Are You Out of Your Mind?

A couple of weekends ago Marie and I went to tour a show home in an exclusive gated community of Asheville North Carolina.  Not because we had any desire or aspiration of owning a home there; at prices of between 1.5 and 4 million dollars per home these were way (way, way) out of our financial reach.  We went because this particular show home was built with a lot of “green” building techniques, used reclaimed and Earth-friendly materials and was furnished entirely with furniture and art works provided by local artists.  This last point was our main interest, but seeing the latest techniques of “green” building is interesting too.

SecretaryNearly all of the furniture displayed was quite beautiful, and very well made.  One particularly striking piece of furniture was this secretary desk.  I was impressed by the careful attention to detail in its construction, the French Walnut veneer and the absolutely flawless finish.  Marie looked in the guide book to see who had made it and what the price tag was.  I fell right out of my shoes when she said that the price was $52,000.00! No, that’s not a misprint.  My initial reaction was to think, “Are you out of your mind!?” I know that “Art Furniture” carries with it a high price tag but Fifty Two THOUSAND dollars? As I was putting my shoes back on I wondered how long something like that has to travel around the country being displayed before it strikes the fancy of someone with deep enough pockets that the price tag seems reasonable.

Probably not as long as I might imagine.  Just because it is way out of my range doesn’t mean someone else won’t snap it right up, maybe one of the folks living in those multi-million dollar homes.  And I’m sure a lot of long hours were put into building it.  The finish alone probably took weeks.  It must be nice to be able to say that your work can command such a price tag.  I will never know that feeling, or so I thought. Continue reading “Are You Out of Your Mind?”

Reducing Runaway Consumer Buying

Advertising is everywhere.  Its purpose is mostly to increase consumer buying.  Some advertising purports to educate you, but in the end the purpose is to induce you to buy their brand, support their cause, or think their way.

How much advertising we are exposed to depends on the person.  Estimates published on the Internet vary from 247 to 5,000 advertisements per day.  If you watch television, approximately 25 minutes of each hour will be advertisements.  Radio is similar.  Then there are billboards and signs on stores, busses, cars, trucks, food packaging and clothing that advertise someone’s product to others.  “We never know where the consumer is going to be at any point in time, so we have to find a way to be everywhere,” said Linda Kaplan Thaler, chief executive at the Kaplan Thaler Group, a New York ad agency.

The net result of pervasive advertising is that we begin to think of things like cell phones as fashion accessories and feel that we must always have the latest and greatest of anything we own…as well as owning a great many things that we don’t really use.

This is a vastly different mindset from that of America a few generations ago.  During the Great Depression Americans were experts and reusing and repurposing everything they had.  Before that: when people began settling the Appalachian region, people made most of what they had.  Getting supplies from the East into these mountains before there were roads and railways was difficult and dangerous.  Settlers brought the bare essentials with them, then used what was on hand to make what they needed.  By trading amongst themselves they could have what they needed without having to make everything themselves.

Some of us still treasure generations-old cast iron cookware or power tools from the 50s and 60s that were built to last – and did.  Today too many products are designed and manufactured to be disposable.  The manufacturers want them to wear out so you will buy them again and again.

Some will argue that consumer buying is the driving force behind our economy and to keep the economy strong we must all do our part by continually buying as many consumer goods as we possibly can.

Excuse me?

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De-Fanging the Credit Monster

credit, debt, economics, living debt free, simplifyingAfter the economic crunch we have been through in recent years I don’t need to tell you, Dear Reader, that living eyebrow deep in credit card debt is a bad idea.  At one time it was considered the norm – almost a status symbol.  Now more and more people are seeing that reducing this debt is beneficial.  Some time ago I wrote about how to slay the credit card dragons in The Economics of Simple Living.

Today I want to briefly reiterate the benefits of living credit free.  You will note that I did not say credit CARD free – for indeed we do still have a couple of credit cards.  If one plans to live in this modern society, having at least one active credit card is a necessity unless you go into “survivalist” mode.  Continue reading “De-Fanging the Credit Monster”

Income Inequality Indeed

income inequalityThese are my thoughts on the income inequality issue.  As a long-time business manager and owner I can tell you that while the thought of improving income to the lowest paid among us seems like a generous thing to do, and is probably a good campaign tactic for Democrats, it will backfire.  What always happens when the minimum wage is raised is that ALL employees expect a commensurate raise in order to “maintain scale”.  American workers demand income inequity.  This is how they measure their success.

