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| A Weak US Dollar | |
| When I arrived in Germany for the International Toy Fair, I needed some spending money. Credit cards work around the world, but not in many restaurants or taxicabs. Dollars aren’t accepted within most foreign economies, so I needed Euros. One of the purposes behind the creation of the European Union was to consolidate a dozen or so currencies into a single value system: the Euro. From the airport to the hotel was a 20 Euro cab ride, well worth it since I didn’t yet understand how to work the train system. However, one Euro is worth $1.30, approximately. Take 20 Euros and multiply by 1.3 and you get 26 bucks! At that moment, I was the victim of a weak US dollar. Just a couple of years before, a Euro was worth around 85 cents, so the same taxi ride would have cost me 17 dollars. I hadn’t given the matter much thought until I landed in Nürnberg. By being an archetypal stay-at-home monoliguistic American, I seemed immune from the World Economy, but I wasn’t. Neither are you. As I discovered as I paid my taxi driver, I became like every American model railroad manufacturer who imports models made overseas. My dollar just didn’t go as far. The dollar is weak all over the world which is a curse in some ways and a blessing in others. Let’s say you have wheat to sell by the bushel from your farm in Kansas or Eastern Oregon. Just for easy calculation, suppose you generally get a buck a bushel (yeah, you wish!) Now a few years ago, that bushel would have sold in Germany for about 1.18 Euros. Today, it would go for more like 0.77 Euros. So you can sell more wheat abroad with a weak US dollar while still getting your price. That’s the good news. We have seen prices going up on railroad models in the past couple of years precisely because the dollar doesn’t go so far anywhere else in the world. The same goes for other consumer products made abroad. Whether it’s the Yen or the Euro, we’re paying more. Surprisingly, some prices are actually coming down, representing excellent buypoints for right now, and others are holding their own. I would say that track and landscaping hasn’t gotten as expensive as quickly, in part because some of this is made in America and partly because makers have been holding prices fairly steady here. Yes, there are exceptions, but this is a generally good time for modelers to undertake the landscape portions of their layouts. It’s also a good time to buy into DCC and other technologies. We’ve come to expect that technology is expensive when it is first released because a small sales base has to support a high research debt. As the sales base increases and the debt is retired, the prices come down, often dramatically. I can remember my first electronic calculator and how expensive it was for its comparatively wimpy performance. I can now get much more for much less, and the same is coming true with decoders and systems. Look for Bachmann to debut a basic DCC system for under a hundred bucks, list! Count on more locos to come with sound decoders at a price point which is less than the loco and the sound system purchased separately. Existing digital product lines are receiving refinements with little or no increase in cost. The year 2004 would be a good one to plan purchases of DCC and other technologies for that very reason. Most of us won’t stop buying new locos and rolling stock just because the prices have gone up against the weak dollar. We may scale back some purchases, but many of the new offerings are just too good to pass up. The bottom line is that a weak dollar doesn’t make for a weak model railroad marketplace. |
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John Sipple, Editor |
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| To respond to this month's Editorial, send comments to: Editorial@modelrailroadnews.com | |
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