Festool Price Increase???

[Greg Heppeard]

Has anyone else heard of a price increase for Festool on Apr 1? I just recieved an email from a major screw retailer. If you don't know...Festool does not allow retailers to discount their products. They threaten to pull the products from the store if any discounts are offered. So, if they are increasing retail prices, everyone has to do it. If you're on the fence on buying, you may want to think harder about it. I have no professional affiliation with Festool or any other tool retailers.

[Don Abele]

I got that same e-mail. The same price increase is happening with Felder/Hammer. When I bought my Hammer the other day they said it has to do with the decreasing value of the US Dollar and increasing value of the Euro. By what I was told, the prices will not increase in Europe, only in markets based on the US Dollar.

Be well,

Doc

[Jesse Cloud]

Much as I hate to see the prices go up, its looks like Festool is eating most of the difference. Probably going to get worse before it gets better, lowering interest rates makes the dollar even less attractive overseas, so it probably hasn't hit bottom yet. I expect we will see same actions from other companies, like Lee Valley. The folks that have their tools made in Taiwan will probably just cut back even more on quality to make up for the weak dollar. If you are looking for quality tools, this might be the time to buy....

[Dan Clark]

Unfortunately, the devaluation of our currency against the Euro and other currencies is responsible for the majority of our price increases in the last six years. Attached are two charts showing how poorly the USD has performed and how well the Euro has performed.

The manufacturers of quality European products like Festool, Felder, Hammer, Laguna and many others are going crazy right now. The US is the worlds biggest market. Our currency value is tanking. How would like to see your biggest potential customer base shrink because they can't afford your products!?!

And ever worse, there are many new products being developed in Europe that will probably never see the light of day here because we can't afford them!

Here's a rather nifty portable workbench: http://www.walko.nl/. It's getting a lot of good press and has been growing quickly in the last year. Here's a link to their demo film: http://www.walko.nl/Frame%20NL.htm.

Several months ago, there were discussions about bringing it to the US. Now? Nada!

It's sad that many parts of the world are moving ahead, while we run in place.

Regards,

Dan.

[Mike Henderson]

As I understand economics, money is a commodity just like oil or corn. If there's too much of it, the value goes down (it costs more to buy things).

The United States has been importing a lot more than it has been exporting, which means that we've been shipping money out to the rest of the world. As the rest of the world gets too much US money, they value it less, which means that the value of the US dollar falls relative to other curriencies. This makes US goods less expensive for the rest of the world and they buy more of our stuff. This "feedback" process continues until there's some equality in the money flows.

I've always wondered how we kept up the excess of importing over exporting for so long.

Mike

[Will Blick]

What's the solution Dan?

I personally think this decline / recession is simply a correction in the world economy. While USA is still "the" major force, the combining of the Euro currency (now representing over a billion people) and the developing countries such as China, India, spending money like crazy, our position is not quite as strong vs. 10 years ago.... markets sometimes take time to make corrections like this. We can only hope the correction is not too painful.... but markets are always perfect, they determine "real" value.

[Dan Clark]

Will,

I have no solutions. I'm just clarifying the problem.

Like you, I hope the correction won't be too painful. However, I'm a little afraid that many in the US are sitting on their duffs remembering our past glories. We've gotten complacent - fat, dumb, and happy.

The world is a tougher place. We need to realize that people in other countries are as smart or smarter than we are. Other countries are pumping out top talent from their trade schools and colleges. Most importantly, they are hungry. They want the life that we have and are willing to work hard for it.

Collectively, we have to work harder and smarter to compete.

Regards,

Dan.

[Jim Becker]

Yes, April 1 is the date...and not just for Festool. Some other Euro manufacturers have announced price increases if I am not mistaken. Cost of steel, oil and the exchange rate all are contributing to this.

[Will Blick]

Considering the dollar vs. the Euro went from 1:1, now $1.55 dollars for 1 Euro, in such a short time period (bulk of it in 3 - 4 years?) .... you have to wonder if many Euro makers have been holding back on price increases, OR, buying currency options to hold their USA pricing for some time, but we all know, options don't last forever.

If this is the case, and the Dollar keeps tankin and hits near $2.00 to 1 Euro, its possible a year from now, Euro tools will be 2x what they cost just ~3 years ago. I was looking at Milling machine last week, German made, sold for $6k here in USA 4 years ago, today, identical machine is $10K, thanks to the decline of the dollar. In this case, the dealer simply buys them, and must fully absorb the currency hit and try to pass it on.

Now that tables have turned, it's our chance to sell our manufactured products to the Europeans, so they get the value and we get the profits......but.... we lost our manufacturing base :-(

[Dave Falkenstein]

Have you been to the grocery store or gas station lately? Almost EVERYTHING has gone up in price, not just tools from Germany.

[Jeffrey Makiel]

Have you been to the grocery store or gas station lately? Almost EVERYTHING has gone up in price, not just tools from Germany.

