Increasing cost of entry into model engineering

I was reading another thread where someone was interested in buying an X2, X3 or similar mill and was tempted to respond with what I bought and how I modified it, but then checked the prices that I paid against the current ones and was somewhat taken aback by the increases.

My X2 was bought from Axminster, in December 2013 at a special price of £492.77 - down from £679.00 as they were just changing their colour scheme and selling off the old stock at a cheaper price.

They currently have a sale on and are selling the same model for £799.96, down from their normal price of £902.51 - this is a 32% price increase against the normal price over 7 years.

The Arc equivilent SX2P has gone from £585.00 to £771 in the same time period - a 31% increase.

The LittleMachineShop model 3990 (3960 back then) has gone from $819.00 to $1170.00 - a 42% increase.

Now I accept that prices fluctuate, exchange rates move, inflation needs to be taken into account, etc, but these increases are the equivilent of 4% or more every year.

This all during a period where incomes have remained relatively static by comparison.

This is by no means a dig at any of the above suppliers, and I am sure there are good explanations, since the increases seem relatively similar across the suppliers, it just came as somewhat of a shock when I started looking onto it.

Edited By Zebethyal on 24/07/2018 14:19:14

2013 average exchange rate £1=1.56US

2018 £1=1.31US

so your 2013 £585 = $912 2018 £771=$1010 so in reality under 11% inflation over 5yrs since most international transactions are euro or dollar. 2% annual inflation is historically quite low.

pgk

The SX2P now has a brushless motor, that and the better board to control it account for quite a bit of the cost increase. Compare the next size up X2.7 and the SX2.7 and there is nearly £300 difference and it is basically just the brushless you pay extra for.

The Chinese factories are also having to comply with latest polution regulations etc the cost of which has to be passed on to the buyer

As mentioned a massive devaluation of the £ hasn't helped. Not sure if that means that you can buy in EU at the older price and still bring into UK without tariffs. On a USA forum they are expecting a substantial increase as steel imports are affected. If this affects sales in the USA the production volumes will either decrease with knock on effects on economy of scale, or lead to dumping of imperial machines on the world market.

Fundamentally, it's all down to exchange rates and the rising regulatory burden on Chinese industry. Jason is also right, a typical 2018 SC3 mini-lathe, for example, is a much better specified than a 1998 C2 mini-lathe despite being the same basic design.

China has realised climate change and pollution are major threats to the country, and when it decides to tackle issues like that, it tackles them!

I do get to speak to many of the importers and the fact is most of them have absorbed a proportion of the price rises, rather than exploiting them.

The same is true for my hobby of astronomy where costs of imports from the far East have risen.

Whatever comments there are about quality, we have enjoyed twenty years of enjoying machines and tooling at an excellent 'bang per buck' but there is a gradual and ongoing 'correction' in the market happening.

Expect things to be even more volatile over the next few years with Brexit and (unrelated) trade wars all having their impacts.

Neil

The dollar has also weakened against the RMB by about 10%, compounding the effect.

Neil

Actually, the SX2P had a brushless motor back in 2013 as well - I am taking my information from my blog, where I detailed some of my initial wants back then, so have saved pictures of what it looked like in 2013 as well.

I appreciate that the price increases are across the board, and are not restricted to the SX2 and clones, those were just the ones I had historical data for.

The concern is that these rising costs will further deter people from joining the hobby and the longer they wait, the more the prices are going up.

It would also appear that I can't count, making 2013 - 1018 to be 7 years rather than 5!, for some reason I was convinced it was 2020! this actually makes the inflation figure closer to 5% a year.

I also understand the £ to $ rates have changed, but that does not explain the 42% increase on the LittleMachineShop prices that are all in $US.

Edited By Zebethyal on 24/07/2018 15:12:20

I always understood that a hobby is a pleasant way of spending money

Roy

Hi Zebethyal,

Here are some of the cost increases since 2013:

Exchange increase: 19%

SIEG increase: 15%

U.K. Wages and compliance cost increases: confidential

Similarly, SIEG have had major cost increases greater than the 15% they have imposed, to include wages, compliance for local government - environmental, as well as other compliance costs, and serious devaluation of RMB vs USD, the international trading currency of choice.

SIEG, ARC, and others have absorbed many of these costs.

Ketan at ARC.

Maybe a partial answer to that problem could be clubs organising say 2 nights a week model engineering only, no time wasting chatter, just get on with using the clubhouse equipment. SMEE do it but that's fine for those living in the smoke to jump on the tube but not so funny for Brightonians or similar places at an hours train journey each way.

I recall visiting a Midland club who had a large workshop full of redundant machinery from GEC, on whose land they had their track.Think it may have been Coventry club. Beechurst at Haywards Heath and Chichester for example, have got well equipped workshops.

I am sure that a number of clubs could reorganize their accomodation to house say a pair of mills and lathes, allowing 4 members to use the machines one night a week and a different group of 4 use the other night each week. Maybe there could be a Workshop Superintendant willing to do 3 nights and possibly a second one to cover yet another couple of nights from say 7 to 10pm, advising/training newcoomers. It would be like old times with the old night school classes.

What do you all think? Would/could it work?. Could an annual charge be made, help club funds and extract some sort of commitment from the newbies to not just get started but plod on with their project and see it completed.

