Wag-Aero's Demise

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Kristin said:
You must have been asleep during the 2012 election and missed all the discussion about Bain Capital, etc. Lots of examples if you want to Google it.
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Well, as someone who was running a company for a private equity firm in 2012, I can assure you that I didn’t miss any of that election-year propaganda. Tell me, how many companies have you run, and what involvement have you had with private equity?

Kristin said:
As for Hartzell, all I need to know is that prices jumped overnight about upwards of 30%.
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No competent, successful executive nor investor - much less any sort of rational analyst with any integrity - would use a single datapoint to come to any sort of decision about a business. ‘Nuff said.
 
Kristin said:
Did these things happen, or are you just spinning a hypothetical here? Seems unlikely that Hartzell wasn't profitable as it has been buying up other entities at a great rate over the last decade.
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Well, we know that the Browns owned Hartzell for the past 37 years. The rest is very likely given the public statements that have been made.

Do you have any information that refutes the post you responded to, or are you just being argumentative?
 
Kristin said:
As for Hartzell, all I need to know is that prices jumped overnight about upwards of 30%
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And if customers are still buying the product, it seems there must have previously been a large consumer surplus. That's great for previous customers, bad for Hartzel. But it sounds like the ship may be getting righted.
 
Lindberg said:
And if customers are still buying the product, it seems there must have previously been a large consumer surplus. That's great for previous customers, bad for Hartzel. But it sounds like the ship may be getting righted.
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A starter that was $600 in 2021 is now $1,500. A prop governor return spring that was $60 in December is $150 in January. These prices far outstrip inflation. It's just as likely the we're being forced to pay for the buyout leverage, simply because we have no alternatives.
 
Chip Sylverne said:
A starter that was $600 in 2021 is now $1,500. A prop governor return spring that was $60 in December is $150 in January. These prices far outstrip inflation. It's just as likely the we're being forced to pay for the buyout leverage, simply because we have no alternatives.
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I can speak to the starter price. Have you looked at copper costs lately?

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Next, have a look at skilled and semi-skilled labor costs and availability. Have you tried hiring anyone into a manufacturing, machinist, welder, or similar role lately? Not only have wages risen sharply, the demand for skilled workers is higher than the supply.

I won't suggest that the business transition doesn't play any part in it, but inflation at the producer level is running higher than inflation at the consumer level (look at this week's reports). Small low-volume businesses have to pass these costs along faster than the big-box consumer outfits will.
 
I'm doing an engine overhaul right now, and the prices have risen sharply for parts. Am I suppose to blame the manufacturers for taking advantage because "because we have no alternatives" or look at the current financial situations such as inflation and cost of materials?

Same goes with the company airplane. It's coming due for brakes this summer, and the pricing we are getting on them is much higher than a year ago. Different manufacturer, different country.

This is the reality of inflation.
 
Doc Holliday said:
Apparently you don’t know the actual story behind Hartzell.

Also, apparently, you don’t understand inflation. Or business.
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You apparently don't understand math. We have not had 30% inflation in the last year, or even the last three years in total.

You apparently also don't understand monopolies or are just a fan of them. Poor, struggling Hartzell, over the last decade, as bought all the major aircraft exhaust manufacturers, both manufacturers of combustion heaters for aircraft, and numerous other aircraft parts manufacturers, e.g. Sky-Tec, Plane Power, et al. Despite your misplaced defense of what now passes for capitalism, this is not a situation where a family was rescued from the poor house after the founder died.
 
StraightnLevel said:
Well, as someone who was running a company for a private equity firm in 2012, I can assure you that I didn’t miss any of that election-year propaganda. Tell me, how many companies have you run, and what involvement have you had with private equity?


No competent, successful executive nor investor - much less any sort of rational analyst with any integrity - would use a single datapoint to come to any sort of decision about a business. ‘Nuff said.
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Two companies. The equity was private. Mine! Other family members have been very involved at the upper level of companies owned by private equity. Very much a mixed bag.
 
