It’s been a while since I sat down to the computer and shared my thoughts. This summer has been a blur and it’s hard to relate all that’s gone on.
What’s been going on?
Personally, it was a great summer. We spent over three weeks in the camper. Northern Minnesota, North Dakota, Cody Wyoming, Yellowstone… it’s been a ball. The weather was warm but way too dry. Lake levels dropped well below normal but it was great weather to be on the water.
This is the first summer I really decided to put business aside and just enjoy the time off. I will admit that I took in a couple of gun/knife shows that I don’t normally. They were worth the time and a good diversion. There’s still a ton of discretionary income being spent on knives, axes and guns. And who would have ever thought you could get a part time job at the local gas station making $18/hr?
While Covid is still a factor, it seems like we’re finally starting to accept it as a part of life. Vaccines and new treatments have brought us a long way. In our part of the country, we don’t see many folks wearing masks anymore. Our infection rates are up but the mortality rate is down. It’s starting to feel more like a flu outbreak we can deal with.
What’s happening in the industry
The biggest changes I’ve encountered at the shows and in the day to day operations are the price increases. Actually, the price increases and product shortages are startling.
I had axes on back order for over 6 months and finally cancelled them. Two of the companies couldn’t give me a firm delivery date. This screwed things up when scheduling shows as you don’t know if you’re going to have product to display.
Delivery was a problem but in the axe industry it seemed that availability of steel was an issue. One of the companies recited horror stories regarding steel prices that were moving on an almost monthly basis. Most of the issues came from manufacturers that were spec’ing the steel they wanted rather then buying sheet steel off the rack. If you’re using 1095, D2, 440, etc, it doesn’t seem availability was as much of an issue.
I’ve seen prices on knives moving steadily up as well. Some of the foreign import knives (Finland, Sweden, etc) have taken substantial price jumps. Domestically, a real shock was the price of the Southern Grind throwing axe. Early in the year the suggested retail was $139.95 for the tumbled finish. Today, you’re looking at well north of $200. Karesuando’s Beaver Damask was $500 (MSRP) and is now $600 MSRP. 10-15% price increases since the first of the year is pretty typical.
What can we expect in the future
We’re hearing from the government that the inflation is temporary and we need not be concerned. We’ve heard this song for several months and I hope someone picks up an economics book. While the US isn’t feeling it to any huge degree yet, the energy shortage (specifically natural gas) in Europe is raising havoc with everything from home heating costs to manufacturing. I read last week that several steel manufacturers in Europe were considering shutting down due to cost and availability of fuel. And of course the steel industry is a major user of natural gas and electricity (which is also produced with natural gas). With the heating season just around the corner, this problem isn’t going away any time soon. In a few short months the US went from an energy exporter to asking OPEC to increase production to help us out. I would predict we could see even more upward pressure on prices before the end of the year.
We’re seeing some issues with products coming in from Asia. While energy and steel prices are a factor, further complicating the problem are ships sitting off shore that can’t get into harbors to unload. Some of the large importers are starting to lease/rent their own smaller cargo ships that can get into the smaller ports to unload. This is coming at a huge cost to them which will get passed on to the consumer. It’s all going to add pressure to prices.
Domestically, some of these issues could help our US manufacturers. The problems we face at home include energy costs, transportation issues and upward pressure on wages. I’m in favor of folks making more money, but someone has to pay the tab. The push to pass the humongous infrastructure/tax/green bill is frightening. If we tax the manufacturers to pay for these ‘improvements’, someone has to pay for them. Amazingly, we’re being told the cost of these programs will be zero. How in the hell that works I don’t know. In high school economics we were told businesses pass on their costs in the form of increased prices. So if their taxes go up, I think it’s a pretty good bet companies won’t just magically absorb them.
In summary…
We’ve got a mess that’s not going away any time soon. In the near term I’m not sure it’ll have a huge impact. So far it hasn’t had much effect on folks spending money even with the higher prices. There are still stimulus dollars burning a hole in pockets. By year end as we start to feel these costs penetrate deeper into our economy, it’s bound to affect us more and more. My hope is our domestic manufacturers can contain costs and get a firmer foothold in the cutlery industry. We’ve seen China take a huge chunk of the market in the last few years and this could slow up their expansion. Time will tell. They’re a formidable competitor.
For now, I’m exercising more caution on what I’m buying. Actually, what I see selling at the shows and what people are asking about is influencing my buying more and more. Let’s all hope we move past this time in history with minimal bumps in the road!!