Will 2009 equipment prices be lower?

[Wes Billups]

I know there's been much talk about major equipment prices rising at the end of this year but I was wondering if this is still going to happen with fuel and steel prices plummeting.

Where I work, we're anticipating raw materials dropping 10-15% in the first quarter of 2009. We're also seeing shipping prices for containers out of Asia dropping 25-30%.

With this said, does anyone have first hand knowledge of what's going to happen at the beginning of 2009 in regards to tool pricing? I realize this is a little bit of a crystal ball question but many of the price increases we've seen in the last year were attributed to steel and gas prices. Using this reasoning you'd think we'd see the same in the other direction.

Thanks,
Wes

[Lee Schierer]

My crystal ball says that most items will drop in price between now and January. After that it is anbody's guess.

[John Schreiber]

I don't think prices will actually go down except that there may be more and more specials with lower prices.

Deflation is very very bad for the economy and the powers that be will keep that from happening even if it means the modern equivalent of just printing more money.

That's my guess which is worth less than what it cost you.

[Mitchell Andrus]

As long as I can get a fat discount on a new laptop, I'll be happy. The money left in my pocket will go to some other producer, so it isn't exactly a 'loss' to the overall market.

[Jason Beam]

I think two factors are in opposition to one another right now .. Materials and Shipping prices have dropped, but only because demand has dropped. Which means what you make probably suffers from a lower demand as well. So while it may be cheaper to make the tools, it's also probably tougher to sell them.

Now that all sounds like good news for lower prices until you factor in that a company needs to make money to survive in this kind of climate, too. They may have to go for higher margins rather than volume since people may not be buying nearly as much as they had been.

Add to that a stockpile of inventory - created when raw materials were still high priced, no less. Who knows what will happen!

[Justin Leiwig]

I doubt you will see prices drop a significant amount in the short term. Even though raw materials may be cheaper, other costs have gone up

[Tony Bilello]

between Thanksgiving and X-Mas. Everyday I turn on thr news, 20,000 more jobs are lost. Consumer buying is at an all time low. The retailers and the manufacturers have to get rid of merchandise to carry them through next year or go belly up. I think a lot of stuff will be sold at cost and some stuff sold at below cost just to pay the rent. The other obvious thing is that more jobs will be lost which means even less buyers.
I hate to sound like the Prophet of Doom, but I dont see a very good outcome for the worlds economy for the next few years.
I am a sub contract worker in the offshore oil fields in The GUlf of Mexico.
I may have to take a job in Cameroon - West Africa in January or go unemployed. This is literally where I have to ask myself "How much is my life worth?"
Prices will continue to decline and corporations will continue to go out of business and eventually, when ever that might be, things will level out for a while then pick up. I done expect to see that for several years.
I sure hope I am worrying for nothing.

[whit richardson]

Oooooouuuuuuhhhhh the spirits talk... my wallet will look thinner very soom... Oooouuuuhhh... my buddies next door and across the street will buy less tools for Christmas and next year .... I see big red Bargain and Sale signs in our future.. but also ... no price drops... but I see people eating beans and rice while dreaming of a 14" Rikon bandsaw.... the crystal ball is dark for now.

[Chuck Durst]

A local steel making plant Chartes Steel just xed 150 guys to stay in line with everybody else. There price is dropping some not much, they make a lot of high end and great quality stuff that was being shipped over seas because of the weak dollar before. Most xed were saleried spots. As the dollar goes up our prices won't drop on tools. Just my opinion I have been wrong in the past.

Chuck

[Chuck Tringo]

I don't think we will see actual prices drop, but I do believe that sales this XMas season will include some bigger discounts than normal however. With all of the job loss going around, Im glad I work for the most stable employer in the world, job security baby (and you can have it too....just visit your local recruiter/ROTC instructor :D) and its nice to know that by law my raises are tied to inflation as well as longevity, so I will always make at least as much as I did last year (cmon discount, Im waitin for ya :p)

[glenn bradley]

I would say "absolutely". I would expect that just like coffee and baltic birch plywood, once the "reason" for the sudden and brutal price hike is resolved; prices will drop right back down.

[Keith Outten]

Chuck,

Your current employer had me on the payroll about the time you were born. There are more than just a few here who also spent some time in your outfit who like me are too old now and not eligible for rehire :)

It's your watch and we're all proud of you guys and gals.

Concerning the economic situation we find ourselves in these days I think there we all expect to see things get worse and we are all braced for a long crawl out of this one. I wonder if those who experience the loss of their jobs will have to start their own businesses in order to make ends meet. Waiting for large corporations to start hiring again might be the longest wait in history this time.
.

[Rod Sheridan]

I don't think that prices will drop, however we may see suppliers go bankrupt.

