Gotta love that weak U.S. dollar...

March 23, 2008

IF you're a tourist from Another Country. If you actually live here and have a business and sell stuff made anywhere except China, then it's a harsh, bad deal. Same, if you buy things from one of those kinds of companies.

Giant to us is the strength of the Yen (¥, or "option Y  on a mac keyboard) which is key to our business,The more ¥ a Buck buys, the lower the price of anything Japanese. In what follows, an expression such as "The ¥ was at 150" means one dollar bought 150 ¥. Sorry about the financial talk, but it affects things.

In 1972 and before then, the ¥ was at 375 or so, and you could get really great Japanese cameras really cheap. Japan's bike market and technology weren't yet at the point where Japanese parts had much international appeal (that was about 6 to 8 years off still), so it's not like you could get an Atlantis equivalent for $500 complete or anything. But cameras, sure. Nikon, Olympus, Canon,  Pentax, Yashica, and others were already up to speed.

Japanese bike makers and parts makers were getting pretty good by the late '70s, and the dollar was still strong (¥ at about 250), and so you could go to a Japanese maker and basically say, "Give it your best, don't hold back on materials, feautures, quality, details, aesthetics, lustre, or anything," knowing that however over the top they went, the finished product would still be super affordable.

In 1984, the ¥ was still at 250, and by that time the parts-makers had learned plenty, and bike parts made in that year were Special. By today's standards, they didn't work any better, but they looked better, and even the cheap parts had details that even today's best parts lack. One example: A pivoting rear derailer cable clamp, which assures the straightest pull on the parallelogram throughout the range of gears.

It's not like it matters in practice, but it does matter in theory, and the smart designers knew that it was the right thing to do, so they did it--even on $12 rear derailers. And, the finish was really good. Today we have matte where then we had polished and anodized. Today we have screened-on names, and then we had forged-in, cast-in, and engraved.

Now, don't go getting all weepy and pathetically and unnecessarily sentimental about things you didn't even know about when they were happening, just because you can't get them any more. I'm just saying: When the dollar is strong and the ¥ is weak (1:250 or so), you can pretend you're Bill Gates or Oprah Winfrey when you go bike shopping.

In 1985 and as the result of a Big Meeting of Five Big Governments from the US, Japan, Germany, England, and I think Italy but it might have been Switzerland, the exchange rates were arbitrarily leveled, and the USD went from 250 to 150 overnight (May 1985). As a result, there was a huge shift to Taiwan, and all the nice & classy details such as the pivoting cable clamp and non-rubboffable manufacturer's marks, went out the window. No big deal, many things have improved, but just not in that way. We have The Clean Air Act, and now a guy is running for President and actually has a chance, who wouldn't have had a chance back then. There's more organically grown food, and a few good books have been published.

But now the ¥ is at 100, and that's the lowest it's been since a month or two in 1995, when it hit mid-eighties. We base our pricing on a ¥ at 115--which, by recent standards, could be considered a pessimistic benchmark, but you always want to err on the side of thinking you've got less money in your bank than you actually do, if you know what I mean. We PRICE things according to 115; and now it's at 100, with no soon promise or reason to believe that the dollar will strengthen.

Even at 115, our margins are low, and now, it's just not working. I mean, we have inventory, we want to sell it, but we're going to have to raise prices. Even without the falling dollar, our prices have increased.

So, no big deal--if you want the good stuff, you'll just have to pay more for it, starting in about mid-April. That's when we raise prices on things from Japan and England, at least. Bikes, frames, Nitto stuff, bells, bar tape, pedals, headsets, tires, and so on.

The NIGEL SMYTHE & SONS bags have  increased tremendously--our listed prices were based on a much stronger dollar/weaker Brit pound, and in some cases our  prices are now 40 percent higher. So them too have to go up or go 'way. These are low-margin items for us, since we like the idea of fine British Bags and all, but as of March 23, the new prices are in effect. Don't be bummed--if you like us, you'll want us to benefit when we sell something, not bleed.

If you're a member, you still get the five percent credit rebate. That should help some, right? OK, all for now, thanks.

 Grant