Why do manufacturers pinch pennies so badly?

[Brian Elfert]

If a manufacturer sells a trailer at wholesale for $3,000 or so, would it hurt them to spend an extra dollar or two on paint and actually paint the whole frame? Are they that hard up for money? I would never buy a new trailer from these guys after rebuilding one from the ground up.

I bought a used trailer that I knew had rust issues. After tearing the whole trailer apart I figured out they only painted the parts of the frame the customer could see. The parts of the frame inside the wall are not painted and have rust on them too.

I suppose when you manufacture 10,000 trailers a year a penny here and a dollar there adds up, but if you want a customer down the road you can't do things too cheap.

[Steve Peterson]

Everyone talks about how skipping the paint on 10000 trailers adds up to a lot of savings. I don't understand the logic. My thinking is that it upsets 10000 people, many of them needing to tear the whole thing apart to fix the problem. It may have saved $1 per trailer, but adding the paint would easily add $10 in value.

Of course, not many people seem to consider quality over cost anymore. Notice how busy Harbor Freight or Walmart are most of the time.

Steve

[Greg Peterson]

What's worse, some unhappy consumers or unhappy investors?

Business today is geared towards keeping the investors happy first.

[Brian Elfert]

The thing is most customers would never see the part of the frame that isn't painted. Most customers would just buy another trailer when they needed a larger one or the current one wore out.

The trailer I bought has seen so much salty road spray that even the aluminum skin is corroded. I have had to remove the aluminum skin and now I see that the frame isn't painted underneath the the skin.

[Ken Fitzgerald]

and if only 1 out of 10,000 finds out..pretty low percentage.

Often it's the fit and finish that separates the good products from the cheap ones.

[Dave Lehnert]

I have worked in retail a long, long time. I can tell you fact with most shoppers at purchase is PRICE, PRICE, PRICE. Most customer ask "Do you have" and "How much is it"
You can be a retailer that wants to sell a better product but the guy next door keeps advertising his less quality product for less. That forces you to get a better price from your manufacture. Why? because when you tell your customer that the frame on the other store product is only painted on one side they look at you like "ya, right buddy"
I have been in meetings with manufactures and seen grown men argue over $0.20. Profits can be so tight that .20 can be your profit.

[Ken Fitzgerald]

Dave.....and over the past 10 years or so it's gotten even tougher IMHO. I work on HIGH dollar stuff. Often a machine will cost 1-2.4 million dollars. The difference of a few thousand dollars today can make or break a sale where 20 years ago it had little effect. There used to be a certain brand loyalty among customers. That is rapidly being replaced by best price. At one time, having an established service organization in an area would often swing deals where now it has little influence. The short term worry is price and they will take a chance that there is someone available to fix it when the problem arises.

The consumer is a cause of a lot of this.

If I can't sell my better made products but I can move my cheaper made products, that's where I will be if I want to stay in business.

[Brian Elfert]

I would never buy a certain brand of trailer because they are so cheaply built. There are just all kinds of little things they cut corners on. Doing it right would probably cost less than $50 additional at the retail level for a $2,600 trailer. They do put on flashy LED lights that cost as much as doing things right would cost.

These trailers are mostly sold at big box stores so many customers may have never seen a trailer with everything done right.

I guess they aren't losing enough sales to make changes.

[Bryan Morgan]

What's worse, some unhappy consumers or unhappy investors?

Business today is geared towards keeping the investors happy first.


This is a sad truth. I experience it every day.

[Mitchell Andrus]

There is a difference between company policy and a lazy employee and his foreman.

Company policy says paint all surfaces, employee policy says paint what shows and don't work too hard.

Also, a lousy $3.00 or $7.00 on the assembly line here and there does add up, but the bean counters don't see it as 5% of the retail sale figure, they see it as 8, 10, 13% of the company's net profit on that item. Manufacturing is a contact sport with slim margins where spending an additional 3% or 4% on the ass'y line can send a company into chapter 11.
.

