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Observations of a single basement dweller who's dumb enough to hang out here ten times per day:
1to392831weretaken
Member, Swaye's Wigwam Posts: 7,310
Stoke the campfire and pull up a Stump°, it's storytim.
It's early 2007 or thereabouts, and yours truly and future Mrs. 1to987955weretaken were looking for our starter home. Myself and the future ball and chain have great credit (an uphill battle up to that point for this fast strategy looser), extremely stable employment, low debt, and are in the 87th percentile of wage earners in the state or thereabouts (I can only project back, but close enough). Loading up the real estate sites, I'm thinking I'll enter in our upper price limit and be bombarded with houses you'd find on MTV Cribs. Instead, we spent the better part of a year on a festival of pain, touring shithole after shithole and feeling increasingly insulted and angry.
Finally, March 2008 or so, the rusty gears in my skull budged a bit, and I had an epiphany. I turn to the future Mrs. and I say, "This can't be right. If we can't afford to buy a first house, nobody can. And yet they are. These prices aren't real, and this is going to blow up. We buy now, and we're going to take it in the shorts. I'm out."
We agreed that it was stupid to buy something when a major correction was surely coming (I was right), but then the very next day she found the "perfect" place, and we stupidly ended up buying. That's another horror story. The point is, you don't always have to have your finger on the pulse of the market, have a booming Ameritrade account like Pumpy, or be a financial analyst to feel what's blowing in the wind. It's often pretty easy to observe the world around you and see that things are out of balance.
Which brings me to another such observation that I'm still right in the middle of. Like the good little vulture that I am, I've been trying for months now to pick the carcass of a COVID-killed business to steal a VMC for the shop. I've dreamed of having one for decades, since playing around on one in college, it's always been too expensive to justify, but I started seeing them go at auction for the price of a used motorcycle! I'd never seen prices like this, so figure it's either now or never.
Problem: As @Logistics could attest to, moving such a thing is no small matter. We're talking about a 10' cube of cast iron and steel weighing 10,000 pounds, containing sensitive electronics and extremely tightly toleranced bearings and whatnot. It's a fool's errand to try moving one yourself, and most auction houses won't even let you, so you're beholden to rigging companies, and there just aren't that many.
Since December, I've contacted no fewer than a half dozen rigging companies, most local but some national, requesting estimates. I've passed on four machines now because I didn't want to bid before knowing how much it would cost to move. It's been REALLY pissing me off that these businesses are seemingly not interested in taking my money in exchange for performing the service that they advertise. Finally--after two months of emails, calls, leaving messages, talking to office assistants--I got one of these guys to answer the damned phone and call me back. Really nice guy, we had a decently long chat, and it was enlightening: He told me he understands that it's frustrating, but every single rigger in the state is so damned busy that they literally don't have time to deal with new customers. I thought it was just modern communication incompetence, as discussed in the other thread here, but that's not it at all. So many businesses are selling off their shit and closing doors that equipment riggers literally can't keep up! He told me that usually most of their business is delivering new machines (business expanding), but lately their business has been over 80% auction removal.
Finally, over a week later and after taking a leap of faith and buying a machine, I got a bid to prep, rig, move, and place a smallish machine in the shop. It was about 100% higher than when I read online that I should expect. And why not? Supply/demand, right?
I'm not mad that a business would maximize profit when the gettin's good. But I am a little worried in a macro sense. It's another one of these moments where there's enough clues of bad things coming that it's hard to miss. I've walked through multiple places now to inspect potential purchases. These are not mom and pop shops. This last one, the first HMC sold went for $1 million, and the buyer got a steal. As I was walking through the building, I'm thinking, "No way this place employed fewer than 200 people. Now it's gone."
Point is, I don't think we've seen the worst of things at all. There are simply too many businesses that have closed, and the government can't prop everyone up forever. I've been completely insulated from the economic impact of the pandemic (even more insulated after all the daydrinking and commensurate gut expansion...), so it's a bit of a shock to me to see firsthand the level of carnage over the last couple of months, and it only seems to be accelerating. I can't stress enough that I've been eyeballing these things out of the corner of my eye for the better part of 20 years, and I've never seen anything like this market. I've never seen prices for used equipment even close to this low. I've never seen so many shops (many large) closing all at once.
