Money money money

October 7, 2009

Every now and then I talk about the dollar and Yen. I think about it all the time, because we buy so much expensive Japanese stuff, and how many yen one dollar buys has a tremendous effect on what we pay. Short historical perspective. In 1972 a dollar bought 375 yen. In 1984 it bought 250 yen.
In May 1985, five country's moneymen got together and came up with a plan to help the balance of trade among their countries (US, Japan, Germany, Italy, and England, as I recall). The way to do that is to re-value their currencies; and so it was de---are any of you still reading this?--cided that a dollar should buy only 150 yen--that would make it easier for Japanese companies to import American-made goods, and that would help balance the trade between Japan and the U.S.--
But the change from 250 in April of 1985 to 150 in May made it way more costly for American companies to import Japanese goods, because it meant almost a doubling of prices for anything Japanese. Almost doubling retail prices was unacceptable, so the strategy was to cheapen the Japanese stuff, to lower the cost, to keep the retail prices the same. So if you bought a Japanese-made XYZ  before the re-valuation, it might cost $100, and would be made with hi-grade materials and intensive labor to make it shine. If you bought XYZ after the re-valuation, it would cost about the same $100, but would be made with worse materials or less labor. It would be cheapened somehow, so it could sell for the old familiar 1984-ish price.

To avoid an apples-to-apples comparison, something had to change, so you wouldn't say, "Hey, wazzup with this? Last year it looked fancy and polished, and now it's plain and painted and it costs the same." Lugged bikes almost entirely died in the popular price ranges, and in the thrust from finery to technology we got indexing. Over the next decade, non-indexed (friction) shifting lugged steel bicycles became associated with classic nostalgia and connoisseurs and tweed and meerschaum pipes and waxed cotton and all That Stuff, which really isn't fair to any of it, especially the bikes.

You can make a lousy lugged bike, and the kinds of joints matter only so much and not at all from a pure performance (speed?) perspective, but a nicely made and well-designed lugged bicycle blends craft and engineering and theoretical goodness and art in something simple like a bicycle, and when you spend a lot of your life riding and thinking about and looking at bicycles, that can start to matter.

I'm the world's worst rambler off-tracker...what I meant to say is that a dollar now buys 88.81 Yen, which makes it hard for us, hard for Nitto and MKS and other Japanese companies to be competitive in the US bike market.

If things don't turn around by the end of the year, we'll be raising prices some. It's a good time to buy Japanese stuff. It's all going up next year, and some things, maybe sooner. The jobs-get-lost/prices-go-up model is not a good one, but there aren't many options.

We hope you have a good Fall and Winter, and we hope you hope we do.

Grant