First let me make a correction or rather, a clarification. When I said down 75%, I meant in volume of basses being made. The actual difference in dollars is more like 35%, not 75%.
We had a growth spurt in the late 1990s making supplying our lower cost basses to stores as 'door openers' or in the case with a chain like Sam Ash, it was the main model of ours that they carried.
We were in the process of competing with ourselves making a bass just above the Burner Basses we had made in part in Japan. We were also cutting and supplying quite a bit of wood FOR Japan to make the Burners as well. All of the Morado Fingerboard blanks were supplied by us and all of the
maple and walnut body woods were directly supplied from our shop after 1998 for the BSR B models. When we stopped making the Burners, we used all of the left over body pairs for our own M and J models. We still have tons of Walnut lumber in stock to make these and a few maple blanks in the shelf that we cut over 10 years ago. We just hardly ever have a call for it these days.
As the economy changed drastically after 9/11, I decided to concentrate on making our better or rather higher end models. My staff has slowly declined as some workers moved on in life and were NOT replaced as I would have done in a 'booming' period of manufacturing. It worked out just fine in the balance as the demand for product lessened and my building staff slowly shrunk.
As it turns out, making lower end product was not at all profitable. In fact, the year we made the most of them we actually lost money doing so. The loss was off set by the more expensive basses and our string and polish business. The loss 'ate' 2/3rds of our gross profit that year. Being able to make less basses and cutting out just about all of the low end production was actually a profitable move that sort of happened and adjusted itself in a way. A situation of luck actually. In late 2008 I noticed the business slipping once again overall with the recession coming in like a storm. Within a month I laid off a couple of workers to adjust and made some other personal cuts to stay afloat.
I have to say that the last two years although down about a 1/3rd in gross sales, the adjustments I made allowed for us to survive and stay profitable. Now, I am trying to increase production slightly in the coming months as we have sold out most of the stock that accumulated during the past two years. Most of the stock we have now are recently made basses produced to replace the older stock we sold thru but there was a period when we made more than we sold. Now that is in reverse so we have to adjust and balance that out to avoid a longer back-order situation in the coming year.
It's kind of challenging to move things up and down to meet the demand but seeing the business survive on less and be profitable at the same time makes my life a lot easier. We just can't go back and make 75% of our basses from the lower end of our product line to please dealers so they can say the sell Smith basses. In face, it didn't represent us very well at all. People got the wrong impression thinking that was THE Smith Bass when in fact it was just the appetizer, not the main course.
On the stock market figures that Tim corrected me on, let me say a few things. First off, we are talking about maybe a 15% difference at most and the 14k figure was a bit wobbly or rather wishful as far as strength in the market at that time. I remember hearing Greenspan in the news saying that the Market is facing a self re-adjustment or something like that because there was little to support the growth it was having. Either way, when the market goes down, it takes most everyone with it. Mutual funds depending on the mix involved go down with it more or less.
I was taught once that it's best to do what you know. Stocks I do NOT know and don't have the time to learn or watch or gamble. Basses, wood and my business I do know so I would rather do what I know than gamble blind with stocks and have somewhat a bit of control in what I invest in.
The other think that has helped us to survive is in the wood business. I bought so much wood in the late 1990's up until a few years ago that almost every piece in every bass is 'old money'. That means we are turning dead stock into cash. In the bill of materials, most everything is recent spending as far as the parts and hardware goes and the labor is mostly brand new. Using wood that was paid for years ago brings cash back in for wood we had sitting in stock. This holds true for over 95% of the woods used in every bass. Also, selling off bass stock that was made prior or as fill ins to make up a small run when filling orders has helped a great deal in cash flow and production time.
It's a balancing act being a manufacturer.
Run length equalization and
economic run length are terms I learned many years ago for production that help me in being efficient. We are all 'hand-made' here but we do make up the body and neck blanks in groups to save time per unit rather than to fly one passenger per jumbo jet! That's just a huge waste. When things are tight, there is no fat to burn, business wise I mean.
