Saturday, September 22, 2007

Loonie hits 30 year high.

Yesterday, for a few moments at least, the Canadian Dollar reached parity with the US dollar. Everybody seems to be walking around saying how darned good this is! Hey guys...if it wasn't for that pro American Canadian treasury official years ago who decided to "harmonize" the Canadian system with the US system, we would not not have such a simple and misleading bench mark! The two systems are separate, and often go their separate ways. It would be easier if we called out dollar the "Lira" or the "Pound", then there would be less call to compare the two economic systems.

A little history business takes two aspects....the manufacturing of suits of armour, and the import and sale of swords and knives. Muddying the issue is that much of the materials I use to make the armour comes from abroad....but the savings on raw materials is negligable. When the internet came on stream some 20 years ago, I invested in web pages, and on-line sales seemed to be the way to go. Then, as more and more people got on line, the competition heated up, profits started going down. Then E-Bay started, and the phenomon of E-Bay stores happened, and profits went into a death spiral. The web pages have changed from being a sales medium to being a simple catalogue. I have not sold a sword or a knife on line for more than 8 years...and have simply stopped trying! Price corrosion has made it impossible to sell anything on line that anybody else in the world can sell for cheaper. Which is a fact of life, of course, but it means that dealer networks all over North America are dropping faster than flies in the fall! I still continued to bring in the products, and for 9 years, managed okay, but I used every bit of profit to build a manufacturing facility to take over when the inevitable crash would happen....which it did only a couple of years later when my main sales venue vanished.

It has taken about 8 years to build my armour production up to where it seemed to be doing well enough for me to say "this is a success". Most people who wanted my armour live in the US, and aside from competition from Pakistan, India, and China, sales were expanding 15 per cent per year. Then, about a year ago, the Canadian Dollar started rising and the Chinese Yuan stayed pegged at an artificially low rate. Sales have dropped in a death spiral. Again.

The news is not all bad of course....the low sales mean that I don't have to worry about paying employees....they are all laid off. The armour making shop is idle, but mostly paid for. I have time to mow my lawn, trim my hedges, build my blacksmith shop and decks. Train a new puppy, and go motorcycling and snorkeling. Maybe look into a career change...flipping houses or building choppers. Clean up those web pages, get rid of Canadian prices, and maybe surf the net to find out what my competition is up to.

There is an upside to this...but as usual, it will mean a major change in how I do business. Even though change is usually quite expensive, I am looking forward to it. Don't quite know what I'll be doing two years from now though!

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