Toro National Price Increase

[ztnoo 2,298]

Got an email from RCPW (Replacement Commercial Parts Warehouse) of Macedonia, OH today announcing "Toro National Price Increase" effective 4/30/2018.

I would assume that means any Wheel Horse parts Toro is still in possession of will follow suit into uncharted pricing territory.........and Toro is already extremely proud of the NOS Wheel Horse parts they are warehousing.

I think I'll check a couple of old style mule drive parts I know Toro to be in possession of currently, and when the new pricing goes into effect, calculate the increase as a percentage. I will report my findings.

Here's the actual text of the email announcement:

     "Due to rising costs, Toro has announced a national parts price increase. We wanted to inform our valued customers that the price change won't be effective until Monday, April 30, so any orders received this weekend will still be at the  

     lower pricing. Most genuine Toro parts ship free inside the contiguous USA. Have a great weekend!"

 

So, my assumption would be if Toro is going to bump parts pricing for Toro parts, they would probably be more than gleefully happy to do the same to their remaining Wheel Horse parts inventory.

 

 

 

[953 nut 55,156]

May as well become accustomed to it, as our economy improve there will be price increases everywhere. Of course our government bean counters will say there is no inflation so there is no need for a cost of living increase in my Social Security, however the Medicare payment they deduct from it will go up due to cost increases?   ?   ?   ?              

Edited April 28, 2018 by 953 nut

[clueless 2,980]

52 minutes ago, 953 nut said:

May as well become accustomed to it, as our economy improve there will be price increases everywhere. Of course our government bean counters will say there is no inflation so there is no need for a cost of living increase in my Social Security, however the Medicare payment they deduct from it will go up due to cost increases?   ?   ?   ?              

The government, just like corporations, don't put your trust in them.  

[Jerry77 1,218]

53 minutes ago, 953 nut said:

as our economy improve

You can already see it at the fast food joints - people from there are moving into better jobs and the dregs are doing the fast food...experienced it today at the local Pizza Hut - left hand didn't know what the right hand was doing......

[MalMac 1,331]

If Wheel Horse part prices go up from where they are now, and more than likely they will. Then I would have to seriously decide which would be more beneficial, purchase parts to keep a 30 plus year old tractor going or invest in buying Gold. As I see it prices would be about the same. Maybe Parts might be a tad more then the Gold. 

[wh500special 2,168]

I'm always the odd man out on things like this it seems.  Maybe it's because part of my job is to determine pricing on things we sell in our business, including spare parts.  So I look at it from a different perspective.

 

Toro is trying to make sure they don't lose money on parts.  If they're lucky, they're making money on them.  But I'd be surprised if they are getting rich off of these things.

 

Parts are expensive.  No doubt.  I don't disagree with that and it sucks to have to buy them.  But costs of doing business rise just like everything else.  For us to expect them to never adjust pricing is silly, even for some item that might have been made 40 years ago and has been sitting in inventory ever since.

 

I of course don't know specifically how Toro marks up their parts, but you can bet on it that the bulk of the markup isn't "profit."  They are paying overhead and general and administrative costs on everything they do.  Electricity for the warehouse the part is sitting in, real estate taxes on the warehouse the part is sitting in, the salary and benefits of the picker who pulls it from the shelf, The shelf itself, the salary and benefits of the security guard out in the parking lot, the salary and benefits of the legions of people that shuffle paper around to keep track of which shelf in which warehouse the part is sitting on, permit costs to keep the place open, maybe pensions to people who no longer work there, possibly inventory taxes every year that goes by on that part, on and on.   Shoot, they even have to pay the guys that cut the grass outside their buildings and for the break room table and coffee pot.  Don't forget toilet paper for the guys that have their bodies trained to evacuate on company time.

 

They also have to pay for the computers and statistics folks that try to anticipate what parts are needed for their current lines of machinery.  And for R&D and marketing for new products.  All of that gets rolled into every transaction they make.  The CEO and other people way, way at the top get paid to manage all of this and more.  They're in there too.

 

These costs of course are on top of the cost of the actual value of the part.  In cases where they have to have a batch run, they have to pay for all of them up front and then float the cost over time.  I wouldn't be surprised for them to amortize the cost of a batch of parts over a fixed number of them that they expect to sell in a year (for example).  So if you're buying an idler pulley assembly you are probably also paying for a couple of other idler pulleys they expect to languish on the shelf longer than a year.  But they commissioned more than they need to ensure the part is in stock in case of abnormal demand. 

 

Just guessing of course.

 

It's hard to imagine how much stuff in their parts inventory never sells.  Eventually they throw all of this stuff away.  I heard stories about the exodus from South Bend where tons - literally - of old parts inventory was hauled to the scrap yard just down Ireland Rd. from the factory.  Stuff that hadn't sold and wasn't valuable enough to move to Minnesota.