Anyway, I just thought many some of you who are similarly unaffected might be interested in some observations from the front lines. Shit's coming.
It's early 2007 or thereabouts, and yours truly and future Mrs. 1to987955weretaken were looking for our starter home. Myself and the future ball and chain have great credit (an uphill battle up to that point for this fast strategy looser), extremely stable employment, low debt, and are in the 87th percentile of wage earners in the state or thereabouts (I can only project back, but close enough). Loading up the real estate sites, I'm thinking I'll enter in our upper price limit and be bombarded with houses you'd find on MTV Cribs. Instead, we spent the better part of a year on a festival of pain, touring shithole after shithole and feeling increasingly insulted and angry.
Finally, March 2008 or so, the rusty gears in my skull budged a bit, and I had an epiphany. I turn to the future Mrs. and I say, "This can't be right. If we can't afford to buy a first house, nobody can. And yet they are. These prices aren't real, and this is going to blow up. We buy now, and we're going to take it in the shorts. I'm out."
We agreed that it was stupid to buy something when a major correction was surely coming (I was right), but then the very next day she found the "perfect" place, and we stupidly ended up buying. That's another horror story. The point is, you don't always have to have your finger on the pulse of the market, have a booming Ameritrade account like Pumpy, or be a financial analyst to feel what's blowing in the wind. It's often pretty easy to observe the world around you and see that things are out of balance.
Which brings me to another such observation that I'm still right in the middle of. Like the good little vulture that I am, I've been trying for months now to pick the carcass of a COVID-killed business to steal a VMC for the shop. I've dreamed of having one for decades, since playing around on one in college, it's always been too expensive to justify, but I started seeing them go at auction for the price of a used motorcycle! I'd never seen prices like this, so figure it's either now or never.
Problem: As @Logistics could attest to, moving such a thing is no small matter. We're talking about a 10' cube of cast iron and steel weighing 10,000 pounds, containing sensitive electronics and extremely tightly toleranced bearings and whatnot. It's a fool's errand to try moving one yourself, and most auction houses won't even let you, so you're beholden to rigging companies, and there just aren't that many.
Since December, I've contacted no fewer than a half dozen rigging companies, most local but some national, requesting estimates. I've passed on four machines now because I didn't want to bid before knowing how much it would cost to move. It's been REALLY pissing me off that these businesses are seemingly not interested in taking my money in exchange for performing the service that they advertise. Finally--after two months of emails, calls, leaving messages, talking to office assistants--I got one of these guys to answer the damned phone and call me back. Really nice guy, we had a decently long chat, and it was enlightening: He told me he understands that it's frustrating, but every single rigger in the state is so damned busy that they literally don't have time to deal with new customers. I thought it was just modern communication incompetence, as discussed in the other thread here, but that's not it at all. So many businesses are selling off their shit and closing doors that equipment riggers literally can't keep up! He told me that usually most of their business is delivering new machines (business expanding), but lately their business has been over 80% auction removal.
Finally, over a week later and after taking a leap of faith and buying a machine, I got a bid to prep, rig, move, and place a smallish machine in the shop. It was about 100% higher than when I read online that I should expect. And why not? Supply/demand, right?
I'm not mad that a business would maximize profit when the gettin's good. But I am a little worried in a macro sense. It's another one of these moments where there's enough clues of bad things coming that it's hard to miss. I've walked through multiple places now to inspect potential purchases. These are not mom and pop shops. This last one, the first HMC sold went for $1 million, and the buyer got a steal. As I was walking through the building, I'm thinking, "No way this place employed fewer than 200 people. Now it's gone."
Point is, I don't think we've seen the worst of things at all. There are simply too many businesses that have closed, and the government can't prop everyone up forever. I've been completely insulated from the economic impact of the pandemic (even more insulated after all the daydrinking and commensurate gut expansion...), so it's a bit of a shock to me to see firsthand the level of carnage over the last couple of months, and it only seems to be accelerating. I can't stress enough that I've been eyeballing these things out of the corner of my eye for the better part of 20 years, and I've never seen anything like this market. I've never seen prices for used equipment even close to this low. I've never seen so many shops (many large) closing all at once.