Small adjustments don’t have a devastating effect, but an increase from $7.25 to $10.10[3]  will mean either everyone gets a $3.00 an hour raise or entry level employees will be making as much as those who have been working hard for several years.

This across the board raise in salaries will be a major hit to the labor cost of every company in America.  Some companies will respond with lay-offs of the least essential personnel.  Most will respond by increasing the price of everything they make or do, thus pushing the burden of this wage increase back on the people it was supposed to help.  The end result is that no one benefits, everything simply gets more expensive… again.

As I see it, there are only two ways to achieve the leveling effect the liberals seek:

Continue reading “Income Inequality Indeed”

The Rise of Urban Farms

Abandoned home: _AP-Paul SancyaTo most of my readers a farm is not a strange or unusual sight.  Many readers live on farms.  But to most city dwellers, a farm is as mysterious and distant as a tropical rain forest is to us.  Many city kids have never seen how food is grown; they know only that it comes from a supermarket wrapped in plastic.  Some cities have started busing school kids out on field trips (literally) to nearby farms so they can get a look at what a field of produce looks like.  Many cities have parks, and maybe a horticultural garden, but not farm land.  I bet the last place you’d think to look for farm land would be inside a major industrial city, such as… oh, say… Detroit.  The Motor City.  And you’d be wrong!

The city of Detroit has for years been the poster child for urban blight: having lost 25 percent of its population over the last decade and with roughly 40 of the city’s 139 square miles vacant, according to The Detroit Free Press.  But the actions of some residents and organizations may be about to change all that.

In the wake of the largest municipal bankruptcy in U.S. history, Detroit is rebranding itself as The D.I.Y. City, with projects such as urban farms, encouraging small businesses selling locally made products, and residents pitching in to handle municipal upkeep.

Bands of citizen volunteers have been swarming into vacant properties, abandoned and neglected by their owners, to cut grass, clear brush and pick up litter and debris.  Many of the derelict homes are being razed by the city, but some feel there is a better way to go.

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The Economics of Simple Living: Less Debt, More Life

It is popularly said that “Money is the root of all evil.” But, Dear Reader, I can unequivocally state that money itself is not evil.  Having money does not make you a bad person.  Rather it is the pursuit of more and more money, the lusting after money; greed that produces deleterious effects in people.  Greed is the root of evil.

money, cash, moolahMoney is just another tool to be used in bartering with others for what you need.  It simplifies the process of life by offering a universally accepted medium of exchange.  Instead of trading eggs for flour or firewood for meat, you trade your efforts in your area of expertise for money, then trade the money for the things you need to support yourself and your family.

Using money as a bartering medium is far more convenient than exchanging physical goods, especially since so many people these days produce no physical goods.  I’d say the vast majority of American citizens support themselves as service providers not goods producers.  They may be Payroll Administrators in a corporation, or County Tourism Directors, or Network Administrators in a hospital, or a cook in the local grammar school, or even a laborer in a factory that does produce goods, such as furniture.  But at the end of the week, they are not paid in sofas and chairs.  What a good thing *that* is! Continue reading “The Economics of Simple Living: Less Debt, More Life”

The Fat Lady Sings

fat ladyThere is a saying: “The opera ain’t over till the fat lady sings.”  Apparently coined by sports information director Ralph Carpenter during a 72-72 tied game between the Raiders and the Aggies in 1976 and reiterated any time someone is in a close contest.

For most of us recently life has been a close contest.  Economic disaster has pushed many to the brink of ruin.  And some have gone over the brink.

I’ve been building furniture for over 30 years.  It started as a hobby, making things for my own home, then friends and relatives.  Eventually word got around and my friends’ friends began calling on me to build things for them too, and furniture making moved from hobby status to side-line business.  This side-line grew until I cut my full-time employment to part time to test the waters as a full time woodworker, then quit my job altogether.  That was about 12 years ago (1998) and I’ve been working full time as a self employed custom furniture maker ever since.