[Brian Elfert]

I don't think I would make it as a product or manufacturing engineer. My conscience wouldn't allow me to design some of the crap manufacturers sell.

[Prashun Patel]

I'm a manufacturer of chemical products.

I've seen quality deteriorate because of competition - not because we have lazy people or our policy is to make bad product.

I can sit on my high horse and refuse to play the game, but I wouldn't have a business then.

We can lament the world we live in, but I think it's naive for you all to blame the manufacturer.

It's the consumers' refusal to pay for quality that drives the supply chain to cheapen itself on all levels.

[Jim Rimmer]

and if only 1 out of 10,000 finds out..pretty low percentage.

Often it's the fit and finish that separates the good products from the cheap ones.
There's an old story about a farmer whose mule died. He sold raffle tickets for $1 to win a mule. He sold $500 worth of tickets. A friend asked him about making 500 people angry when they found out the mule was dead. His reply was "I'll only make one person angry and I'll give him his dollar back."

[John Coloccia]

This is the same bulletin board where you can reliably get choruses of "overpriced", "not worth it", "snobbery", etc at the mention of Lie-Neilsen, Festool and SawStop? It's pretty obvious to me why they pinch pennies. It's because WE pinch pennies.

[Cliff Rohrabacher]

because a tenth of a penny every time you make something adds up over time to one whopping lot of money, if you make enough of something.

It's part of the war against trial lawyers if you can believe it. I often hear bitter complaints about the claims of fraud by plaintiffs whose credit card companies were bilking them of a whopping tenth of a penny on the dollar of interest charges. Resulting in Incredible sums per month of maybe a whole half a penny being wrongly charged to credit customers. Sounds like real exciting stuff huh?
Except that when you have a gozilllion customers and you unlawfully squeeze a tenth of a cent from each of them on a regular basis it adds up and the only way to address it is is by class action.

[David Weaver]

Exactly right, it's because we pinch them.

People are short on money now and short on foresight. Some of my relatives are from the old school central PA german influence, as are my wife's.

They set a quality threshhold and then dicker on price. If there isn't something high enough quality for them, they keep looking, as they don't like to buy things twice. They don't buy stuff just to buy it, either - there's not a lot of extra junk around the house.

People don't have much foresight these days, and not much regard for longevity. I guess the supposition is that by the time something wears out, it'll probably be out of style, anyway.

There's a furniture store here who runs infomercials, they do "free interior design" with the furniture sales. They mention in their informercials that they have been in business for almost 10 years, and they're seeing customers come around a second time because their furniture design scheme from 10 years ago is now out of style and they need to pitch it all and redo it.

We used to buy furniture (when I was a kid) based on how good the internals were - wanting to be sure we wouldn't be buying a new couch in 10 years because one wore out.

Times change, I guess.

[Mitchell Andrus]

It's pretty obvious to me why they pinch pennies. It's because WE pinch pennies.

It's not just because WE pinch pennies, but also because we all OWN the companies we buy from.

My 401K, stock portfolio, bonds, etc., depend on YOU paying enough for a cheaply made product that I can retire in comfort.

So, thanks America... That 4% boost in profits represents a doubling of my dividends. If it means a trailer, sweater or toaster lasts only 10 years instead of 20.... so what? You would have bought a new before it wore out anyway.
.

[Mitchell Andrus]

We can lament the world we live in, but I think it's naive for you all to blame the manufacturer.

It's the consumers' refusal to pay for quality that drives the supply chain to cheapen itself on all levels.

I agree..
.

[mike holden]

Think about how many posts here are of the "where can I buy Festool, Lie-Nielsen, etc cheapest?" type.
People want the best but will NOT pay for it.

If people were willing to pay for things like they want to be paid for their labors, then life would be better. But then, it only takes one to ruin that scenario.

This is why it is so darn difficult to buy american made products.

