“The razors edge”, a familiar expression, has returned to our sector once again in 2006. After experiencing robust growth for a period of five years fostered by new TV shows and other forms of media, the motorcycle industry, specifically the American V-twin market that we know and love, is starting to show signs of a “cooling off period”.
The American public has grown dependent on the hi-jinks of Billy Lane, OCC and the like, over the course of the last 5 years which has brought tremendous success to our celebrity brethren while also creating increased sales within the motorcycle community as new riders come forth to join the flock.
This renewed interest in our community has also brought with it the opportunity for others to enter the sector and perhaps pursue a lifelong dream, or for some, just try to earn a quick buck.
We all recognize the benefit of new talent entering the sector, bringing with them fresh ideas and designs. Economically it forces more competition to the marketplace which benefits the consumer as other players in the sector are forced to be more creative while also price effective in their approach to the new consumer market. Free market economies such as ours are the cornerstone for this action and it’s effect for the consumer.
However, today as manufacturers, we face a new and modern paradigm. New resources have emerged for the manufacturing sector (read: China labor force). These new resources have provided cheap labor allowing an American manufacturer to produce his items overseas while still attaining good margins domestically. As American consumers waiver in their discernment of “quality” versus price, the American businessman can take advantage of this new “margin spread”.
While they complain about their salary or hourly wage, they will go out in the same breath and buy a product produced overseas simply on a “cost” basis. You see, we have been trained over the years by product obsolescence and “throw away” goods. We have found a way to produce products so efficiently and cheap using the overseas labor market, that when it’s functional or economic life diminishes, it is simply thrown away and the new “improved” version is bought, sometimes at even less cost than the original.
Folks, we are building our home on a very weak foundation. Although, some might argue that money supply measures are increased (an economic measurement of the velocity “speed” of one dollar handed from one hand to another defined as M1, M2, and M3 money supply), the value of that same dollar decreases as more money is printed to keep the velocity through the economy high. “Easy money” policy becomes a necessary component to keep the wheels turning, further undermining our economic future.
Once upon a time, not too long ago, we had a nation which grew out of the Industrial Revolution as an economic powerhouse producing high quality durable goods which fostered a more mature economy. This in turn, spread into service sectors taking care of and “servicing” the needs of this expanding economy. This provided wide-spread job growth and prosperity in America for many economic “rolling periods”.
Now, we flash forward and notice a time where we are taking this successful formula and entitling other countries with it…… this is the “modern paradigm” shift mentioned earlier. No longer do we care about the production of the goods which trickles money all the way down the supply chain to you and I, but instead we focus the attention to the consumer alone and make him the object of our affection putting price over quality and selling our manufacturing and service sectors overseas to satisfy the consumers veracious appetite.
Heck, in this day and age, we have been trained to buy things on credit. Plastic cards buy the consumer his goods without the pain of real money trading hands as we brainwash future generations to undermine their future economic well being in order to grab immediate gratification- “without pain”. Real ownership becomes a fleeting commodity as we are coerced to leverage any purchases through “creative financing” thanks to our benefactors and money lenders who care so much about us that they will lend us the money at a nominal fee, for just about as long as we desire (witness the push for home mortgages past 30 years!). Just don't forget to tell your children to get their credit cards early in life (you can also co-sign for them), so that they can start building their credit! After all, we all need good credit! You simply can’t buy a car or home with cash!
Cash has become such an obsolete tool to barter with. Usually my good looks pay for most everything- I’m sure you’re just as lucky as I am.
Now you say, “What the heck does this have to do with motorcycles?” I know, wipe the sleep from your eyes and reheat that cup of coffee. Our small sector of the economy responds to economic factors in the same way as every other sector. We aren’t as special as we think. In fact, we are the fly on the ass of this economy–pardon my expression. However, I do feel that we share something that others don't. It’s our desire to share our feeling of expression and freedom through riding. Our bikes have been an artistic conduit for over 100 years, giving us a way to express our patriotic feelings, and the one thing that makes our country better than any other country in the world, OUR FREEDOM. Our children place their lives in harms way to help to cultivate, protect and share this wonderful way of life.
We face arduous times. We have the most knowledgeable Fed in history and the most responsive monetary and fiscal policy in our short history working for our benefit. They are doing everything in their power right to fight the effects of this new paradigm and keep our economy moving forward. We are in a period of rising interest rates, increasing commodity prices (caused in part by China exhausting supply), and American debt levels that are unprecedented. Trust me when I tell you, it’s not going to get easier.
A company with the name “U.S. Choppers” could not possibly offer products made in China- we would not do this to you. We spend our money using American made materials, American tools, and American workers to deliver you a 100% Red, White, and Blue products.
Our freedom has been paid for in blood and there has been significant cost. We will not let those efforts slip away in vain. Is it worth it for us as a business to pay more for our materials, our tools and our workers? Let me tell you, friend, it’s worth every red cent. I wouldn't trade the quality of my goods or the people I work with for all of the tea in China! For these reasons we have very thin margins and make very little off of our product line, but when we sleep at night, we rest well knowing that no Chinaman can compare his product to ours and we do our best to support our people at home in every way. For these reasons and for you, our American brothers and sisters, we walk “the razors edge”.
-Rick Krost
Rick carries a degree in Finance, with emphasis in economics and accounting. He has spent 7 years in the finance profession as an institutional bond trader, financial consultant, and high net worth manager for such firms as Morgan Stanley Dean Witter, Salomon Smith Barney, and ultimately owning his own branch office of Raymond James Financial employing 5 other consultants in Newport Beach, CA. Rick’s efforts were concentrated on technical analysis combined with modern portfolio theory blending both fundamental and technical aspects. Ricks clients included a very highly regarded local CEO base. Rick sold the practice in 2004 to pursue a dream and passion– “U.S. Choppers”. Rick has been involved in the restoration community for over 17 years, starting with his first motorcycle business “Homies Cycle” circa 1989 in a little town named Pasadena, CA.
U.S. Choppers
2039 S. Lyon St
Santa Ana, CA 92705
714-546-4699
Appointments Only Please
http://www.uschopper.com
