Tony Harding wrote:
> Ted Mittelstaedt wrote:
>> Hi All,
>>
>> I've been recently looking for tires (size 205-70-15) and I am finding
>> among the retailers that for the mileage I'm looking for (80K) and
>> the UTQGS ratings (treadwear 700, traction A, Temp B) that the
>> prices are virtually identical. The biggest difference is pricing for
>> the
>> road hazard warranties and for balancing, etc. from the tire dealers.
>>
>> What I really don't understand is why this is the case. For example,
>> Goodyear tires are manufactured in the US, by an American-owned company.
>> Michelin, and Bridgestone/Firestone tires are manufactured in China by an
>> American-owned company. Lastly, Toyo/Tourevo tires are an Asian-owned
>> firm and are manufactured in Asia.
>>
>> I understand reading from the trade rags that US companies have
>> outsourced manufacturing to Asia to save money. I also understand from
>> the trade rags that CEO's of Asian companies don't take the gigantic
>> pay amounts that US CEO's do.
>>
>> So, in principle, the Goodyears should be the most expensive, followed
>> by the Firestone, then the Toyo stuff should be the cheapest.
>
> For most things we buy, the cost to produce an item has little to do
> with its selling price (companies don't spend billions on advertising
> every year for nothing, after all)
>
> <snip>

I would like to see your evidence for this. For gasoline, most of the
cost is the crude oil, refining, transportation and cost of selling the
fuel, like operating the station and taxes. For electricity, it is for
the coal, oil, or carbon-containing substance or uranium or the cost of
the dam, windmill, or solar panels, the cost of transmission and the
cost of billing.

For computers, almost all the cost is the cost of the raw ingredients
(e.g., CPU, motherboard, disk drive) and putting the computer together.

For paper, the biggest cost is trees and processing the tree at the
paper mill.

For car and trucks, the cost of making the vehicles is a major
determining factor in the price of the vehicle, however, some cars get
much higher prices than the cost of the vehicles, and for others, like
GM's EV-1, the cost of the car was not related to the cost of manufacturing.

For all of these things, market forces do play a major role. For
example, if Dell could sell its $1200 notebook for $1500, it will. And
if it costs ExxonMobil more to suck its oil out of the ground than it
can buy crude oil for, it will buy the crude.

There are other things where the cost has nothing to do with the cost of
the product, like cell phones, which are basically an advertising
thing to get people to buy cell phone service. And for prescription
drugs under patent, the cost of manufacturing drugs has very little to
do with the price of the drugs (actually the cost of marketing the drugs
- essentially kickbacks to docs, dividends for stock holders and the
price of development are the main costs). The cost of food crops (e.g.,
grain, corn, milk) has a lot more to with outside forces, like market
forces and government subsidies than the cost of growing the crops.

>> What happened to competition?
>
> Gets a lot of lip service, but companies & CEOs hate it in real life.

Of course they hate it. Would you rather sell cars when there are only
three makers or many more (lets see, Ford, GM, Chrysler, Diamler,
Mitsibushi, Toyota, Honda, Hyundai, Kia, Subaru, VW, BMW, Fiat,
Alfa-Romeo, Nissan, Isuzu and Mazda all sell cars in the US, but there
are more, like Cherry who would like to sell in the US as well).

>> Seems to me there ought to be a big
>> case here for an anti-trust price fixing lawsuit against the tire
>> manufacturers.
>> Anyone have any ideas?
>
> Just between you & me, I'd save my energy. Look around for your best
> deal and get the tires you want.

Good advice.

> Have you considered how little gasoline prices differ regardless of
> where the oil comes from, where it's refined, the price the oil co. is
> actually paying for its crude by virtue of its futures contracts, etc.?

That's called "market forces." For a commodity, the cost of
manufacturing matters little for the cost of a particular brand.

> It's a good way to drive yourself mad if you worry about it too much.

Perhaps you have been worrying too much about it. Sorry, couldn't resist.

Jeff