My personal opinion,
Mike

[Brian Ashton]

The more things change the more they stay the same.

Some of you may have heard that quote over the years... It took me years to figure out what it really meant - to me that is.

There have always been companies that will cheap out and not care about the end product and what the customer thinks of them or the product. You can see entries going back hundreds of years in recorded history that attest to that... On the other hand though there are the companies that strive for good customer satisfaction and quality products... In our little world of woodwork I can think of a few: Lee Valley, Lie Nielsen, Oneway, Sawstop, and the list goes on. I can also think of many companies that sell crap, for lack of a better word, but we won't mention them. There will always be a market for both. The pendulum will swing back and forth on the over all ratio of crap to good... It will never end you just have to be true to yourself and buy what you feel is the right thing. Don't like cheap crap then don't buy it. Can't afford good quality then wait till you can or buy the cheap crap alternative. Complain because you don't think it's worth... well, to be honest who cares what you do you'll never be satisfied anyways...

For me personally I hope the good quality manufactures will stay true to what they believe in. I hope Lee Valley don't cave to the whingers and start cheaping out. Or if they do I hope they keep a good quality line for the likes of me and a cheap line for the unsatisfiable whingers. But it they do, me a and a few others will lament their passing with this sort of thing: "I can remember back when tools were made right!"... "Back when we didn't have cell phones and had to walk bare foot to school in the snow, up hill both ways!"... But there will be another that will come along and fill the niche when the time is right and I will give them my loyalty and money... And Lee Valley will be relegated to the same conversations as Stanley (yes they actually did make good tools at one time - relatively speaking).

So you see the more things change the more they stay the same.

I know I've picked on Lee Valley here a bit but history is on my side - unfortunately. When the "old guard" passes on the mantle the new blood always make changes that they think are in the best interest of the company... There aren't a lot of examples of companies that haven't gone down the slippery slope of "economising for the betterment of the company" in fact I can't think of one example. Lets hope it's Lee Valley that will be the one to stand fast...

[Glenn Vaughn]

I apologize for rambling here but thisw is a topic that gets me heated up.

Not all people earn the same amount per year. The cost of a product or service is of more concern to someone earning minimum wage that to someone earning 5 or 6 times minimum wage. For many years I was in the position of having to buy cheap or do without. Now that I can afford more expensive things, it is still difficult sometimes to justify spending for the more expensive items.

Manufacturers have discovered that there are more people willing/able to buy cheaper products that there are willing/able to purchase more expensive items. Consumers have, over the years, been conditioned to be a "throw-away" society. If something breaks; replace it. Repairs are expensive,(if the item is repairable). Parts are way over priced. Case in point: I run a weather station with wireless sensors. After 3 years the sensors started failing. I ended up purchasing a new station because the dead parts cost more to replace thn a new station. The problem turned out to be an internal rechargable battery in each transmitter. The manufacturer does not sell the batteries. I have found 2 vendors that do sell them - for $30.00 a battery. I can build the battery packs for l;ess than $5.00 each. The difference in price between a complete solar transmitter and the battery is $2.00 - that tells me the battery is way overpriced.

The other thing that ticks me off is the tendency to reduce package size to do a hidden price increase. A half gallon of Ice Cream when to 54oz and then to 48oz. Eventuall a half gallon will be a quart.

Walmart has reduced 1 pound packages of shrimp to 14oz.

Coffee is no longer 1lb.

Printers are cheap. Ink is way out of line. If I figure half of the price of a black replacement cartrige for one of my printers is the cost of the cartrige construction, the ink in it is costing me over $3000 a gallon.

We as consumers just live with the changes thus encourging the manufacturers to continue putting the shaft to us.

[Butch Edwards]

The consumer is a cause of a lot of this.

If I can't sell my better made products but I can move my cheaper made products, that's where I will be if I want to stay in business.

