Aftermarket in the Toilet?

[Lorien]

from one of my favourite literary sources of inspiration;

DON'T PANIC

 

[severedthumbs]

interesting post I found by a big time dealer.

" $2295 + Shipping. Thats as low as I'm gonna go on this knife. If it doesn't sell, I'll just hold onto it till the economy improves."

It still hasnt sold.

 

[A. G. Russell]

Thank you so much AG. You are always so kind to me! I am more mortal than most. But I don't live for politics. Things cannot always be wonderful. You cannot have the good with out a bit of bad thrown in. And I've had more than my share of bad over the years. If you don't mind too terribly, I would like to at least try enjoy just a little of the good just to see what it's like. Living good never seemed to bother you!

Mike, I was only suggesting that what happened to Buster and to many less than godlike makers in the past might possibly happen to you. Your post semmed to indicate that you could not even dream of such a thing. I will be VERY happy to find that you are right and I am wrong.

If you think I have hard thoughts of you, please do not. Once you stopped attacking me and my friends, I became aware of the quality of your work and even attempted to order, I was pleased to find that you were too busy to sell to me. For 40 years it has been a pretty good bet that any friend of Bob Loveless was bound, sooner or later, to be a friend of mine.

Good luck and a long life! A. G.

P.S. Living good is a state of mind, since meeting Goldie, I have indeed lived well, with money or without.

 

[Kevin Jones]

I have surprisingly sold two expensive pieces from my collection in the last few weeks that I did not even have for sale.
So IMO, there's still money and knives circulating in the aftermarket in spite of current economic conditions.

 

[Bladeandbarrel]

When I am working on Big Bears, its like hitting the breaks. It use to take me two weeks to build one. Jim Merritt at the Loveless Shop really helped me out on them. Now It takes about a LONG week!

I hope you haven't forgotten mine!

 

[RWS]

I have surprisingly sold two expensive pieces from my collection in the last few weeks that I did not even have for sale.
So IMO, there's still money and knives circulating in the aftermarket in spite of current economic conditions.

Kevin, I'm not sure what you're trying to say here. I'm just curious and maybe I don't get it and maybe I'm one dumb sob, but are you saying that because you sold a couple knives during the beginning stages of arguably the largest financial and economic collapse in American history, that this your indication that the knife aftermarket seems to be withstanding a worldwide recession/depression? Business as usual, right?

Folks, we can't intelligently prepare for the impact of, or try to fix, the problems we face if we don't identify and accurately assess the size of the problem first.

 

[Kevin Jones]

Kevin, I'm not sure what you're trying to say here. I'm just curious and maybe I don't get it and maybe I'm one dumb sob, but are you saying that because you sold a couple knives during the beginning stages of arguably the largest financial and economic collapse in American history, that this your indication that the knife aftermarket seems to be withstanding a worldwide recession/depression? Business as usual, right?

I'm saying that in spite of all you that are implying the custom knife industry is doomed, though some areas of custom knives are affected more than others there's dealers and collectors out there that are still buying and selling custom knives. Investment grade custom knives could actually appreciate in value through this mess. I haven't heard knife dealers complaining about sales. Have you?

Panic and negativity will only make things worst.

 

[Tai Goo]

 

[RWS]

Panic and negativity will only make things worst.

Kevin, we all know panic is the worst possible thing that can happen in any situation. Panic will always exponentially magnify any problem and destroy any potential for recovery no matter what it is about or toward.

But, there's a huge difference between having a negative mental attitude toward an event versus us all sitting around here discussing, and planning for, the negative/unpleasant nature of that event......I prefer the word "unpleasant" because to me the word "negative" suggests a harmful mental attitude toward the topic.

However, just because there is a problem that needs to be addressed, and just because we all discuss it in real terms, even if those terms are "negative"/unpleasant in context, it doesn't mean we all have a negative attitude about it.

