Hi Adrian, :wave:

Dont you find PEST and SWOT useful? What about four-box matrices? :lol: :lol: :lol: :lol:

There is a difference between mangement bu!!shit speak and academic/scientific rigour though ....I'll get me coat........ :lol: :lol: :lol:

I used to work for a boss, in the 1980/90's who loved 'buzz-words' you know the type, great at presentations and yet couldnt do the job, yet like a tur... sorry dross that wont flush, he always, in his non stick way, seemed to float to the top :shock:

I invented a little game, with my mates, so as to while away long boring and pointless meetings that he often called, a game that required us to come up with new phrases that he would take up and use - thus turning them into buzz-phrases! :lol:

The best ones were those which he got his secretary to write down (we let her in on the game and she could, from then on, not keep a straight face) so that he could 'use that later'. We should have copyrighted them :lol: :lol: :lol:

I without knowing such I said that he reminded me of 'Guss' from 'Drop the Dead Donkey' and everyone in the 'team' agreed, this then got out into the office/building at large, the boss got to hear about and he went mad :lol: Evidently in his previous company someone else had nicknamed him the same - Guss :lol: :lol: . I am not a malicious person and it was just a jokey throw away line - yet many a true work spoken in jest!?

He was a bit like, no, a lot like, Reynholm (Reynholm industries) the CEO in the IT Crowd :lol: :lol: :lol:

He later went off to be a consultant, I expect that he left a trail of disasters behind him - no wait, he would have, as was his way, he would have magically surrounded himself in able people who could do the job for him, whilst he sat back and rode the gravy train :lol: :lol: :lol:

TTFN,

CME :wave:

 

[CME & Bottlewasher]

[quote=""adrian"":3n5fwc4f][quote=""CME & Bottlewasher"":3n5fwc4f]
I shall do my best to avoid using phrases such as 'paradigm shift', P.E.S.T and S.W.O.T! :lol: :lol:

House!! Yes buzzword bingo is alive and well in our organization too. Nobody wins an award any more it's always a "prestigious award" etc.
Adrian[/quote:3n5fwc4f]
Would that be part of 'job enrichment' ? :laugh: :laugh:[/quote:3n5fwc4f]

:lol: :lol: :lol:

I have no idea what that means - have I been outta the loop too long :lol: :lol: :lol:

:wave:

 

[CME & Bottlewasher]

[quote=""Phill Dyson"":e2wtukvc].....I don't think the price of RTR brass will affect me though as I couldn't afford it at the old price either.............so they can put it up 400% for me :laugh:

:lol: :lol: :lol: You & me both, there...

I will as always buy what I can afford & if manufacturers want to price themselves out of the market, It will not affect my line as I will just do more & more kitbashing & scratchbuilding & less & less buying :scratch:

I do wonder sometimes at just how big the market for RTR Brass in 7mm & 10m really is, considering what a small percentage of the whole hobby these scales are supposed to be anyway?
A pretty good guide to 'demand' IMO is the likes of Ebay... once people have what they want, then anyone else trying to sell a similar item will struggle to get their price for it. There's been a couple of Brass 24/25s on there recently, and at ?450-ish Buy-it-Now they just aren't moving; it applies beyond brass too - Heljan Hymeks are a case in point - they barely reach ?250 these days, anyone putting a higher start price won't sell, and yet you see retailers still advertising them at over ?300... and wondering why there's no demand..? A Heljan Class 20 went for about ?330 last week- massively down on even the "Discount" retail prices!!. Yes we all know about the silly prices some things reach on Ebay at times, but for what people are prepared to pay, as opposed to what sellers would like, I think it's quite a good guide.
The area I think might suffer from this brass price increase would be the wagon & coach market; few of us will ever have the means to fund a fleet of RTR brass
locos (or even one!!), but wagons and coaches are things we all need if we want to model any resemblance of a real railway... & going back to Ebay, I do wonder at the prices wagons reach sometimes..!![/quote:e2wtukvc]


+ 1 I agree!