2 words: disposable income..... if the consumer doesn't have it, they can't spend it,especially in todays' market,regardless of the higher quality. that extra quality that you could've gotten for a little more, is meaningless if you don't have the money,and/or are tapped out in credit. The cost of living and the high demand upon our paychecks, have led to the seeking of affordability over higher quality. your last statement is exactly spot on in relation to todays' consumers. ... most households are payday to payday in this nation,regardless of how and why.

[Brian Elfert]

I like to buy quality stuff, but I also want the best value for my $. (The best value is not always lowest price.) I will often spend too much trying to get the best price for anything I buy. I figure the manufacturer is getting approximately the same amount of money no matter where I buy.

Prices can vary widely for the same item. I just bought a new cable for my trailer. $50 at the trailer dealer and $20 at Northern Tool. Where do you think I bought it?

[scott spencer]

It's getting harder to "get what you pay for", and I'm pretty fed up with the falling quality standards too. There's a difference between intentionally buying a cheap temporary "college dorm" or single use type item, but it's gotten so it's hard to even tell the good stuff apart from the junk when you go looking. I do expect to pay more for quality, but am getting tired of businesses trying to dupe me at every opportunity.

I guess greed is the new business model. Businesses seem cut corners everywhere but the executive bonuses...to let them know how I feel about receiving low quality merchandise or services, I've been making a point of filing complaints when appropriate, plus I return junk that's disguised as a quality item, and send emails, so they at least know the scoop.

[Brian Elfert]

Just the other day I bought a package of Vermont American square drive bits. They were more expensive than Irwin, but they advertised 10x the life of normal bits. They sucked. I destroyed six of them removing 100 screws. I took them back and bought the cheaper Irwin bits. The Irwin bits last much longer.

I used to buy Vermont American screwdrivers bits exclusively because they were made in the USA. They moved production to China and changed the design of the bits so I no longer buy their stuff exclusively.

[Steve Orbine]

My two senses: First, the sad part is that so few customers actually demand (and are actually willing to pay for) quality that the quality aspect has become a niche. High quality hand tools are a niche market, and therefore you pay an even higher price. If all demanded quality, the price of quality would come down. Instead we have boutiques.

Second, from my experience as an engineer, the product is driven by marketing people. Marketing people are not users, nor engineers. Their thought process is quite different from yours or mine. And while you may disagree with it, as I do, you cannot argue the outcome. Make it cheap enough, and it will sell. Stock price rises, marketing execs enjoy fat steaks and thin women, and we scratch our heads about why there is no paint on the underside of our trailers. Get used to it, it's the world we live in.

[Jim Rimmer]

Most of the opinions posted here support the reasons why many of the craftsmen on SMC do it for fun - they know they can't make a living at it because people won't pay for the quality.

[Joel Goodman]

Here's my theory -- in the old days -- not that long ago --- people saved up to buy things and after saving up for months (or years) we expected the product to last, as we had spent a long time anticipating the pleasure of owning and using it. Now -- a swipe of the plastic -- easy come, easy go! Our time frame has collapsed, and with it our expectations. Back "in the day" the consumer wouldn't tolerate the shoddy stuff we often buy now.

[Brian Ashton]

It's getting harder to "get what you pay for", and I'm pretty fed up with the falling quality standards too. There's a difference between intentionally buying a cheap temporary "college dorm" or single use type item, but it's gotten so it's hard to even tell the good stuff apart from the junk when you go looking. I do expect to pay more for quality, but am getting tired of businesses trying to dupe me at every opportunity.

I guess greed is the new business model. Businesses seem cut corners everywhere but the executive bonuses...to let them know how I feel about receiving low quality merchandise or services, I've been making a point of filing complaints when appropriate, plus I return junk that's disguised as a quality item, and send emails, so they at least know the scoop.