The machinery that all the importers are selling now, were purchased with high value US dollars, perhaps 6 months to a year ago.

Now they're selling them for low value US dollars. This will affect their ability to make any profit, therefore they'll either keep prices steady or increase them.

Of course I could be right out in left field, however I wouldn't want to be a supplier right now.

Regards, Rod.

[Rick Fisher]

Nobody knows the answer to that question. Picture a bunch of Penguins standing at the edge of the water. Each one with a name like Delta, Powermatic or General..

Each one watching the other as costs drop, hoping nobody drops their drawers and jumps into the water.

These guys work on inventories. They order a few months in advance. If any one of them starts to get a warehouse full of stock that isnt selling, they will need to move it. When one jumps, they will all be forced into the water.

The lead time for tools from Taiwan isnt as long as you would think. If sales drop off, and the big names start ordering less, you will have factories in Taiwan and China with less to do. That will cause them to sharpen pencils as well.

All indications are that prices should fall, but nobody will want them too.. It will take someone getting nervous.

[Jeffrey Makiel]

The price of woodworking machinery today is still pretty darn cheap for what you get.

When I outfitted my home shop 20 years ago, the price of machinery was nearly the same as today. However, the average income was about 1/2 of what it is today. I would also like to add that woodworking machines offered today are of better quality especially considering the poor quality of the early Taiwanese imports. The offerings today also sport more innovative features.

Here are some examples of my purchases 20 years ago:
- Delta Unisaw $1,900
- Jet 18" bandsaw $1,000
- Grizzly 6" jointer $400
- Sears 10" radial arm saw $450
- Delta portable planer $420

All of these can now be had for nearly the same price, and all of their modern replacements offer more features and value.

What’s killing me is the diversion of my funds to non-woodworking related necessities in life. My property tax and health insurance costs have increased almost 5 times of what they were 20 years ago, and my utilities are about 4 times more. Did I mention that my income has only doubled?

It's not the value of machines today, or their relatively small price increase, that is making them harder to obtain. It's mostly the lack of sufficient funds to buy these 'wanted' items which must give way to ‘needed’ items. And, I suspect, this situation will continue to get worse.

-Jeff :)

[Frank Drew]

It probably depends on how much inventory is clogging the pipeline, and how badly the manufacturers want to keep their factories busy.

I saw a headline today: California Port Overrun By Unsold Foreign Cars.

Are cars the only manufactured goods not selling?

[Jack Briggs]

I don't think that prices will drop, however we may see suppliers go bankrupt.

The machinery that all the importers are selling now, were purchased with high value US dollars, perhaps 6 months to a year ago.

Now they're selling them for low value US dollars. This will affect their ability to make any profit, therefore they'll either keep prices steady or increase them.

Of course I could be right out in left field, however I wouldn't want to be a supplier right now.

Regards, Rod.


I agree with Rod here. We won't likely see changes in prices (at least downward) for several months, if at all. Inflated freight charges, due to higher fuel costs of a couple months ago, will be passed on to the consumer for months to come. My $0.02.



Cheers,

[Tony Bilello]

Thats because the big price drops will be "Going Out Of Business" sales. As someone said earlier on here, the 'wants' will be replaced by the 'needs'.
I think woodworking, like a lot of other pass times and hobbies are a generation thing. Some of us older guys remember wood shops in schools and local woodworkers 'fix it' shops. Wood working had a resurgency due to the older generation getting to the point that their kids are married and gone and they have a higher income and their housed are paid for. This leaves us with more time and money. Now that we are looking at retirement and all hell has broken loose, people are becoming very conservative with their spending. When it comes to tools, well, it's just a hobby.
I hate to sound like doom and gloom, but the world is about to be financially and economically reorganized. In the over all scheme of things, this may not be a bad thing.
In times of uncertainty, descretionary spending drops way down. I do not own property. I rent two 12 x 36 mini storage units for my shop. It is primarily a hobby. I am thinking of buying a 20" planer. If I do, I will need another generator. Mine is not big enough for a planer. Thats 2K for a new generator and 2K for a planer. Thats a lot of money for a hobby. It will probably be put on hold till I find out my future job stability. Lots of people out there like me and that is what will cause the bankruptcys in the tool industry.

[Anthony Whitesell]

I agree with Rod here. We won't likely see changes in prices (at least downward) for several months, if at all. Inflated freight charges, due to higher fuel costs of a couple months ago, will be passed on to the consumer for months to come. My $0.02.

Cheers,

I'll agree with that. The prices (may) start to drop but by then (hopefully) the commodity prices and everything else will have straightened themselves out. So months from now, while the prices are falling the costs will start rising. The falling prices will meet the rising costs before the prices ever get back to what they were.

