The cost of building

Have you been to the grocery store recently?

Thanks Alan, it is quite the challenge these days.  Now just imagine if 2 of those 4 cans of 3M glue didn't work, the blue tape is actually green when you unroll it because, well, why not... and you have to go out an manufacture your own sheet metal because the suppliers are so bad and just don't care anymore.  Unfortunately that is the reality of it today.  I am very fortunate to have patient and understanding clients for the most part, which helps. I've had a few that were not understanding and they were politely refunded.

I'm sure not many on the site know this, but Greg and I actually work together behind the scenes pretty well.  We share ideas, report new issues, and even have teamed up on some parts manufacturing.  Sometimes we just "shoot the ****".  Greg laughs all the time because it's like we live parallel lives on different coasts, in more than just building cars... it's kinda strange at times.  LOL  We've actually become pretty good friends over the years.

@Alan Merklin posted:

Just picked up "a few things " this AM ... " Was " = 2 months ago)

Small bottle of Argon was so high I switched to the dirty flux core mig wire. 10 lb spool of 0.30 Mig wire  $60  (was $39) 4 cans of 3M Super 90 Spray adhesive $98....( was $54)  4' of 1/2 hollow metal tube $18 ( Was $8)  6 x 18 sheet metal $ 11 ( was $7) Roll of blue tape $12,99 ( was $ 7.99)   $200 vs $116 just two months ago..... Insanity

............I truly don't know how our good friends Carey and Greg do it !

I really feel for Stan, can only imagine those invoices too ~

Thanks, Al. It's been a challenge, for sure. I need at least twice the working capital I used to, because a single skid of refrigerant is now $20K, and we buy one every month or two. Revenue was up 50% last year, but we made less money.

The stuff Carey was describing is every day - opening a box and having a part that used to be the gold standard of reliability actually fall apart in my hand, paying 2X for absolutely everything (and 5X for a lot of things), which assumes it's actually available to buy.

Right now we've got a condenser coil leaking on a remote unit - it's a small system, only holds 25 lbs or so of gas - but the gas is now $27/lb (up from $6/lb 20 months ago), and we're leaking 20 lbs/week. The coil (which used to be 2 days out) has a projected ship-date in early February - but that's been pushed back twice, so who really knows? We've got a local fish shop whose choice is to empty his frozen coffins or leak $500+ of gas out (plus the time to put it in) every week until... ? He's riding it right now, but if the ship-date keeps getting pushed back, who knows? That's a Faustian bargain for a small operator.

The big boys fixed-cost (things they can do nothing about) for energy and our repairs has doubled. A store that used to take $100K/yr in maintenance and repairs is running about $250K/yr now. I had a small-town independent grocer install a 100 Kw 3 ph stand-by generator because the electrical grid has become so unreliable. His energy bill is up 120%.

That says nothing about the cost of labor. Retail grocery is having such a difficult time finding help that the stores we service in Bloomington just went to a "gig-type" employment system. The store posts the available shifts, and employees can decide if they want to work them or not. They figure that if nobody shows up, it's really no different than what they have right now. It's staggeringly close to chaos.

If you think your groceries are expensive now, wait until these costs get built into the budget (they haven't been - the bigwigs all believed the fed and the pointy-heads in DC that inflation would be transitory).

The costs are staggering.

I hear what all you guys are saying! I'm in the retail/service industry. Our off-shore shipping rates have quadrupled in the last 3 years, with unreliable shipping dates and substandard quality on a lot of the parts. This is our new reality.

... hell in a handbasket.

Ditto, ditto.

  I am seeing manufacturing costs rising and I am trying to "hold the line" on raising prices.  I have a zero based budget attitude and if a change or increase makes the product better, I am IN, if not, then I will stand fast. 

Persevere

Chris

Alan, Carey and Stan pretty much summed it up the last 2 years have definitely been a roller coaster (not a fun one) and I don't see it changing anytime soon.

The part of this that is that is hard for me to grasp is the business model that Greg and Carey need to follow.  They set a price now for a product they won’t finish for two to three years.  To know their future cost to build, they need to have a magic 8 Ball on future costs of materials, labor and overhead.  Maybe they have secured long term price guarantees with their suppliers, but they need to hope their suppliers uphold their end.  Maybe they stockpile enough parts to cover backlog commitments, but then they increase storage costs.  They certainly need to build strong employee loyalty.