There have been a few lean spots where things got particularly tight, and there have been times when demand for my work has been so great that I had a 12 month long waiting list in spite of the fact that I was working 12-14 hours a day 6 days a week for weeks on end.

Yet, somehow we never seemed to reap the benefits of all this work.  Even when our busiest year came to a close and we tallied up all the numbers in our annual report to Uncle Sam, profitability was disappointingly low.  How could that be?

Then I found a series of articles in Custom Woodworking Business magazine written by consultant Anthony Noel in which he addressed this very issue, pointed out many expenses that often slip through the cracks to feed upon your profit margin and taught us to build a spreadsheet for tracking those costs and calculating them back into our hourly shop rate.  I awaited each installation of that series with much anticipation and when it was complete I had my spreadsheet and began tracking down all those misplaced profits.

We recalculated our shop rate based on the results of that study and were confident that we would now be able to start tucking away a little for retirement.

Then the economy tanked (2008).

For a while people who still had money to spend on quality furniture were finding us and we were getting along, but last July either those people started feeling the need to hang onto their money or we were no longer able to get our name in front of them and things began to get really tight.  But, the fat lady hadn’t sung yet.

Almost another year has passed and nothing is getting better.  I believe I hear that buxom soprano starting her aria.  It’s decision time.

Having furniture custom designed and built for you is expensive.  It’s much like the difference between selecting a suit off the rack at your local department store or going to a tailor and having a suit specially fitted to your physique.  A tailor made suit will be many times the cost of an off the rack suit.  More so if you choose a particularly spiffy fabric.  But there are men who feel that $500 to $1000 (sometimes more) for one suit is money well spent.  Marie spent many years as a seamstress in a popular dress shop in St. Louis and she knows first hand the extraordinary amount of money women will put into custom made gowns.  And we hope to meet some of those people again soon as they will be the ones who are willing to spend money on high quality furnishings that are designed to their specific needs and tastes and built to last for generations.

But those are not the people who have been contacting us lately.  As an example, there was the fellow who wanted a table and benches designed for his children’s use.  After discussing his needs with him I estimated the job at around $1,000.  His budget for the project was $350, and that had to include delivery to the east coast!  This was just one example, it is typical of most of the dealings we’ve had lately.  We’re just going to have to move in a new direction if we are to survive.

Over the years there have been certain items that have been very popular and have sold consistently.  The higher pricing dictated by the need to actually show a profit as cooled the enthusiasm for even these items.  But if I can get pricing back down to the previous levels, we may be able to revive interest in those pieces.  How do we do that? Volume production.

I have always considered myself as something of an artist and as such have always considered production work to be distasteful.  But then, so is starving to death.

If I can produce our most popular items in batches of 10 to 12 pieces I can economize by making the parts of these pieces in runs, and saving labor overall.  How does that work? Well, it takes time to set up a tool to make a particular cut.  Depending on the tool and the cut being made, it can take 20 minutes to fit the jigs and make test cuts to home in on perfection.  If making parts for a single piece of furniture, all that work will go into making one or two finished cuts on parts (which may take all of 30 seconds to make the actual cut) and all that time gets billed to the one piece of furniture.  If making 12 of those pieces of furniture, once the set-up is done it can be used to make parts for all of them and the 20 minute set-up time gets split between the 12 pieces.  Instead of adding 20 minutes of shop time to each, less than 2 minutes is billed to each.

This is not to say that we will be able to slash our pricing to ½ of the current rate, for assembly and finishing of each piece of furniture will still consume most of the construction time and that must be done one piece at a time, with careful attention to detail or the quality of our work will suffer greatly.  And it does not take 20 minutes to set up for every cut made.  But if economizing in the parts making stage will help us reduce costs, maybe we’ll get some of that business back.

This will mean that what we build will not be customizable.  Asking us to make a set of tray tables 2″ wider than the ones we normally make seems a simple enough request, but it would in fact require re-designing and re-making all the jugs and templates for most of the parts used to make those tables.  So, full custom work is being sent to the bench until the game turns around for us.  The fat lady has sung.