I don't expect huge price drops (maybe 5-10%) as the high prices the manufacturers currently have could be leveraged for lots of advertising, including 'permanent' price reductions (the 5-10% mentioned earlier) and lots of sales. A whole lot of sales. Why not? A first glance it would look great but in the end it would still be higher than what it started at.

Take the Jet Performax 16-32 drum sander, for example. In April '08 it was $850, in November it is $1100. Jet could advertise a price drop, say $100. (there's some advertising and free publicity). Then they could do a series of "Holiday Sales" (President's Day, Father's Day, etc) with 5%, 10%, or 15% off or $50 or $100 rebates (more advertising and free publicity). So now all the retailers advertise it (free advertising for Jet) and we think that we're saving all kinds of $$$, but in the end it's still more than the April '08 price. Plus, all of this really cost them nothing because it was the material cost that dropped.

[Prashun Patel]

The only thing that'll drive a price decrease is if demand gets severly battered because we consumers can't afford the current prices. In that case, the price will decrease, but likely your purchase power would have also decreased. So, it's gonna 'feel' just as expensive or worse.

I expect to see temporary sales around the holidays. The big savings might be in freight. I could see Grizzly possibly doing a 'free shipping' thing if they're able to negotiate some sweet deal with carriers who are certainly reaping savings in fuel costs....

[Jeffrey Makiel]

I wonder if a 10 or 15% reduction would even boost sales significantly. I am seeing family and friends loosing jobs, and none of them are able to get a new job with half the pay and benefits they previously received. Their disposable income purchasing power is like a light switch. One moments it's on, the next moment it's off. I don't think 15% would matter as much at this point.

Also, with all the competition in the woodworking market, I wonder how much margin these companies have in the first place to handle these reductions. I have always thought that price wars are potentially devastating to all companies involved. For the consumer, there may be some short term gain, followed by a drop in quality, service and choice.

-Jeff :)

[Terry Beadle]

I think that the 'xBay' will see record selling and dirt cheap pricing. Need money for rent? Sell the LN, sell the Jet, sell your shoes when socks will work.

Hope it doesn't come to that.

[Rod Sheridan]

I wonder if a 10 or 15% reduction would even boost sales significantly. I am seeing family and friends loosing jobs, and none of them are able to get a new job with half the pay and benefits they previously received. Their disposable income purchasing power is like a light switch. One moments it's on, the next moment it's off. I don't think 15% would matter as much at this point.

Also, with all the competition in the woodworking market, I wonder how much margin these companies have in the first place to handle these reductions. I have always thought that price wars are potentially devastating to all companies involved. For the consumer, there may be some short term gain, followed by a drop in quality, service and choice.

-Jeff :)

That certainly seems to be a major problem, as Jefferey said, people are losing "real" jobs and are only able to find "McJobs" to replace them.

When all your money is being used for basic shelter and sustenance, it doesn't leave anything for hobbies.

Regards, Rod.

[Ed Blough]

Market prices are set by the price the purchaser is willing to pay. Unfortunately most people have forgotten that principal and "I gotta have it" mentality has become common.

Frankly I think the whole mess is going south because the manufactures have also forgotten this principal also. If you have merchandise you can't sell lower the price until you can sell it. If you lose money then figure a way to make it cheaper, if you can't make it cheaper then it is time to get into another business.

The car manufactures are clamouring about their situation, yet if you walk onto the car lot today they are acting just as arrogant today as they did yesterday. I say let them keep their cars they must be far more precious to the auto dealer than they are to me.

[John Schreiber]

It's sad, but the next couple of months might be the time to watch CraigsList and the Penny Saver for bargains. Sad.

[Rick Fisher]

Folks..

If you dont have sufficient savings to live for 6 - 12 months right now, it may be good time to NOT add to your tool arsenal.

I dont want to appear negative but there is no real job security right now. The problems for companies right now are immense, survival of the fittest has become the new strategy for 2009.

Companies that appear solid and strong can be suddenly affected by bad debts, rising borrowing costs and cancelled contracts. These things happen fast.

I own a medium sized company, we laid off over 20 full time employees in the past 3 months. These folks are not finding other work. Its a horrible thing to have to do. Sales are off as much as 20% from last year and there is no light at the end of the tunnel.

My company is still doing "okay". Its not losing money but its close. 20-25 extra people and we would be in red-ink. The banks have no tolerance for customers losing money right now. 3-4 bad months in a row and they start changing the rules. We have been warned.

The best thing you can do right now is save your money for a rainy day. I hope everyone sails through this recession with little grief, if the worst happens, a nest egg will be of more value than a new tool.