 

The relatively low value of the little things we buy for our tractors is overshadowed by the costs they have to charge.  Some of the cost of getting the part to you from their shelf is relatively constant across the range of their stuff. So if you're buying a new $1000 transmission for a Groundsmaster or you're buying a $0.39 primer bulb for your snow thrower it still costs Toro about the same amount to find the thing, get it off a shelf, stick it in a box, ship it, and update the inventory.  So it makes little things artificially expensive. I'm sure they have a way of spreading the costs around to keep the prices on low-value stuff as low as practical, but it probably isn't completely proportional.

 

There is a tremendous amount of stuff going on in the background.  Paying for all of that has to happen.  And there is only one source of revenue for these businesses: customers.

 

I wouldn't expect that Toro is big enough in the parts distribution network to be automating anything in their system either.  Chances are that everything is still done by people, which obviously costs more on a running basis than a machine.

 

Somewhere in my literature collection I have a couple of price increase notices from WH from way, way back.  They've always done things this way.

 

I think the requirement for a manufacturer to support parts for a machine is only about 7-10 years after it was last manufactured.  I wouldn't be surprised if one day they just abandon anything older than that.  I suspect that Toro being a privately held business has something to do with their long-term product support that they've shown so far. 

 

This doesn't make it better, but perhaps it is something to think about next time you buy an expensive OEM item.  besides, it could be worse...ever bought Echo parts?  Wow!

 

Steve

[Terry M-(Moderator) 2,175]

I don't like price increases , but lets please keep our posts  in check and remember to keep things unpolitical ...  Thanks  

 

Terry...

[ztnoo 2,298]

@wh500special et al.,

A very well thought out presentation and study of the background of the costs involved with and associated with "the parts business".

It truly included some area and things I hadn't fully considered before. Really good stuff and food for thought for all of us here.

 

I said I'd report back my findings on a couple of NOS parts I generally follow which are still in stock in a couple of businesses around the US.

I guess I was expecting a real blood bath/horror story on the announced price increase on Toro parts I received from RCPW, and especially on Wheel Horse parts.

I think most of us when we hear "price increase" think in nightmare terms.......worse case scenarios. 33%, 50%, 98%, pick a number, any number.

In reality, the actual numbers can be much less concerning and alarming.

 

I use my 1969 GT 14, 1-7441 tractor as an example.

A couple of years ago I stumbled upon an ad for a GT 14 with mower deck included listed at $1,495. Now while I can't be certain as to the year of the ad (no dates given), for illustrative purposes, I'm going to assume that's was my tractor's original pricing. Now if I use the federal government's Bureau of Labor Statistic CPI ( Consumer Price Index) calculator, I can ball park what my now 49 year old Wheel Horse tractor would sell for in today's dollars, based on its advertised price. Shockingly, my 1969 $1,495 tractor is valued in today's currency at $10,409.02!  (Jan. '69 - Jan. '18). If it was discounted $200 from list ($1,695 is what the ad inferred), the value in today's dollars would be $11,801.53!

https://www.bls.gov/data/inflation_calculator.htm

 

 

So realistically, if I have a running, functioning tractor that if it were made and still sold today would be worth over 10K, I guess I have to expect that the limited number of NOS parts still floating around, likely would reflect increases in inflationary pricing also.

Maybe these parts are proportionally higher than the actual tractor, but since most original pricing information for the replacement parts is long since gone or tucked way in a few dealer literature groupings scattered around, we're kind of speculating wildly about that topic. Scarcity and rarity increases value. Pretty much Econ 101 stuff.

I casually follow some of the old style mower deck mule drive parts that were present on most late 60's and early 70's Wheel Horses. In the roughly 39 years I have owned this machine I have become very familiar with the  mechanism, the problems that can occur, and how to quickly resolve almost anything that arises in keeping the deck running. I know other owners generally favor the newer style mule drive set ups, but until I can no longer obtain serviceable parts and/or hell freezes over, I'm going to keep using what I have. I guess the old man in me is showing. Don't fix what's not broken. I marvel I am able to keep a 49 year old beast like this still working and doing what it was intended to do. Speaks highly of the quality of the original build.

 

So, the two parts I watch are Arm-Pivot (6725) and Assembly Cam Lever (7068). I'm sure lots of you are familiar with these parts. Pics below:

6725                                                                                                                           7068

    

 

Here's what I discovered about these two parts in the "price increase". I only checked RCPW for 4/28 pricing, prior to the announced increase.

 

6725

RCPW  4/28/18 = $104.22

               5/2/18 = $106.83

               % increase:  .9755

PartsTree  5/2/18 = $108.89

Toro direct 5/2/18 = $109.82

 

7068

RCPW  4/28/18 = $214.62

               5/2/18 = $219.98

               % increase:  .9756

PartsTree  5/2/18 = $224.25

Toro direct 5/2/18 = $226.15

 

Conclusion:

Well, I don't think anyone would claim these parts are dirt cheap. Actually they are rather expensive, IMO. But the real point is that they ARE AVAILABLE, for those that might have a real need for them!

The realistic increase in pricing from RCPW is really no more at most, than the cost of a fast food meal. C'est la vie.

I guess I can close the door on the fire alarm button now............. 

 

 

 

 

 

Edited May 2, 2018 by ztnoo