Hypothetical situation: What would you advise the Board of Directors and the executive management team of GM to do right now if you were its CEO or CFO. Would you tell them to maintain current manufacturing capacity just to remain "positive" in appearance, and that they too should stay "positive" for the sake of not giving in to the negative catastophic nature of current events, or are you going to make a report and recommendation based on the fact that business is going to get worse before it gets better and that GM had better prepare because if it doesn't do something soon it is going to run out of cash next year based on economic projections. Even though the report would be viewed by all as a "negative" and unpleasant one and not "positive"/pleasant at all, I hope you'd choose the latter.

Society can't always avoid "negative" events. When they do occur, the only way to overcome them is to not BS our way through it with reckless "positive" assessments that are adopted solely out of the desire to remain positive. We have to be real here based on what is happening and not based on what we all wish would happen.

Things will get better. That's a fact. Things are going to get a lot worse before they get better. That's a fact. These two statements are not the result of a negative attitude, but are the result of being in the middle of unpleasant circumstances that need to be strategically and financially planned for in order to get through it as positively/pleasantly as possible.

 

[Les Robertson]

I agree with Kevin on this.

The saying goes "if you think you or cannot do something....you are right!"

It's like when you are thinking about buying a new car or have bought one in the color blue. Everywhere you go you will see blue cars. This is due to the fact that this is what your brain has been concentrating on.

When it comes to the after market if you feel it is horrible, for whatever reason...you are right.

If you feel that there are still people buying and selling custom knives you are right.

You can view anything with negativity and will always find examples to support your view.

Interesting that this past spring....knife sales were down and shows were horrible because of the $4.00 per gallon of gas. Just filled my Suburban up for $51.00 ($1.90 per gallon)...does this mean that knife shows and the aftermarket can expect an up tick in sales?

What happened to all the people who told me that they buy what they like and they don't concern themselves with what their knives will sell for in the after market?

 

[Joss]

One problem is that we don't know the aggregated numbers for the knife markets. We don't know how much more or less people are buying vs. last year, we don't know how the mix has shifted, we don't know anything.

Personally, I don't think talking negatively about a phenomenon will make it worse and I don't think that thinking (and saying) "happy thoughts" will make it better. I do think that anyone's worst enemy lives in one's head. Not sure if it applies in any way here.

 

[Les Robertson]

Hi RWS,

Hypothetical answer...

Let GM go bankrupt. Sell the manufacturing facilities to the highest bidder. Break the contract with the labor union (which is what really bankrupted GM). GM employee's average $74 per hour (compared to Toyota @$48 per hour).

New corporation (Free Market at work) hires back some of the laid off workers (if they can squeak by on $45 per hour...surely that is more than unemployment). Takes much of the money they save and look into additional robotics to replace workers (something that has been ongoing with all car builders for years). Robots don't call in sick and don't require health care or a pension. Perhaps GM could offer its former employees technical training to maintain and improve robotics that GM employees.

Take the $50 Billion loan (which is needed to improve gas mileage and produce hybrid vehicles) and actually do that. Increase quality, gas mileage and gain tax breaks by creating hybrids. This will make GM more competitive with the market leaders (Honda and Toyota).

Will any of this happen? Of course not.

Perhaps GM can employ a strategy as Porsche did to increase its cash on hand.

 

[Les Robertson]

Hi Joss,

I think if you talk with most of the dealers they will tell you that sales are up for the year.

A better comparison may be how did 2009 do compared to 2008.

 

[Ellis]

Aftermarket in the Toilet?
I guess my higher end clients do not know that, been selling top drawer pieces for big bucks.
Lower end stuff is moving a bit slower.
Dave

 

[RWS]

Hi RWS,

Hypothetical answer...

Let GM go bankrupt. Sell the manufacturing facilities to the highest bidder. Break the contract with the labor union (which is what really bankrupted GM). GM employee's average $74 per hour (compared to Toyota @$48 per hour).

You're very negative, Les!...Very negative.

BTW, I agree with you, but it's not a strategy that you'd really propose to the GM's BODs.

Perhaps GM can employ a strategy as Porsche did to increase its cash on hand.

