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Are luxury goods disappearing?

kaxixi

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A discussion recently came up (and it often does) on the apparent gradual disappearance of revered manufacturers that use traditional techniques to make their goods. In this case, the industry was leather tanning: there are fewer and fewer tanneries that use traditional techniques, and that they are folding under pressure from low-cost manufacturers in the East. On the flip-side, many luxury goods markets have seen a strong revival starting especially in the early Nineties, due to increased demand for luxury goods as folks worldwide have gotten wealthier (mechanical watches are one example). This revived interest has helped to resurrect the crafts in question, providing continuity, and even improvements on traditional techniques. In the thread linked to above, I argued that this trend was likely to show up in the leather industry as well. However, I don't know anything about the leather industry and would be interested in your thoughts on this industry, and in general.
 

RJman

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luxury goods = expensive branded goods = will always be with us.

goods made in certain ways that are not the most cost-effective, maybe not.
 

SoCal2NYC

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Deluxe: How Luxury Lost It's Luster
 

Irond Will

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It strikes me as odd that finely-crafted labor-intensive luxury goods could not be manufactured in third-world markets. I mean, there's nothing about Chinese labor that precludes quality craftsmanship. In fact, it seems as though countries with low labor costs would be more suitable for traditional labor-intensive crafts. The reality seems to be that Chinese (or Vietnamese, or developing market du jour) manufacture is synonymous with low quality, but I have no idea why this is necessarily the case.
 

NorCal_1

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the tannery industry is in a state of incredible turmoil and 2008 created a once-in-a-100 years set of circumstances that pushed many over the edge

chemical prices and leather prices soared early in the year causing margins to collapse since many had fixed price contracts in place and couldn't pass throught the price increases. Most were on the edge before the recession even started in late 2008.

then, as oil came back down, the credit crisis/global recession started that finished off a lot of them as demand dried up 40-50% overnight, leaving many tanneries with huge inventory problems and soaring debt loads to fund it

the good producers are being taken down with the bad and there weren't many good producers left in North America and Europe

sourcing from Asian producers to replace that demand is risky and expensive (shipping costs to get it to the US or Europe are huge because rolls of leather are heavy and distances long) so prices have no where to go but up

OSHA laws also make it prohibitively expensive to produce in the US as well

leather is going to get a LOT more expensive in the near future so buy the good stuff now while you can and support the good producers during these tough times

a good read here and here

Captains of leather industry have observed 20-30% reduction in export orders. It started declining in November and continued in December and is further expected to aggravate in the coming months. Chairman of council for leather exports (CLE) Habib Hussain said, "We have never seen in living memory a crisis of this magnitude. Nobody is sure of anything. Existing scientific parameters to assess the market demand and sales projections are not working.''

”The tanneries are now working at 30-40 percent capacity as against 80 percent utilisation last November (2008). All the exporters will see around 20 percent fall in their order volumes,” said Zackria Sait, chairman of the Indian Finished Leather Manufacturers and Exporters Association.
 

idfnl

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Originally Posted by Irond Will
It strikes me as odd that finely-crafted labor-intensive luxury goods could not be manufactured in third-world markets. I mean, there's nothing about Chinese labor that precludes quality craftsmanship. In fact, it seems as though countries with low labor costs would be more suitable for traditional labor-intensive crafts.

The reality seems to be that Chinese (or Vietnamese, or developing market du jour) manufacture is synonymous with low quality, but I have no idea why this is necessarily the case.


I think me and most would disagree with this.

Those places seem fine for mass producing things, but hand made craftsmanship often takes years to develop and master.

What you suggest is a slippery slope because this will lead to short cuts in the manufacturing process (mmm, yummy brick dust in your toothpaste anyone?) and what is called hand made becomes "hand watched while it goes thru a machine".

Plus, the faking industry would love for hi end stuff to be made in China, how better to get ahold of design specs. If they are willing to fake critical medications, there is no limit.

No, thank you.
 

youngScholar

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Originally Posted by Irond Will
It strikes me as odd that finely-crafted labor-intensive luxury goods could not be manufactured in third-world markets. I mean, there's nothing about Chinese labor that precludes quality craftsmanship. In fact, it seems as though countries with low labor costs would be more suitable for traditional labor-intensive crafts.

The reality seems to be that Chinese (or Vietnamese, or developing market du jour) manufacture is synonymous with low quality, but I have no idea why this is necessarily the case.