Dave...I think you're spot on. Also add health insurance & services, property taxes, and utilities to the list. All are seeing double digit increases. All are domestic services for the most part.

The dollar is weakening abroad and at home. Festool is only one of many. I expect many 'mom & pop' manufacturers of niche woodworking products will be hurt the most. After all, I'm guessing that most of the sales in woodworking products in the USA these days are for hobbyists and therefore based on disposable income which is likely shrinking while production costs are skyrocketing.

-Jeff

[Will Blick]

Jeff, good points, fully agreed....

> Like you, I hope the correction won't be too painful. However, I'm a little afraid that many in the US are sitting on their duffs remembering our past glories. We've gotten complacent - fat, dumb, and happy.


Well said Dan..... although a high % of Americans live paycheck to paycheck....lets hope that scenario doesn't represent the good ol days.


> The world is a tougher place. We need to realize that people in other countries are as smart or smarter than we are. Other countries are pumping out top talent from their trade schools and colleges. Most importantly, they are hungry. They want the life that we have and are willing to work hard for it.

BINGO! Again, well said, this is a big component of the problem.... Americans are spoiled vs. developing nations, complacency happens without people even knowing it.

The older I get, the more fascinated I become about the economy in general, specially now that its global.....it really is a new paradigm that our experts have not fully comprehended. I think our current recession is evidence of such..... I had a strong suspicion once the final Real Estate bubble burst, we will see the real shake out of the world economy AND the new found power of the Euro. First we had the stock market of the mid to late 90's, then R.E., both artificial bubbles that kept our head in the sand for ~ 12 years.


I find it fascinating how fragile our economy is, even during good times. Consumer spending represents over 80% of our economy, which is quite amazing that our trips to the supermarket, dinners, ww tools, is what fuels the economy. When you consider the slim net margins the avg. corporation makes due to stiff competition here and abroad, it only takes slight reductions in gross sales and many companies can crumble.....partly because of super high fixed costs and the fact Wall Street keeps funding these companies vs. the companies taking drastic measures before its too late. The attitude has always been, things will return to the good ol days.

When gas levels at $5 - $6 a gallon (the UK has been paying $6 per gallon for 8 years now) this will represent a huge hit to many Americans as our fuel bills will start to exceed our car payments. Not to mention, more dollars continually leaving the country. We will soon be bidding against China and India for fuel :-(

Then R.E. value after finding bottom might appreciate at 1 - 2% a year, ridding all that excess equity, which we used to buy power tools, cars, 2nd homes, etc. It's like a snowball rolling down a hill, you just can't believe how fast it becomes huge.

The Feds finally haa a clear understanding on how sensitive the economy is, and I marvel at all the fixes they are throwing out relatively early in the cycle. Of course, if this current recession represents the overdue worldwide correction mentioned above, then all the band-aids the Feds offer, at best will only postpone the correction.

Americans forget, even after WWII, when things were supposedly boomin, the stock market indexes did not grow one bit from 1952 - 1972, 20 years of stagnant market... this can easily repeat itself.

I think you are right, America needs a new model for success now that the economy is global and the internet is making the world a small place.

Sorry for the soapbox....

[Eric Haycraft]

I once saw a quote that said that our economy is a deck of cards in gale force winds.

In terms of the exchange rate, it won't stop dropping until we are a net export nation again. Unfortunately that won't happen until our dollar drops another 30+ percent compared to other currencies. In general, that means that everything will be at least 50% more expensive and our wages will on average be equivalent to today. That will be a very tough pill to swallow for the majority of Americans especially those living paycheck to paycheck. The reality of the situation is that everyone has and will continue to receive pay cuts via inflation until we are an export nation again. Last week it was announced that we are no longer the largest economy in the world..due to the exchange rate. What is about to happen here is payback for borrowing so much money to import goods for the last 30 years.

[Will Blick]

Boy, you creekers sure are smart :-)

It would be nice as our dollar tanks, our auto makers would be a beneficiary, exporting more cars to Euro. But this has not been the case yet, and might not be... (at least not on a big scale) Not every country is as import friendly as good ol USA.

Eric, if you are right, and the dollar drops to 2:1 to the Euro, we will see some serious economic impact. Other currencies have beaten up the dollar also, including the Yen over the past 8 years, same radical move as the Euro. Bottom line, our currency has very little buying power outside this country.

I think the Great depression was an example of how fragile an economy really can be.... a drop in the equity markets, a slow down in industry, and whamo. It took many years, to get back on an upward swing. Your deck of cards analogy is a good one.

I think I will go order some Festool and Felder tools now, before its too late :-)

[Pat Germain]

I don't think the deck of cards analogy is accurate. Likely, it comes from people who benefit from scaring other people. Our economy is nothing like it was in 1929. People also know a lot more about economics now then they did in 1929.

I don't agree that we must be an "export nation" before the economy turns around. The US economy was booming in the 1990's and we weren't an export nation then.