The Decline of Manufacturing in USA

[Tim Bishop]

Originally Posted by Ken Smith

Ok, BUT, which period in time are we talking, 1987, 2001 or 2008?

14k: Timeframe: 2008. That's the highest the DOW had reached in its history.

[Thomas Erickson]

In my own business we are down 75% from where we were pre-91

Ken, do you attribute this entirely to the state of the economy (and our state of mind - prioritizing other purchases, investments, etc.)? Or are there other factors within the industry that are also significant?

I've always thought of Smith as sort of the "industry standard" of professional bass guitars, and would have assumed that with "boutique" instruments and all that getting big in recent years that such a solid name and reputation would be right at the top of the industry; I guess there are a lot more people buying flashy "happy meal" instruments than the real deal...

So, what are you waiting for? Call me, Buy a Bass already. It's proven to be a better investment over time than the stock market in the last 30 years. I say, enjoy your money before the Banks or someone else does!

Indeed. Who's loaning big money on old double basses these days, anyway... Forget buying a house...

[Ken Smith]

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.

[Arnold Schnitzer]

I would just like to point out a terrific company bucking the trend: Lie-Nielsen Tools of Maine, USA. My shop practically runs on their excellent hand tools--planes, chisels, and specialty tools. They do everything in-house, including casting and machining. Their products are expensive (like Smith electric basses or my double basses), but heirloom-quality and worth every penny. Woodworkers the world over cherish and collect their products. Have a look:http://lie-nielsen.com

[Thomas Erickson]

+1

Lie Nielsen stuff is great; I hope one of these days they expand their lineup to include small planes, and gouges to match the chisels.

[Eric Swanson]

Originally Posted by Arnold Schnitzer

I would just like to point out a terrific company bucking the trend: Lie-Nielsen Tools of Maine, USA. My shop practically runs on their excellent hand tools--planes, chisels, and specialty tools. They do everything in-house, including casting and machining. Their products are expensive (like Smith electric basses or my double basses), but heirloom-quality and worth every penny. Woodworkers the world over cherish and collect their products. Have a look:http://lie-nielsen.com

+1. Although I use them less than I used to, I still appreciate the significance of my Lie Nielsen tools.

Interestingly, their large rebate plane (copy of the Record #73) is such a close match to the original, that the parts are interchangeable; I have a L-N handle mounted on my old Record plane (the old casting got cracked). I also especially love my small, low-angle L-N block plane.

From an old-timer I apprenticed with, I received several of the original old Stanley tool catalogs. Several of the L-N plane line are reissues, with improvements, of the discontinued Stanley or Record lines. While I still treasure my old Stanley Bedrock planes, the L-N stuff is very sweet....

Hock plane irons are also nice, and a good complement for the L-N stuff.

Well-made manufactured items represent a series of decisions. For me, as a professional craftsperson, it works best only to buy only things that represent manufacturing decisions that also express my beliefs, as a "maker."

[Thomas Erickson]

Anybody bought LN plane irons lately? I'm wondering how well they're finishing them these days. The last one I got was flat and had no issues, so it worked fine, but was pretty roughly ground so it took a bit of work to get it to a nice polish. Granted, I'm a perfectionist and like to have a great finish on my blades.

[Srikanth Narayanan]

Hi there,

This video has a lot of good points regarding the manufacturing cycle.

http://www.storyofstuff.org/

Click on "stuff" movie box and watch the full video. There are some excellent points about the externalizing of costs, and about this whole production system.

It should stimulate this discussion.