I think it goes back to time= money. The actual amount paid to the worker may be less, but you still have to invest an equal amount of time in the apprenticeship phase. Companies just don't want to invest in that way right now.
 

youngScholar

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Originally Posted by SoCal2NYC
Deluxe: How Luxury Lost It's Luster

From the Amazon description, it sounds as if crafting has been largely overtaken by branding.
confused.gif
 

dibadiba

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NorCal_1 raises a good point. I had a chat with my leather supplier yesterday and he told me the tannery that he gets some of his higher-end leather from (unfortunately the same leather I use) had gone out of business recently. hopefully this trend doesnt continue
 

ChicagoRon

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This is really a question of low-cost vs. differentiated strategy. Unfortunately, changes in the media consumption habits of Gen X and Gen Y over previous generations have lead to the successful differentiators being celebrity endorsement and visibility in pop culture (movies, mtv, etc.).

This is why so much overpriced crap w/ huge D&G logos is popular while well-made, but more low-profile items are not.
 

Irond Will

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Originally Posted by ChicagoRon
This is really a question of low-cost vs. differentiated strategy. Unfortunately, changes in the media consumption habits of Gen X and Gen Y over previous generations have lead to the successful differentiators being celebrity endorsement and visibility in pop culture (movies, mtv, etc.).

This is why so much overpriced crap w/ huge D&G logos is popular while well-made, but more low-profile items are not.


It's hard to imagine that previous generations had any of the traits that we like to chastise the latest generations for lacking: a better eye for quality construction, the means to support a thriving luxury industry, the desire to differentiate one's self through the collection of quality goods, the willingness to ignore branding and avoid trends.

I suspect that in the past, there was just a lack of low-cost competition, stronger communication barriers to thwart trade, more expensive transportation, and legal structures less favorable to international trade. Basically, people didn't shop at WalMart because Wal-Mart didn't exist, and the cost differential between cheaply-constructed goods and well-constructed goods was not as strong as it is today, since they were all fairly expensive.

I don't really think that our grandparents were made of sterner stuff with regards to consumer demands, as seems to be the implicit attitude around here. They had their ridiculous fads and trends as well.
 

Irond Will

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Originally Posted by idfnl
I think me and most would disagree with this.

Those places seem fine for mass producing things, but hand made craftsmanship often takes years to develop and master.

What you suggest is a slippery slope because this will lead to short cuts in the manufacturing process (mmm, yummy brick dust in your toothpaste anyone?) and what is called hand made becomes "hand watched while it goes thru a machine".

Plus, the faking industry would love for hi end stuff to be made in China, how better to get ahold of design specs. If they are willing to fake critical medications, there is no limit.

No, thank you.


I agree that the general manufacturing paradigm is that third-world countries produce cheap, low-quality stuff. All I'm saying is that there's no real reason that China couldn't create high-quality tanneries or shoemakers or tailors or whatnot. In fact, I suspect that it's inevitable that they will eventually.

Japan was once in the role of low-cost low-quality manufacture that China/ Indonesia/ Malaysia/ Philippines iare, and now produces some of the highest-quality dry goods in the world in many industries. Hong Kong, South Korea and Taiwan have similar stories.

I guess what I don't understand is why some enterprising capitalist doesn't set up some Chinese factory that actually makes quality goods under the current environment. He'd still save a great deal on labor, even if he still spent money on high-quality base materials and process.
 

RJman

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Originally Posted by Irond Will
I suspect that in the past, there was just a lack of low-cost competition, stronger communication barriers to thwart trade, more expensive transportation, and legal structures less favorable to international trade. Basically, people didn't shop at WalMart because Wal-Mart didn't exist, and the cost differential between cheaply-constructed goods and well-constructed goods was not as strong as it is today, since they were all fairly expensive.
Yep.
 

ChicagoRon

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Originally Posted by Irond Will
It's hard to imagine that previous generations had any of the traits that we like to chastise the latest generations for lacking: a better eye for quality construction, the means to support a thriving luxury industry, the desire to differentiate one's self through the collection of quality goods, the willingness to ignore branding and avoid trends.

I suspect that in the past, there was just a lack of low-cost competition, stronger communication barriers to thwart trade, more expensive transportation, and legal structures less favorable to international trade. Basically, people didn't shop at WalMart because Wal-Mart didn't exist, and the cost differential between cheaply-constructed goods and well-constructed goods was not as strong as it is today, since they were all fairly expensive.

I don't really think that our grandparents were made of sterner stuff with regards to consumer demands, as seems to be the implicit attitude around here. They had their ridiculous fads and trends as well.

I'll agree with most of that. The lack of competition for the low-cost position and primitive supply chain did support artisans more. I will not give up my position that expensive logo-ed garb with inferior quality is a byproduct of mass media.
 

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