Lindberg said:
And if customers are still buying the product, it seems there must have previously been a large consumer surplus. That's great for previous customers, bad for Hartzel. But it sounds like the ship may be getting righted.
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What ship was listing? Certainly not Hartzell after their accumulation of monopolies or near monopolies on combustion heaters, engine accessories, exhaust systems, etc.
 
Kristin said:
You apparently don't understand math. We have not had 30% inflation in the last year, or even the last three years in total.

You apparently also don't understand monopolies or are just a fan of them. Poor, struggling Hartzell, over the last decade, as bought all the major aircraft exhaust manufacturers, both manufacturers of combustion heaters for aircraft, and numerous other aircraft parts manufacturers, e.g. Sky-Tec, Plane Power, et al. Despite your misplaced defense of what now passes for capitalism, this is not a situation where a family was rescued from the poor house after the founder died.
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The current admin has been super aggressive in going after supposed anti-trust violators. Maybe the FTC doesn't know about this.
 
Kristin said:
What ship was listing? Certainly not Hartzell after their accumulation of monopolies or near monopolies on combustion heaters, engine accessories, exhaust systems, etc.
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I'm just going based on what you wrote, that the company was leaving an additional 30% potential profit on the table.
 
Annual%20Inflation%20Rate%202010-%20Mar%202024.png

Kristin said:
You apparently don't understand math. We have not had 30% inflation in the last year, or even the last three years in total.
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Cumulative inflation since 2020 has been about 19.31%. We could throw in a few more variables, such as raw material supply and demand, supply chain problems, interest on money, liability insurance rates, etc. So yea, 30% (where ever you got that number) doesn't seem to far off.

So do you feel the owners of Hartzell should just keep their pricing at prepurchase levels and absorb the losses themselves?
 
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StraightnLevel said:
I can speak to the starter price. Have you looked at copper costs lately?

View attachment 128787

Next, have a look at skilled and semi-skilled labor costs and availability. Have you tried hiring anyone into a manufacturing, machinist, welder, or similar role lately? Not only have wages risen sharply, the demand for skilled workers is higher than the supply.

I won't suggest that the business transition doesn't play any part in it, but inflation at the producer level is running higher than inflation at the consumer level (look at this week's reports). Small low-volume businesses have to pass these costs along faster than the big-box consumer outfits will.
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All of what you say is true, but I have no idea from where Hartzell sources component parts. Additionally, a higher PPI doesn't mean Hartzell won't use pricing as a strategic weapon. Seems I recall a few years ago Hartzell made the shaft and Continental the gears of a tsio starter adapter. Rumor had it Hartzell wanted to make all of it and Continental said no. So Hartzell said making the shaft wasn't important to them and all of a sudden a 1500 dollar part was 10k.

Comanche owners face a similar problem with torque tubes. What was once a $100 low tech steel tube is now $1,500, if you can find one, because the single source can price it however it wants to, and the system allows it.
 
Chip Sylverne said:
. Rumor had it Hartzell wanted to make all of it and Continental said no. So Hartzell said making the shaft wasn't important to them and all of a sudden a 1500 dollar part was 10k.
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Sure. That's a go-away price. It happens all the time and it results from opportunity costs being greater than the possible ROI.

Not all sales opportunities are worth pursuing.
 
StraightnLevel said:
Sure. That's a go-away price. It happens all the time and it results from opportunity costs being greater than the possible ROI.

Not all sales opportunities are worth pursuing
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As a single-source, knowing other manufacturers have high barriers, what it shows is abject disregard for the consumers of the product.
 
Chip Sylverne said:
As a single-source, knowing other manufacturers have high barriers, what it shows is abject disregard for the consumers of the product.
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No. It shows business sense.

When you have limited capacity and resources, you allocate them to the best projects. You can't - and shouldn't - take every order, nor should every order be taken at the same "marginal cost-plus" pricing.

If there truly are high barriers to entry, then the market price should reflect that cost of entry.
 
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There is so much wrong in this thread it is disheartening. Not everyone of course. Mainly those that seem to have read and followed Karl Marx rather than learned the lessons of history.
 
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