When total lead times were 6 months or less and inflation was slow and steady, I get it.  Today?  I don’t.

I have great admiration for what they are both accomplishing.  I think about that as I’m cruising in my almost 1 year old VMC, and I feel good about my purchase.

Thanks Greg.

Absolutely, Jon.

20 years ago, I thought it would be a fun business. Then I watched Henry build a Pepto-Bismol pink car, smiling all the way, "the customer is always right", and I thought, "I could never do it". I've talked enough to all the builders currently in the game to know that there are some builds they just need to psyc themselves up for, because the end result is not really their jam.

That was hard enough. Now? I have no idea how they get it done at all.

Actually, Stan, Henry really turned up his business when he went from his traditional two car offerings - Speedster and Roadster - built his way, with a few options that customers could choose, to a approach akin to a restaurant buffet, with choices galore, and let's not worry about copying originality.

Yes, there were a few builds that he would never have considered at one time, but enough interesting ones to challenge him and keep him motivated.

And, no matter what abomination the customer ordered, it came out first class.

The pink IM was built for a lady who requested the 3 speed automatic. 🤮

@Bob: IM S6 posted:

Actually, Stan, Henry really turned up his business when he went from his traditional two car offerings - Speedster and Roadster - built his way, with a few options that customers could choose, to a approach akin to a restaurant buffet, with choices galore, and let's not worry about copying originality.

Yes, there were a few builds that he would never have considered at one time, but enough interesting ones to challenge him and keep him motivated.

And, no matter what abomination the customer ordered, it came out first class.

I’m aware of all that, my friend - it’s just always been amazing to me that the top-flight builders have routinely catered to very nearly every desire. I couldn’t have done it, that’s for sure.

I am reminded of a house my friend the general contractor built near our big house out in Tremont. The builder had done some truly amazing homes, both design-builds and with architectural blueprints. This home, however was “owner designed”. The owner imagined himself an architect, and the plan was “unique” (to be exceptionally polite).

The contractor stopped by our house one day as we were finishing, to compliment both the design and the construction (of our house). It was my turn to compliment him, and I said, “You know Roger, you have built some exceptionally beautiful homes over the years. It’s a pity the house across the street isn’t one of them”.

He just looked straight at me and said, “Yeah, this one was hard to get up for every morning”. I couldn’t have gotten up every day to go build either that house or the pink car, and that’s for sure. Roger the contractor and Henry from Intermeccanica both did, and they were both done to an exceptional level. How hard that is to do is something most people don't think about.

In this Brave New World, I’m not sure if that level of customization will continue to be a sustainable business model, but that has been the expectation of the marketplace for a long, long time. Well done Greg and Carey.

is that the same pink speedy VINCE drove many moons ago in the Montery car show.

@barncobob posted:

is that the same pink speedy VINCE drove many moons ago in the Montery car show.

You've got it wrong.  Vince had a pink Speedo, not a Speedy.

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I think it was a pink Miata and I may have had a hand in designing it.

It went against all of my best instincts, but we professionals must sometimes bend to the whims of the marketplace.

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Of course Porsche is famous for it's wide array of options for their cars, most notably the paint to sample option. But they charge an arm and a leg for everything.

But, they work from an options menu, they don't open the door to just anything, except paint.

Not even paint, I think.  If you pick the PTS option you still have to choose from a list (an exceptionally long one) of colors - that is, unless there is yet another option I haven't played with.

@Panhandle Bob posted:

Of course Porsche is famous for it's wide array of options for their cars, most notably the paint to sample option. But they charge an arm and a leg for everything.

But, they work from an options menu, they don't open the door to just anything, except paint.

PTS is currently on hold by Porsche.  Apparently between the ship that sank and COVID, PTS is slowing down the assembly line.  They are still offering the upgraded colors but paint to sample is on an indefinite hold on all models that offer it.  

@Lane Anderson posted:

Not even paint, I think.  If you pick the PTS option you still have to choose from a list (an exceptionally long one) of colors - that is, unless there is yet another option I haven't played with.

Just playing, or ordering?

Years ago my sister-in-law was very disturbed by seeing me wearing a Speedo.  It wasn't pink.

@Bob: IM S6 posted:

Just playing, or ordering?

So far just playing.  As for the future...?