Anyway, I just thought many some of you who are similarly unaffected might be interested in some observations from the front lines. Shit's coming.
Comments
Alright I'm just going to fucking ask: what is a VMC and what do you do with it?
Re real estate ... until the techies leave, it is not a bad idea to be long in Seattle real estate. If they ever do, it will be a dark day for many of us, even though I agree they have changed the face of Seattle, and not always in positive ways.
I can only afford old, small(ish), and shitty (plus I have to fit it under my shop door that I should have built taller), but the better, newer, more expensive of these machines can turn a shoebox-sized block of aluminum or steel into whatever you want in about an hour. I plan to make motorcycle parts at first then whatever comes up after that.
Here's a way newer, WAY more expensive and awesome 5-axis VMC doing its thing:
Unemployment is about 7% in Washington State right now. Not sure I see a cliff but there are specific sectors like restaurants which are definitely fucked. Those impacted would seem to also be low wage earners, though.
What kind of manufacturing are you seeing the downturn hit? Part of me wonders if the businesses closing are finding themselves bre-employed at larger companies - it sounds like the "haves" are, to a certain degree, just winning even more resources from the have nots at this time. The other part of me thinks the government bailout money has to eventually induce big inflation and 2 years from now we're in a lost decade.
On the other hand, housing this time around seems to be driven much more by market forces. Inventory in places like Bend or Spokane or Boise or Bozeman or N. Idaho simply can't keep up with demand right now. People are fleeing the cities. At least on a personal level, the Throbbers have ramped up retirement plans by 3 years and are pedal to the metal in getting the Compound spruced up so it is shiny and saleable. If dumb fuckers from Seattle/PDX/LA want to pay 3 times what we bought it for, well, OK! We'll GTFO out of here and go to the South where they don't insulate and houses are cheap.
My question is - who the fuck are buying the houses in Seattle and SF and LA so the escapees can cash out?
More storytim from early 2007: Being an oil worker, a significant portion of my income comes from working hundreds of hours of overtime. My then girlfriend was a high school English teacher. We're sitting in the office of a mortgage broker in Fairhaven, trying to get preapproved for a loan so we could jump on any house that stood out to us. The broker asks us for our information, and I explain that I can't really give her an exact monthly pay, as it doesn't work that way. Depends on how many holidays and overtime shifts I work. Best to just take the year's income and divide by 12. "Huh," she says. "I'll tell you what. The banks don't like to see 'Teacher' because they know teachers are paid shit. What we're going to do is say that your girlfriend here works in 'the education industry' and can make up to $100K, giving her your overtime. It'll look better."
Tap tap tap tap... "Looks like I can get you preapproved for $500K."
I'm like, "WHAT!?" Doing the math to determine a payment we could afford at the time, at the interest rates we would then be looking at (6.25% with zero down on that first mortgage, which sounds crazy in today's climate), we had decided our ceiling was $325K. I told her thanks but no thanks, and I ended up working with my credit union instead.
Driving away from her office, I turn to the future Mrs. and said something to the tune of, "Dear lord, we're fucked. How many people are bad enough at math to take those loans!?" It only barely registered at the time, but it was funny, a year or two later, reading Matt Taibbi articles in which he described the exact malarky° we experienced firsthand in that office. So it wasn't just an imbalance of housing prices vs. wages and employment in 2007; there were other glaring signs that things were fucked.
To answer your question about what jobs I'm seeing disappearing, that's what's most disturbing about my search. It's true that just about every week I see a restaurant, brewery (Skagit River Brewing, recently, hit close to home, as that's a place I've visited many tims), or restaurant supply company offered up on the auction block (fun fact: did you know there's such thing as a giant $6000 stand mixer?).
It's not just restaurants and bars, though. What's disturbing about my observations from the last few months and in speaking with riggers is that it points to impending major job loss in more high-paying industrial sectors. Most of the shops I'm seeing closing are in aerospace. Several sawmills, large plywood manufacturers, etc. are going under, too.