Many thanks Ketan for the explanation.

As I mentioned several times, this was not a dig at you or any other supplier, merely an observation of some across the board price increases over the period that had startled me and I was having difficulties explaining them away.

If I was starting in the hobby now, rather than when I did, then my cost of entry for the same machines would be significantly greater compared to my income which has remained fairly static, as such I am unsure if I would still be able to make the leap today, and had similar concerns for others looking to join the fold.

I also appreciate that the availability and choice today is far greater than it has ever been, and I am sure we all appreciate any costs that are absorbed in order to help keep the costs down.

Hi Zebethyal,

Don't worry, I understand that you weren't having a dig at suppliers

You are also right that the cost increases (selling price) is starting to be prohibitive for new comers. I know that everyone is trying to absorb costs. Unfortunately one of the side effects is increase in popularity of sub-standard products being sold on various platforms such as Amazon, eBay, Banggood, at lower prices with wrong marketing language. Some of these are dangerous, but the sellers are commodity shifters without knowledge, here today, gone tomorrow, and they will pick-up anything from any supplier and sell if there is a profit to be made. This is not a sour grapes point which I am making. The real costs come into play once there is a problem with a machine or accessory, when it transpires that a good deal wasn't such a good deal. It doesn't help when certain people with zero knowledge promote such products via You Tube, suggesting how good it was

Regardless, you are right about prices, and there is a marked reduction in sales activity directly related to price increase.

Ketan at ARC.

Could trends worsen for UK model engineers given all the negative remarks about Brexit and for American MEs due to the USA/Chinese trade war?

When you look at what you get for your money these machines are still cheap. Without these imports there would be far fewer enjoying the hobby.

It could, the 'men in sheds' proves that by getting it to work for woodwork.

But it would mean many clubs completely changing their way of working and approach to one which isn't that which the existing members joined for.

To make a material impact, an awful lot of volunteers would need to make an awful lot of commitment.

It may be more likely for some 'men in sheds' projects to start incorporating metalworking, or maybe even teaming up with nearby model engineering societies?

Neil

also ... your timeframe is semi-charmed ... 20 years ago it was almost unknown for a hobbiest to have a milling machine at home ... most milled in a lathe with a vertical workpiece holder ... let alone all the other neat dodads we can buy for not much from ebay (TIG, etc.)

All this stuff I used to salivate over I can now order for mao's tool emporium, and it arrives on my doorstep in a week.

Realistically - NO. But used as an excuse by the maker factories possibly yes... depending on factory.

Current examples:

1. SIEG depends on certain casting factories. A good 50% have been shut down during the past twelve months due to failing to comply with the environmental policy. Remaining factories are overloaded, many using this as an opportunity to increase prices rightly or wrongly, currently using the excuse of increased expenditure to comply with the environmental policy. Some of it is correct and some of it is wrong. As the number of producers reduces, and if the U.S demand reduces (which I am not sure if it will), the market could correct itself. So far, current flavour of the month... we are paying for the increases due to the environmental policy.

2. One of the vice factories we deal with in China is still catching up with customer orders from 2017, and it is refusing to consider any orders for new products if a customer wants something before April 2019. Again, closure of other factories resulting in increased load on this facory.

3. Referencing to a major manufacturer of accessories such as all kinds of collets, mandrels, arbors and one who happens to be a significant supplier to MSC, Cromwell, Vertex, ARC, and most of the companies in the world - directly/indirectly : Key director 'owner' had enough and sold off his major share to an investment company late last year, because in order to continue he would have had to comply for his heat treatment plant with the environmental policy. Cost of the compliance was nearly US$Two Million. The new owner has been bringing in un-believable price increases, which is throwing all of us into a spin, ranging from 15% to 50% price increases this year, in addition to average 15% increases over the previous two years. Now the said factory is 'culling' certain products, and naturally, we are having to consider if we are 'to cull them' too, and/or consider alternative sources.

Again, keep in mind that 'smaller' factories who cannot afford to invest to comply continue to be shut down. This is not limited to our industry. This applies across the board to many industries, and speaking to people I know in the chemicals industry, they are seeing price increased of 100% to 200%+

So perhaps, we are lucky in our industry ?

Ketan at ARC.

Edited By Ketan Swali on 24/07/2018 17:44:49

Depends what your idea of model engineering is. A lot of retired baby boomers out there with more money than sense. Plenty can be done, and has been done without a lathe or milling machine. Get some copies of 1940's ME magazines for example, and see what the real model engineers did.

Japan at one time produced cheap junk,to get a toe in the market place,then they improved their products,and how !.

Then came the day when they found that other factors came into play,and their production costs increased. Needless to say the price of their goods also increased,so that to-day,Japanese products are no longer cheap.

China is going through the same thing,so in a few years time,their products will no longer be affordable to the small time operator. [Same thing happened to English made machines,over the years ] So,perhaps the way to go is to buy while you can afford it,next year you might not be able to. !

The quality of Chinese equipment will improve since I believe they will focus on the upper end of the market where the return is better. Needless to say,the price will reflect the shift.

No doubt at that stage,someone else will get in on the act.

Just my thoughts on the subject,for what they,re worth.

First Japan, then Taiwan, now China, next India... then Africa - all the raw materials, little heavy industry?

Neil