American manufacturers ripped off by Aussie greed

No wonder nothing is made in Australia. With 42 paid days off and a minimum wage of $16.47 I am surprised Australia even has an economy.

Thats nothing, Canada post employees make $24+ an hour 7 weeks vacation, 15 paid sick days that carry over, a raise every year. and full health benefits, And the highest job absentee rate in the country….

and people complain when it takes to weeks for stuff to come to Canada. your lucky it gets there at all….

We had sheep, we now have mining, eventually we will have sweatshops, the wheel turns.

I checked with an online cost-of-living calculator. It reports that if someone lives on $100,000 in America, he would need only $85,470 in Australia to provide an equivalent standard of living (U.S. dollars in both cases). Thus, Australia is 85.5% as expensive as the U.S., everything considered.

It's easy to point to items that are very expensive in Australia (such as gear imported from the U.S.), but their costs seem to be outweighed by other items.

Our local REI store pays their starting employees $9.17, because they limit the hours for new employees it takes over 6 months to qualify for even marginal benefits (healthcare).
The people who are on Franco's Senior status earn about $14.50 per hour, and if full time the benefits are better.

I guess when you look at it, it might be a wash, stuff in OZ cost twice as much but you get paid twice as much. Doesn't look like anyone is getting a good deal on either side of the water.

Now in Tad's world, I'd like Oz's wages and US prices. Or even better, I'd like the US sale prices when you can get a WM bag for 30% off. I did find this once, but like an idiot I sold the bag.

I like the Sea to Summit ultralight pack although I had to modify it with a sternum strap to make it stable for more weight and I am seriously thinking of buying their new Drybag pack released this year as it is much lighter than the OR Peak bagger I am using. Probably all produced in China , but I'm pretty sure they weren't designed there.

>Rakesh
>We get more but we buy less than you do with our money and that was really my point.
>You cannot have higher wages, higher rents and lower volume and match the price.
>Same reason why a Hilleberg (and a Big Mac…) are more expensive in Sweden than in the US.

>Franco

You touched on an interesting metric for comparing costs of living internationally: How much working time does it take to buy your food? The Economist has a ‘Big Mac Index’ which does this:
wikipedia article

Jerry,

While these are important factors in determining the health of an economy (at least two of them anyway)…they certainly aren't the end all.

GDP (or even better GNI) per person relative to cost of living is a better try – though still not a perfect one. When looking at this type of metric I think you'll find USA is very competetive relative other countries (usually top few). This estimates how much an average citizen can buy. Probably an improvement would be to try to factor in how hard the average guy has to work (effort and duration) to buy these things….but I don't know where to get that.

If interested try searching for GDP(PPP) per capita or (better imo) GNI(PPP) per capita.
PPP stands for purchasing power parity and is an economists attemp to factor in the purchasing power of a local currency.

Its interesting, when I was in school (5-6yrs ago) it seemed the gap btw Canada and USA was much greater than today…still the basic indices I would try to trend on put us ahead…it appears they are doing a lot of things well (good balance of social care vs conservative econmic policy, effective (seemingly at least) goverernmet run medical programs, etc.

Overall I think the USA is still a place of great opportunities — though maybe I am just drinking the Koolaid….

Karl,

The online info I look at shows the exact opposite (though to a greater magnitude). Maybe I looked at a USA website and you an Australian…:)

James

Over the years, I have purchased three silk sleeping bag liners from Jag Bags. Super fast shipping, both cost and shipping better than in the states. Great company too, I had ordered the wrong style one time, emailed them, before they received the wrong bag back, they had shipped the style I meant to order to me. Talk about trust!

Duane

Rakesh,

Do you believe increasing the minimum wage here would unemployment or buying power?

I for one would buy many fewer McDoubles and SweetTs if they weren't a buck apiece same goes for the sushi or chicken wings.

theyll get the message

James,

The US economy is primarily a merchant economy. Most of what drives the economy is people buying things. When people can barely afford to buy essentials, they cut back on everything else, and the result is a downward spiral.

Most of the big companies here are both enormously flush with cash and not paying anywhere near their fair share of taxes, so their own SEC filings make it quite clear that they could afford to pay their workers better.

McDonalds' food is artificially underpriced, I think. It's completely asinine that it costs less to get crap like McD's food than to get un-processed bell peppers. It's the opposite in Europe, which is probably part of why Europeans aren't as fat as Americans.

So yes, I think that increasing the minimum wage would help unemployment.

The buying power problem is another story, however; with our pathetic excuse for a government screwing up everything that they can, the USD is continuing to lose value compared to the rest of the world's currencies, which if it continues would make raising the minimum wage pointless.

I guess that means that my conclusion is a resounding "maybe" in the end.

