Just returned from a month in Venezuela. Experienced the diminishing value of the US$ in a developing nation. The lost in faith of the US$ has resulted in the dumping of the currency. Within 4 weeks the street value dropped from $1 = 3.6 BF to 2.9 Bolivars. The Euro was holding steady at 4.7 Bolivars. Official currency rate is 1$=2.14 BF. .

In the real world of coffee hardware commerce the decreasing value of the dollar relative to the Euro should be effecting the price of the hardware we purchase. So far, there doesn't seem to be major across the board price jump. I'm suspecting the retailers are holding off until the next container arrive. Could get ugly regarding prices.

According to last year's poll Where are the prices of espresso equipment going?, only half the respondents believe the cost of espresso equipment will rise faster than other consumer goods. Below is an update to the Euro versus US Dollar chart I posted in that thread:


USD vs. Euro: The journey from parity to paltry

It does not paint a pretty picture for Euro-zone importers. Some sponsors have mentioned in casual conversation that prices would rise with the next shipment to replenish stock depleted by holiday shopping. For now, I think some manufacturers are absorbing the exchange rate loss simply to stay in the U.S. market. They're no dummies, they know that it takes years to build brand identity and losing ground today would cost them for years down the road. How long before they say "enough is enough" and start passing the cost directly to the U.S. consumer is anyone's guess.

Besides at this point, no one expects the dollar to continue it's slide forever. US is in recession at the moment (don't ask the politicians, though). Hopefully, the dollar will reverse its trend late this year or by next year.

Jarno wrote:Besides at this point, no one expects the dollar to continue it's slide forever. US is in recession at the moment (don't ask the politicians, though). Hopefully, the dollar will reverse its trend late this year or by next year.

I don't see that happening. The housing debacle has a couple of years left to play out, the credit problems will continue. Oil is not going to decrease in price and will probably head towards $150/barrel. Bunker fuel continues to increase in price, so shipping will eat into more of the cost. While the bottom for the U.S. is somewhere around 2010 or 2012, there's going to be a lot of demand destruction that's going to hurt a lot of economies and I really don't see a bright side until sometime after 2015 or 2018.

Bob

Well, now we've heard from an optimist and a pessimist...

It really is quite saddening to see. It makes me wonder if we will see a high end machine maker start producing them here in the US. As the price on these Euro markets bounces up, it might give a competitive edge to move or start a facility for building them here in the US. Or maybe I am just dreaming and have no idea of what I speak.

shadowfax wrote:It really is quite saddening to see. It makes me wonder if we will see a high end machine maker start producing them here in the US. As the price on these Euro markets bounces up, it might give a competitive edge to move or start a facility for building them here in the US. Or maybe I am just dreaming and have no idea of what I speak.

As with cars, it might make a lot of sense to build more machines here. We have a few already - Astra,
Salvatore, Synesso, and, I think, a couple of others. But, I don't see that happening from one of the
major vendors. It would also have to be suppliers as well - water valves, pressurestats, controllers,
and the whole range of supporting industries. Most of these seem to be in Italy, so shipping would be
significantly less for parts only, but someone would need to warehouse parts at the local level. To
make it viable, a range of machines would need to be built - sustainable volume to keep costs low,
or the creation of a niche machine, like we currently have, which makes the price per machine quite
high due to initial engineering costs.

With the proper product mix and listening to customers there could be a viable on-shore business.
It would take someone with a love of espresso that had been successful enough to have enough
contacts or friends to venture into such a market, with the resources to be able to survive (venture
capital funding) three to five years before turning a profit.

Bob

shadowfax wrote:Well, now we've heard from an optimist and a pessimist...

Actually, what I said was the moderate, almost optimistic view. I've seen the pessimistic view
and spent most of last year almost depressed about it. But I'm back to enjoying the coffee.

Bob

On setting up an espresso machine Mfg. operation here in the U.S....

If it were me, I'd -

- buy out Salvatore.
- form a deal with Dalla Corte for their group head.
- attempt to set up a common parts warehousing operation as a co-operative along with the rest
of the part suppliers and repair vendors around, at least the North American hemisphere.
- Offer 3 machines -

- Espresso only machine based on the Dalla Corte head with and without PID, no steam boiler,
vibe or rotary pump, pour over or plumb-in, improved ergonomics, NSF approved.
- HX e61 machine - pretty much the Salvatore design with tweaks to deal with some of the HX
issues, improved ergonomics, while maintaining the simplicity of the design - vacuum
breaker optional, no OPV valve. Vibe or rotary pump, lever only, pour over or plumb in,
NSF approved, 15A.
- Steamer only, HX based hot water, 15A, plumb-in only, NSF approved.
- Maybe an auto version of the above with flowmeters...

Any other offering would be based on customer demand.

While there is a savings in going to a frameless design like the current crop of prosumer machines, their
layout, wiring, plumbing, and ergonomics leave a lot of to be desired. Thus the - buy out Salvatore's
frame design and improve on it.

Bob

It would cost more to make machines in the US. You would have to pay that union labor assembly guy $25 an hour to put a screw on a case. And we wonder why the US auto industry is going belly up.

cannonfodder wrote:It would cost more to make machines in the US. You would have to pay that union labor assembly guy $25 an hour to put a screw on a case. And we wonder why the US auto industry is going belly up.

Does there really need to be a union for espresso machine assembly? I mean, I somewhat have trouble believing that would be inevitable. It's such a small volume thing, I would think. Also, I have trouble believing that there is some kind of child labor going on in a country like Italy, or anywhere else in Europe, getting super-cheap labor for assembly. My take is that my Vetrano should cost about $5-700 if it could be assembled en masse like a toaster or other appliance that's in every kitchen in America. Heck, most of these E61 machines cost significantly more than a Maytag washing machine, and appliance with significantly more metal in it. Maybe I am way off base, but I was under the impression that, even before the dollar took a nose-dive, these machines were stinking expensive compared to machines with similar equipment for the simple reason that someone in Italy is getting paid 25 Euros per hour to screw the boiler onto the machine and connect all the wires. Am I wrong?

Still, I wouldn't start an espresso machine company here in the US. It sounds like the real issue is sourcing all the special parts that are also made in Italy.