I don't think this is actually true if you look back historically - not much has changed with respect to thinking, attitudes, buying power... I think it has more to do with life experiences and perspectives. As a child/young person you most likely had a satisfier type of personality (along with many other physiological traits associated with the relevant age..). As you got older that transitioned into a maximiser type of personality (general explanation below). So now that you look differently at things it appears in your mind that thinks externally have changed when in reality it was you that has changed how you view things. It's that old thing where old people always said things were harder, better, easier, safer (add any number of adjective here)... when they were young as opposed to today. In reality, when you remove technological advancements, not much has changed.

Satisfier - someone that will walk into a store and buy the first thing that reasonably meets their criteria.

Maximiser - someone that will research what they want and carefully evaluate all the options and shop around before making the actual purchase.

Apparently satisfiers are, over all, much happier than maximisers.

[Butch Edwards]

Most of the opinions posted here support the reasons why many of the craftsmen on SMC do it for fun - they know they can't make a living at it because people won't pay for the quality.

..and many CAN'T pay for quality...it's a sad fact.

[Mitchell Andrus]

..and many CAN'T pay for quality...it's a sad fact.

Furniture for instance. You need a chair or two, maybe a couch - now. Buying later isn't practical and paying 2x for quality isn't possible. So you pay for a cheap product now.... and again later. Same cost overall, less quality each time.
.

[Dan Hintz]

Does it really make sense to purchase a quality piece of furniture that is going to get torn up by your animals and kids (or is that redundant)? In my retirement I'll have a quality couch, chaise lounge, etc., but until the dog stops shedding and the kids stop using it as a jungle gym, I'll stick with the cheaper stuff.

[Dan Duperron]

Don't forget the other option - "pre-enjoyed" stuff. That's how I get around the "but I can't afford to buy quality" argument. Everyone has different preferences and values, but this is how I do it.

Once I had a co-worker who turned up her nose at anything not shiny & new. Wouldn't buy a used car because she "didn't want someone else's garbage". She thought the idea of buying a "used house" was "gross". That's the most extreme example I've encountered and I felt sorry for her. My thought was "I'm driving a used car and living in an old house but I'm that much closer to retirement than you, and that's much more important to me." Plus my house was better built than hers and so was my car, but quality wasn't high on her list of values as much as 'new'.

I agree that if you insist on having shiny new stuff but don't have the budget to buy quality, you have one choice - go cheap. Me, I don't care about things being shiny and new. The level of wear I will accept depends on the item of course, but I'm willing to pay the same or even more for a higher quality used item than a new one of lesser quality. There are a lot of new saws I could have chosen for what I paid for my 5hp USA-Made PM66 (and I got a good deal), but I know I'll never outgrow that saw and it will outlast me.

To me it's about value and usefulness and need, not about impressing the neighbors or breathing the 'new car smell'.

Never bought a new car - and I don't expect I ever will. I have wanted to many times, but can't justify it. if I buy a gently used 3yo Toyota it will still last darn near forever, and I save a ton of money in exchange for not getting to pick the color.

Tools - I would love to have a shop full of Systainers, but as a woodworking hobbyist I don't feel I'd get the value for my money (even for the used stuff). If I made my living with my tools 10hr/day it would be a different calculation and I'd be much more likely to buy the green.

But as I've 'matured' and my income has risen, my standards and priorities have changed. Furniture and clothing for example - when a poor college student I used to haunt the second-hand clothing shops. Haven't done that since I graduated. For the first decade or so out of school we didn't have any new furniture, just an assortment of good-quality used stuff. Now when we buy furniture we buy the good stuff and expect to have it for life.

To each his own, but that's how I roll. You can afford more quality than you think you can if you look around.

Now the fact that real wages in this country have been stagnant forever, the role of trade policy and business ethics in offshoring jobs, and the capture of our system of government by business interests, those are related topics that bear on the question of why so many people are struggling and forced to shop at Wally Mart to survive. But they are also political topics and not suitable for or allowed on this forum so I'll leave them alone.