Tohru
"How much working time does it take to buy your food? "

hard question for me to answer because I am semi-retired and have all the time in the world to buy my groceries when on special.
(buying tip : buy what is on special not what you "need" for the day. That means keeping an eye out all the time , being able to cook from raw ingredients and liking pretty much any food…)
My Sunday afternoon for example is spent at the local fruit and veggie market. I walk there and back….

When I left my last job, as a shop buyer , I was on a much higher wage than the one I quoted.
So my food bill at the time for both myself and my wife would have been about 1/10th of my wage.
But again keep in mind that I don't eat take aways (take out) or pre-made stuff ( there are occasional exceptions…)
Franco

"What you gain on the swings you lose on the roundabout" they say – I guess as an Aussie gearfreak I was overjoyed to find BPL and on line shopping from the US and UK.

However no doubt the citizens of the USA can't use the www to avail themselves of our far more modestly priced healthcare system.

So maybe I'll quit complaining and keep paying shipping costs for gear whilst being able to afford to treat the inevitable health issues associated with middle age!

Edit – spelling

"However no doubt the citizens of the USA can't use the www to avail themselves of our far more modestly priced healthcare system."

So what we save in consumer goods, we spend on insurance? Hopefully it averages out :)

I work in a gear store in Australia and to be honest I am constantly amazed at the price of gear on US sites like Backcountry. A Theta AR from there costs US$500, which is our wholesale price. Some might think that a 100% mark up is egregious (I don't know what US stores do) but it is typical of the outdoor industry. In fact, as more and more shops are becoming vertically integrated, the mark-ups are only increasing.

The average mark-up in my store is 100%, that's standard for everything from sleeping bags to jackets to stoves to socks. The reason it costs us $500 dollars to buy a Theta AR is that the supplier for Arcteryx in Australia, Sea to Summit, imports the jacket, thereby incurring shipping and import taxes and then tacks their own profit margin on it, at least 20-30% as someone already mentioned. In the US the retailer mark-ups may only be around 20-30%, but they get the gear more or less directly from Arcteryx. So if we could buy directly from Sea to Summit we would get jackets at more or less the same price as Americans, but in order to run a shopfront here in Aus costs a lot more than in the States, as has already been hinted at. This doesn't necessarily mean that a 100% mark-up is not excessive, but at least you can see it's not simply retailer "greed" that is the issue.

But take a store like Kathmandu, Australia's largest outdoor retailer by far. They make almost all the gear they sell and they still charge around 900 dollars for their "top of the line" Pro Shell jacket. Or at least, that's the RRP. Now keep in mind this jacket is not made in Canada, it is not nearly as good as the Theta, and the cost to Kathmandu of producing and sending that jacket from its factories in China to the shopfront in Sydney or Melbourne is certainly a lot less than it costs Arcteryx to produce a Theta and send it to a retailer in, say, New York. So what's the deal with this pricing? If you thought Paddy Pallin's 100% mark up was excessive what do you think about Kathmandu selling an inferior, more cheaply produced jacket at a similar price, with a mark-up of somewhere between 500 and 1000%?

Of course you might argue that Kathmandu is shooting themselves in the foot with this extortion because surely no-one is going to buy a Kathmandu inferior Pro Shell jacket when they could have a Theta AR for the same money. But the RRP is only half the story. Kathmandu hardly EVER sell an expensive item of clothing for anything close to its retail price. Instead, they jack up the RRP to make the jacket or whatever seem to the average buyer to be on a par with a Theta AR from down the street at Paddy's. I mean, it has the same "Gore-Tex Pro Shell" tag, right? Then, after the jacket has been sitting up there for a few weeks Kathmandu has a HUGE sale. And I mean HUGE. Like 50% or more off everything in the store. So suddenly this 900 dollar Pro Shell jacket is 450 dollars and people buy it thinking they are getting an awesome deal, when in fact they are still paying at least 100% more than it cost Kathmandu to put the jacket in its shelves.

Now I'm not saying that people should not buy Kathmandu jackets at 450 dollars rather than Theta ARs for 1000 dollars. What I'm saying is that this sort of price fixing is rife in the Australian outdoor industry. It's a bizarre business model that I think reflects the market here. Stores like Macpac, Mountain Designs and Snowgum are slowly adopting the Kathmandu business strategy: vertically integrate as much as possible so that you avoid getting hit with middle man costs, and then mark up your products to match the competition so that your gear becomes bestowed with the appearance of quality, then have several massive sales a year and sell your products at "50% off" but still at 200% more than what it cost you to get them onto your floor.

