rx7locost wrote:
Oh Chet, I think the title is accurate. The question is, just who is it that is wanting the US based shop.
Right you are. nether10 was the OP, he's the guy who wanted it. Stuart didn't chime in 'till page 3. If nether10 doesn't want it any more, then perhaps he should change the title, but it's his thread.
rx7locost wrote:
Stuart's wants seem to change from day to day.
Not a fair statement, nor (in my experience) an accurate one. He stuck to his guns on $15,000 down (which includes a sample Exocet) and $100 royalty per kit since he made the proposal. He said he would entertain offers, but I wouldn't accuse him of excessive flexibility. As far as wanting $40,000 down and $250 per Exocet, well, who wouldn't?
rx7locost wrote:
I'd bet if the right offer was on the table, he would jump right at it.
Look, presuming he's telling us the truth on this forum and me the truth in private (and anyone intending to do business with him or buy a kit from him should be presuming that, right?) his ability to profit on UK-made Exocets is staggering compared to the ability to profit making Exocets in the US. When he told me what he makes on kits shipped to the US, I figured there must be some enormous UK government program to encourage exports by paying their manufacturers to send products overseas, but Stuart has since clarified it in a post here ("It's easy, we just..." top of page 9) and it seems to be more of a general difference in UK/US business environments
His in-house rate for production welders is £6 per hour ($9.60) for 10-12 hour shifts. I can't touch that in Oregon; our minimum wage is $8.40 and we have to pay time-and-a-half for overtime. The lowest paid busboy or gas pump jockey in Oregon gets $105 for an 11 hour shift, that's $9.55 an hour. I can't get a "make sure the quality is right" level journeyman welder for a nickel an hour more than an entry level busboy, it's just not possible; I pay double what Stuart pays for skilled labor. When you add in my overhead on the shop facilities alone (rent, power, insurance including FICA, equipment maintenance, supplies) it bumps the labor cost up to triple what Stuart pays, and if you bill the rest of the project support expenses against the labor (secretarial services including reception and bookkeeping, promotion and advertising, phone and internet, and in this case licensing fees and royalties) US manufacturing margin might peak out at 1/3 to 1/4 what Stuart has his up to in the UK. So the "right offer" is going to have to be pretty spectacular to match what Stuart has going on already.
rx7locost wrote:
It seems that we North Americans don't think that the $10K up front is reasonable if a royalty is paid too.
Okay, unless someone else has made Stuart an offer for a US Exocet license, then "we North Americans" may have had lots of reasons we didn't take him up on that. I don't think his proposal was unreasonable, but without his US Exocet earnings linked directly to US sales, it was just too risky for my tastes. I don't think he thought my proposal was unreasonable, but since it linked his US Exocet earnings directly to US sales, it was too risky for his tastes.
rx7locost wrote:
MEV has stated that this money is mainly to sort out the "wankers" as Jack put it.
He said "men from the boys" and that was one reason, but he didn't say it was his main reason. I suggested that putting up ten grand in marketing would sort me sufficiently, but that was my opinion, and I probably have higher confidence in me than Stuart does.
rx7locost wrote:
So, what if that $10K were put up by the US based company <snip> 3rd party escrow account <snip> regular (quarterly?) basis <snip> business milestones <snip>
I can't tell you why Stuart wouldn't be interested, but I wouldn't be interested because $10k would be better spent on promotion than on guaranteeing the designer a specific profit. Promotion would increase sales, and I believe increase profits, but if even with a full court press promotional plan, US Exocet sales never reached 100 cars, Stuart would be better off with the money up front. As it stands, Stuart can equal his 100 US-made kit profits with surprisingly few UK-made kits delivered to the US...so rx7locost, if that's going to be your offer to him, I think you'll need to sweeten the deal.
rx7locost wrote:
This might be enough of a carrot to entice Jack's potential investors, who, by the way, don't seem to be jumping at the opportunity in its present form.
Nobody was jumping at it in its present form, whether I was in the mix or not. At this point, a potential US Exocet licensee wouldn't even have the benefit of a head start--he'd have the same Exocet kit sample that anybody can buy from MEV, and a neat name with "exo" in it.
If the designer has no financial interest in keeping ahead of the competition in the US, then somebody else, who is willing to make a few design improvements for the US market, can offer a better product and have $10,000 left over to promote their Exolent or Expat or...gosh, it's too bad that Exige is taken. Or just make Exocet replicas and put--"If someone wishes to copy my concept the world is big enough." -Stuart Mills, October 6, 2010--on their letterhead. Either way, the licensee is going to have a hard time unless Stuart is motivated to stand up for their rights.
There's enough risk of a clean-slate competitor coming into the market (or as clean a slate as Stuart's--that is, make a Miata kit that looks like an A t o m) and if they're coming in with more money because they didn't pay Stuart for the opportunity, well, a licensee had better have Stuart's long term dedication to rely on or they're going to be in trouble.