cottage industry

COTTAGE INDUSTRY

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When will cottage industry goods become viable again?  It is clear that retailers all across the land are in trouble, and most corporations are stupid high in debt.  Most Internet companies make no actual profit, relying on increasing stock valuations to cash out for a big payday.  Wal-Mart hasn’t been The Low Cost Leader for many years, after its uber-growth strategy hit the shoals of the 2008 Greater Depression.  They stay in business by cutting hours, cutting quality, charging more than most other places but disguising it well and by lobbying DC to pick up their medical insurance costs and by adding to the Food Stamp rolls ( to goose grocery sales ).

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I’m not assuming that small mom and pops will once again fill the void left by big box stores as they go tits up.  Almost all Big Box’ers were little more than excess capacity ( especially clothing ).  And all that excess capacity, which started in the last cheap oil years of the 90’s, was initially about economics of scale.  Pile in deep and sell it cheap.  Now, who does that?  The inventory has shrunk dramatically and the prices have gone to nose bleed levels.  Which should be all the incentive that Mom & Pop businesses need to move back in.  Alas, that won’t happen due to real estate.

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The bankers cleaned up on real estate during the bubble.  Granted, they made more in derivatives ( the draining of the entire Greek economy was due to the singular attentions from the vampire squid Goldman Sachs ) than interest on mortgages, and then there were the bail-outs which might have been completely engineered or in fact could have been entirely necessary to “keep this sucker from going down”, but who the heck knows and really who cares as the bankers control the government and they’ll do as they please.  But SINCE then they are even crazier on that profit squeeze.  They have TWICE if not more exposure to derivatives now and insane levels of leverage with real estate.

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It is possible that this is the only profit center left and it doesn’t matter if it is risky or not.  Regardless if that is the case or the whole thing is just a Long Con, the banks took all those foreclosed homes and either allowed them to rot or they sold the management rights to others to rent them out.  Home rentals are scary high prices as well as apartments ( less homeowners mean more renters mean apartments jack up their rents.  In most cases it is cheaper to leave units vacant and keep the others at higher rents than it is to drop rents for everything ).

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You would think that failing retailers mean that rents decrease, but evidently the retail sector is mirroring the artificial shortage price increases of residential units.  Rents are simply too damn high.  Mom and pop cannot stay in business with those prices.  They can’t buy at the same price level, since the Big Box Boys buy by the container ship rather by the carton, and they can’t sell high enough to pay the rent.  Unemployment increases all the time, as do mandatory medical insurance costs ( the banking sector is also the insurance sector, and no amount of taxpayer money is enough for these whores ), and customers are always having less and less to buy with.

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But people always need tools and even if toys and trinkets aren’t selling well any more, you can always find a market for tools as long as you avoid commodities or retail.  This has been true for twenty-five years, except retail is recent.  It used to be, you left the cheap bikes ( commodities ) to Wal-Mart and sold quality bikes and brand name bikes and bike repairs and bike accessories at a small store.  You weren’t competing with the Big Box.  You were safe, offering quality rather than quantity.  But since the ‘08 crash ( well, even before that to some extent ), real estate prices are far too insane.  Retail is a suckers game now.

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So rather than concentrate on being a merchant, you need to concentrate on being an inventor or a craftsman.  Not pretty foo-foo crafts crap like hand woven pillow coverings or tapestries or crafted beer steins.  There could be a market for that, although I’d avoid anything that smacked on middle class extra disposable income status seeking displays.  In other words, does it have a market during a depression?  I’m thinking more along the lines of tools that either make people money or save people money.  That is your sweet spot.  Like the guys that offer made in America cross-cut saws ( the Japanese saws that compete with crosscut types are great, perhaps better, but rely on overseas trade and the dollar primacy, so I would place my wager on long term survival with the domestic folks ).

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It isn’t just crazy ass survivalist dudes who want old timey saws.  We hate relying on gasoline and spare parts due to logistics.  Others just want a manual tool that is much cheaper to run in the long term.  Some crazy bastards that hug Gaia by relying on bicycles for transportation might be going back to all manual tools on principle.  Off-Gridders just want something they don’t need to have to worry about going into town for parts or fuel, if they are socked in during the winter.  But regardless, manual saws are a quality tool rather than a quantity tool.  And even if they suck compared to a power tool, you can’t argue with the cost savings.

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Cost Savings?  What a concept!  It kind of fits right in there with Saving and Lack Of Debt during an economic contraction.  I would guess that this small little mail order/Internet company should be a safely steady business for many years to come ( here we discount the long term death of shipping due to energy contraction, concentrating on a limping but functioning economy phase ).  You would think that the guy selling individually crafted crossbows would be a disposable income reliant business, but I would wager that even if sales to Society Of Creative Anachronism members dried up there would still be plenty of gun free zone sales ( at least enough to keep him in business ).  Weapons are tools after all.

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Continued tomorrow.

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