I personally think it is absurd that Kathmandu and the like are able to advertise a jacket or sleeping bag at 500% plus of wholesale cost, and then have what seems like more sales than non-sales in order to move previously overpriced gear, but Australian consumer law seems to allow it and Kathmandu is doing amazingly well. Meanwhile stores that import what most would agree to be far superior products from the US are struggling to sell things are 100% mark up. I'm not saying that Paddy's or the independent gear stores are necessarily competing in the correct way, but if things continue the way they are, and if there is no other way to compete with Kathmandu other than adopt its business model, that will be the end of US brands in Australia… at least until companies like Arcteryx start allowing their products to be sold online to foreign markets.

And even then, will consumers be willing to buy packs, pants, shoes and jackets before having tried them on? Especially given how much it costs to ship things back and forth between the US and Australia (like 30-50 bucks for a pair of shoes, each way). I guess it's the difference between being able to walk into a store and try stuff on (albeit, minus the hassle of talking to salespeople and parking in the city) and buying stuff online that you think looks and sounds good, you think is the right size, at the risk of having to send it back and incur $100+ more in shipping costs.

Interesting comparison below. To me this looks like they have basically followed what the dollar is doing but have increased the "markup" slightly (of course this is the RRP not wholesale price).

April 2006:
$1AUD buys around $0.75USD
WM lists the Ultralite regular as $330USD ($440AUD at the time): http://web.archive.org/web/20060417084140/http://www.westernmountaineering.com/index.cfm?section=Pricing
Paddy's lists the Ultralite as $749AUD ($561USD at the time): http://web.archive.org/web/20060428003948/http://www.paddypallin.com.au/page.asp?PartID=210&DepartmentID=12&CategoryID=&BrandID=&Step=2&Page=2

Today:
$1AUD buys around $1.06USD
WM lists the Ultralite regular as $385USD ($363AUD): http://www.westernmountaineering.com/index.cfm?section=pricing
Paddy's lists the Ultralite as $699AUD ($740USD): http://www.paddypallin.com.au/equipment/hiking-equipment/sleeping-bags-liners/western-mountaineering-ultralite-sleeping-bag.html

BIG however though. If the op went to have a look at Paddy's website atm they actually have the WM bags quite heavily discounted. The ultralite is actually selling for $489AUD. Which if you add $40 shipping to the price of buying from the USA is looking a bit more appealing. Maybe they're listening.

"This proves just how little the average person (IE not an employer/shopkeeper) knows about the reality of doing business.
(no offence DW, most of my co-workers and even some of the managers used to come up with lines like that)
We were up to 32 paid holidays a year."

Sorry, I think that you're being disingenuous. I get paid an annual salary. In theory I work 5 days, get 2 days off and then start again unless there is a public holiday. If you want to count Christmas Day as a paid holiday then for consistency you'd better also include the weekends as holidays because nominally I'm being paid but I'm not working.

Australia is actually only mid-rank in terms of annual leave – I had 5 weeks in the UK (and from memory France has 6 weeks, but by "bridging" public holidays you get more) and I had 4 weeks in Japan but 13 public holidays, which they've now reorganised so that you basically you get a further 2 weeks off.

The real issue though is this – what percentage of a retailers total costs do salaries comprise?

@Aaron
"Franco – are these paid holiday/sick days required by law for all working Australians? Or, is your example a choice made by a particular employer?"

Only if you're a full-time employee. Casuals don't get the same entitlements. And in my case, since the longest I've ever been in one job here is 3 years I doubt that I'll ever see long service leave.

@Jerry
"How is the economy in Australia? Unemployment? Real estate prices? …"

Australia has one of the strongest economies in the OECD: after the recession in the early 1990s it's basically been one long boom, mostly due to macro-economic restructuring at that time (e.g., slashing tariffs and duties), then avoiding the tech bubble and then selling lots to China. And, since a lot of our banks and big corporates went under in the 80s and early 90s (Tricontinental,State Bank Vic, SA State Bank) financial regulation is much tighter – and actively policed – than in the US. Hence why we dodged the GFC. Unemployment is low, inflation is low and real estate? Well, I bought my house in 1998 and it's now worth roughly 5 times what I paid for it, basically just on land value. The property market is cooling a bit generally but nothing like what happened in the US – because there are no non-recourse loans here …

@Lawson
"No wonder nothing is made in Australia. With 42 paid days off and a minimum wage of $16.47 I am surprised Australia even has an economy."

Actually that's why we have an economy. Can't compete with China (or Vietnam, or Peru etc etc) on salaries, so why bother? Australia's natural advantage is as a primary producer, manufacturing was always about protected jobs and import substitution. One of the reasons Australia has done well is because we did export manufacturing jobs to China – even with the mark-ups people talked about above, we've all benefited from cheaper Korean cars and Chinese clothes. And other jobs have replaced the ones we lost – hence the 4.9% unemployment rate, despite massive immigration.