The damning part--the part that really disturbed me--was hearing from the rigger how severely his business has turned. He's used to filling new shops with new equipment or bringing new equipment to expanding shops. Now, it's working in reverse: Companies are exploding, and he's driving the pieces around to vultures like me. Riggers don't move refrigerators; they move big, expensive machinery. The kind of big, expensive machinery that only decently sized manufacturing facilities can afford to own and operate. Machinery that requires trained and skilled employees to operate, not just somebody off the street.
Just like with short sellers, somebody always gets rich off the downfall. When it's auction houses and riggers that are getting rich, we should be concerend. It's home shop losers like me who can suddenly afford equipment they never would have before. To me, these are not good signs. I know there's 7% unemployment now, my point is that I don't think we've seen the worst of it. I fear a delayed reaction that we haven't fully seen yet and that will hurt. Maybe things will return to normal soon enough, government intervention will bridge the gap, and these jobs will come back, but... damn. I don't know. It took several years for things to return to "normal" after '08.
hookersescorts and blow on the high class finance board?Super fascinating insights with the rigging industry. What I am not sure about now compared to 2008 is whether the whole thing is about to crash, or if we're fully into the "K Recovery" scenario, where certain sectors do great and others get fucked, and those that are doing fine are virtually independent of those getting fucked.
There are going to be a lot of jobs that just don't come back; the middle class always loses when major shocks are introduced to the system. Particularly with technological change.
Some real estate will go to shit while others will be nearly untouched. Same with manufacturing and service etc.
All this is due to the downturns being created by artifical means (covid). Its not market forces. Its market forces being manipulated by forces outside the market.
Study history. It will be your next best friend.
On the other hand, fuck the lot of you. I spent the day laying on the sand watching beach volleyball.
Florida.
Seriously have had nightmares going on 8+ mos (and even more so after the election) from the existential crises for our? future ... I'm not the "god fearing man" type, but I've been praying someone can convince me we? will be fine and just need to ride it out. I just don't see anyway out that doesn't equal extreme pain for the USofA.
Trying to stay away from #tugtalk, but I see this impending existential crisis as inclusive to geopolitical machinations ...
Some of the smaller ones built for speed like the Brother Speedio and Fanuc Robodrill series are fucking amazing, too. Just check out how quickly these things move and change tools:
The amount of machining porn on YouTube is endless.
Taken about a decade off your lifespan, that's what.
Still haven't missed a meal - still have a job - can still hand over pieces of paper and receive goods and services for them. The entire aerospace industry is on the ropes, as are several other industries that have been ravaged by covid. Seeing the subcontractors that support these industries closing doors isn't all that surprising, and frankly, I don't think it's all that good of indicator of the economy as a whole. Softwood lumber manufacturing is also an industry that's been under attack for decades.
The thing to remember is that someone's loss is another's gain. If you just picked up a machining tool that was previously out of reach, then you're the winner. And you being the winner and Boeing, or one of their subs, being the loser doesn't happen very often. With any luck, your win will become the economy's win and Boeing and their bullshit can fuck right off.
We'll see, I guess. Either way, it will be interesting.
One big Reason housing prices are up is after the 07/08 housing crash, Home builders spent the next 3-4 years building about 25% of the new inventory needed to keep up with demographics.
Your comment on true unemployment and what's coming is so spot on. We have 10 million jobs that are gone and not coming back, and with the new work from home economy, many big businesses are 1/2 months away from having a year's worth of data showing them how much more production they got from their people than by being in the office (25% was number from the head of a hedge fund interview). Banks just came out and said the days of keeping people employed thru covid just b/c are over. What this means is for these people they are going to have to have a Hunger Games Mindset when it comes to their jobs. In the past you could see in the office who was pulling their weight and not, so if crap hit the fan, all you had to do was be better than him/her and you were probably safe.
For the stay at homers, they won't be able to see that, or know who is producing what, so to try and not be the person let go, the only thing they can do is produce more and more which just snowballs as now you can't see what your co-workers/competition is doing.
I weekly go into a store that buys pallets of merchandise (from a auction where you can see the outside of the pallet, but what's inside of it is unknown) and the #1 thing they are getting is coming from restaurant distributors who have cases of product they would sell to restaurants and bars that have went poof. Think 5 gallon containers of mustard, salad dressing, relish, etc.
Point is when this all done, the number of un/under employed is going to be much higher than just the 10 million