Cheers,

CME :wave:

 

[CME & Bottlewasher]

I agree that like all academic models Porter has it shortcomings, but when used sensibly it is a good indicator where the power lies, the problems begin when too much importance is placed on theoretical concepts, or when they are incorrectly applied by 'experts' and 'consultants' !
Anyway, I suspect the ultimate power lies with the consumer. after all the attraction of RTR brass is the 'affordable' instant gratification. when the affordability wains the market demand drops and in theory the balance shifts. Personally, I think rising Chinese prices are good news for the home producers who were here before cheap brass imports. But if brass prices are indeed rising by 33% then brass kits will also be rising by similar amounts, and I suspect that combined with the VAT increase there will be a lot of 'higher than inflation' price rises in January.
Oh and FWIW i prefer N/S as well

I dont think that even acedemics or consultants, well maybe consultants :lol: :lol: , could get Porter's theories wrong :scratch: :lol: :lol:. Experience, so called 'trust' (Prof R. Lamming et al.), yet more importantly, power, applies to all business relationships IMHO, that's were Cox's theories add the icing to the cake, so to speak.

It was good to remember such theories for me - I had almost forgotten such, thanks for reminding me, that was fun :lol: :lol:

I think that you are right, the consumer will vote with his/her feet, because they will have to, no more 'instant gratification' because of a lack of funds, due in the main to an - almost - manufactured recession (Problem, Reaction, Solution?). This time is a very interesting time for us to be able to observe the intricacies of the human ego and how such is nourished by such instant gratification etc..... :? :scratch:

I cant believe that the Chinese have underestimated the imminant shift in the balance of power, time will tell - I think that you are right BTW about a balance shift if they have.......

As you say, we dont yet know if brass its self is going to sky rocket in price - as predicted a couple of years ago? Or if this is China (San Cheng) wrongly throwing their weight around - prematurely - because they believe that they hold the lever/levers of power - with, as you say a higher than inflation price rise. Perhaps though San Cheng will market their own range - directly or through other agents - at a lower price point and leave Tower et al. high and dry with ?300-400 price increases per model? :scratch:

Perhaps too San Cheng have read Cox's et al's. work and wish to control, and thus manipulate, the supply and value chains for this product by cutting out - and ultimately stopping - other outlets from selling their products :scratch: In doing so, if they have an access to market(s) (distribution channels of their own) which they appear to have been cultivating over the past couple of years, they can then potentially keep more value (profit) for themsleves by controlling such supply/value chains. Yet there is the big risk that they will diminish the advantage of 'multiplication' i.e. the ability to sell through many outlets and thus mulitply the movement of so called 'units' (production output) and thus profits, this may be worth the loss of such because in a relatively small market place, such as the UK and that of UK outline models, this would be a good strategy for SC to employ/worth the risk for them. Such an agressive approach maybe a nescessity for San Cheng, so as to able to survive in these challenging times :scratch: Of course if we pressume that they are to adopt such an aggresive strategy, by adopting such, they are not actually refusing to supply - or cutting off - Tower Models et al, and in doing so SC are keeping their 'options' - and thus outlets - open. If we take this a little further, and San Cheng did keep the cost of 'direct sales' models lower to the retail customer (the punters) then their customers, the wholesalers/retailers et al. would start to, rightly so, complain, then any observer could define where exactly the power lies in that business relationship! I dont know what other work SC have/do and my ramblings are all just theory - possibly far fetched too :lol: :lol: :scratch: .

Examine and then diagnose should of course be the watchwords here :lol: :lol:

In short only time will tell.

At least we all have a heads-up and if anyone wants to buy pre-price increase San Cheng models then have 5 months to do it in

All the best,

CME :wave:

 

[Purple-haze]

Having trouble keeping up here lads but if I'm reading this correctley 1) I agree with Jordan, that wagons and coaches will probably affect us more than locos 2)it will possibly make more of us return to making our own stock and 3) I'm about to make a fortune cos I got lots of old 1 gallon oil cans :laugh: :laugh: Any offers must be pounds sterling :lol: :lol:

regards

Rog

 

[hoppy504]

I have copied the following from the FineScaleBrass web site,

We have further information today from the factory and would like to update you as follows
Due to the demand for labour in the Chinese market place the factory is running with reduced capacity as skilled staff are ?poached?. Because of the time it takes to train new staff, this is not simply a case of recruiting more and setting them to work there is a time scale involved. This means that the factory has to give priority to existing orders and new orders are on an extended lead time, this will have the following effect:


I believe that the decision to cutback on future Gauge 1 Brass imports by our main supplier is due to slow sales in the Gauge 1 model sector (a lot of money tied up on the shelves).