@Karl
"I checked with an online cost-of-living calculator. It reports that if someone lives on $100,000 in America, he would need only $85,470 in Australia to provide an equivalent standard of living (U.S. dollars in both cases). Thus, Australia is 85.5% as expensive as the U.S., everything considered."

I find that a little hard to believe – housing, cars, food and clothes are all cheaper in the US than Oz.

@Jeremy
"Kathmandu hardly EVER sell an expensive item of clothing for anything close to its retail price."

I'd noticed that – it is actually illegal, and the ACCC did fine a company for doing it a couple of years ago.

@James
"GDP (or even better GNI) per person relative to cost of living is a better try – though still not a perfect one"

Have a look at the UBS Wealth index – it's the Big Mac index calculated on the basis of how long you have to work to earn a Big Mac. It actually shows US cities in 2nd, 3rd, 4th and 5th places – i.e., where it takes the least amount of time to actually earn that Big Mac. Tokyo is top and Sydney is in the top 10 as well.

"Sorry, I think that you're being disingenuous. I get paid an annual salary. In theory I work 5 days, get 2 days off and then start again unless there is a public holiday. If you want to count Christmas Day as a paid holiday then for consistency you'd better also include the weekends as holidays because nominally I'm being paid but I'm not working."

I find that highly doubtful. The reason that we don't include weekends in leave is that we are NOT paid for weekends. Salaried employees in the US are paid for 40 hours of work per week, period — unless you're in one of the few companies that pays overtime. That means that your weekends aren't paid days.

Leave is time off from your regular work schedule that you get paid for anyway; so if I accrue 5 days of leave, I can take a week off and not take a hit to my pay.

It the import tax and shipping that's raising the prices. Back in the late 1980's during the big skateboard boom. Their was skateboard shop named Street Life a couple women from Japan who owned skateboard shop in Japan would show up every 2 weeks with 4 to 6 suit cases they would pay full retail for skateboard equipment to avoid the high export and shipping tariffs of a protectionist market of Japan.
They would clear out the complete inventory of the shop for the day and the Street Life shop would have all their shipments arrive the next day for regular customers . The women from Japan had relatives in California it was cheaper to buy plane tickets fly to California than pay the taxes plus they were able to visit relatives to boot.

I also went to Vancouver,Canada for a contest and the skateboard shops was selling at about 30% more than you would pay across the boarder in nearby Seattle,Washington.

Basically protectionist markets hurt most countries people when we have open markets in the USA. The country thinks their helping their people by forcing them to buy products made their in country of origin.
Terry

Terry
It is really a lot simpler than some make out.
The retail price reflects the cost of doing business.
That is the simple reason why when you go to Mexico some goods and services are consistently cheaper or dearer than in the USA but when you go to Canada another set of goods and services shows discrepancies with your home price.
That is true for any country.
For example unlike you are told above and in spite of very cheap and labour costs , you cannot buy a genuine North Face jacket in Nepal cheaper than in the US.
However if the US retailers could employ staff at $2 a day and pay Nepalese rents, then he could be cheaper again.
If you read carefully the points outlined above by various members you will find that many goods are dearer (and by a similar margin) here than in the US.
So do you think that ,for example, all book sellers get together and slap an extra 50% on their merchandise?
Fact is that they all pay similar wholesale prices,rents,staff costs,taxes and so on so they need a certain margin to remain in business.
Of course they cannot compete with Amazon so many have already closed down and more are on the brink.
Same for the photo industry as it is for the outdoor one and many more…
Mind you I see that many find it really hard to understand that paying their staff $24 an hour, paying more for petrol and having to cover greater distances with fewer customers , the Canadian Postal Service charges more than the US versions. Amazing isn't it ? What a ripoff.
Come to think of it , our Postal service is pretty much the same as the Canadian one. What a ripoff!
Franco
DW, please tell us how much is to rent a 3 bedroom house in Tokyo compared to Melbourne or how much it is to eat there western style.
Somehow I think it is disingenuous to ignore some of those points…
Of course you can do it the Japanese way but so you could buy here another sleeping bag..

Does anyone know if there is a good Australian backpacking forum? I understand that BPL is very international, but I'd like to see a local Australian forum or newsgroup.

Roger Caffin who is a staff member here on BPL, has a website. He lives in Oz. Don't think there is a forum, but if there is one down under, he probably has a link. Just do a Google search for Roger Caffin backpacking and you should be able to find it.

Roger posts here regularly, but I have not seen any posts in a while. He and his wife usually go backpacking in Europe during the summer, so he is probably out having a great time.

http://www.bushwalk.com :)