IMO, the only viable strategy for GM to stay in business a little longer is a huge, relatively quick cash infusion. The only way that can happen now is through some sort of bailout. They are bleeding to death and will die soon otherwise. Even with a bailout, GM is doomed and will go out of business, unless they file BK and are then taken over by someone.

I think if you talk with most of the dealers they will tell you that sales are up for the year.

A better comparison may be how did 2009 do compared to 2008.

Third quarter 2007 vs. third quarter 2008 is what I'd look at to get a feel for what's ahead and for planning purposes, just to start.

2008 vs. 2009 will be interesting to say the least, IMO.

 

[Les Robertson]

Hi RWS,

The only reason a business exists is to make a profit.

The current configuration of GM (even with a cash infusion) as you pointed out will eventually cause its demise. So instead of wasting the $50 Billion (to extend life)...pull the plug now and rebuild. That would be my recommendation to the GM BOD. Im sure if a "golden parachute" was built in every single one of them would jump.

Comparing 3rd Quarter 2007 to 3rd Quater 2008 will give a quantitative look.

However, the custom knife primary and after markets have more of an esoteric approach more so than a standard business approach.

True you can use business concepts and principles to "predict" future trends. However, because "business" is not really a driving factor of the market...whims and trends are as important (if not more so) quarter/year comparisons.

Most of those who are very active in the aftermarket (read dealers) are primarily looking at the same 25 makers. This is due to both the demand (short and long term) and the arbitrage factor.

 

[Lorien]

I had to look it up;

arbitrage;
Finance.
the simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.

I hope I wasn't the only one who didn't know what it meant.
Is that meaning the one you're referring to, Les?

 

[2knife]

What's to say (blame) on the DOLLAR exchange rate- w/ Canada?

Seems like this is the little "bug" that crawled out of the cellar and bit Lorien.
David

 

[TennKnifeman]

What I'm hearing from dealers (and auctioneers) who are out there in the market on a daily basis that the aftermarket is indeed not doomed.

I have to ask those who are convinced that the aftermarket is doomed how many knives they buy and sell a year? If it is less than the aforementioned dealers with real experience and activity in the game, then I might suggest that they are operating on theory rather than reality, and any lurkers who are reading these posts take into consideration the credibility of the poster before going into a panic. A large number of posts does not necessarily give a poster credibility.

While it is irresponsible to yell "Fire!" in a crowded theater, I personally feel it is irresponsible to predict doom of the aftermarket with little knowledge or experience of how the knife market generally behaves in downturns--because it might tend to panic some collectors who are new to the game.

Les and Kevin, and Ellis have all made positive statements about the REALITY of the market--not theory.

Does that mean every collector is insulated against problems in a downturn?
Of course not. He has to have bought the right knives--and if he did he's ok. If he bought based on personality or following the herd (Sheeple)to the maker of the week--he's on his own. And he may indeed see the aftermarket on his knives go down--but the reality is it was down for him the day he paid for the knife--he just couldn't see it.

Based on past history of prior recessions the knife business has stayed reasonably strong--compared to other industries. In some instances (the collectible end of knives) the market grew and got better. Some people pull money out of stock and have to put it somewhere--and quality collectibles are a viable option. Manufacturers usually see things get tight--but that is NOT the aftermarket.

Now of course this recession could be totally different. But that is the point. For the aftermarket to be in the toilet it has to behave different than the aftermarket behaved in three prior downturns. And I have not seen that happening. I don't see it in my auction prices of either handmades or vintage knives. Obviously as posted here Kevin and Les don't see it declining either.

So other than theory and supposition--if the knife market is in the toilet please cite the specific instances in the past when the aftermarket went into the toilet--and if prices are turning down BEYOND TYPICAL MARKET FLUCTUATIONS, cite those specifics too.

And my mantra through all this is if you want to panic, please go ahead. There are plenty of dealers (and one particular auctioneer) who will be more than glad to take them off your hands.

Bruce Voyles

 

[Les Robertson]

HI Lorien,

I was referring to a person winning a lottery knife at a show. Then turning around and selling it for a profit immediately.

Nothing wrong with it...just happens at every show.