Kirkham - Sign of Things to Come

[HIQ]

Could it be that the Kirkham family has refined their skills to the point where they can provide cars for $40K in the future in large quantities.

The constant inovations coming out of Provo must also be cutting their costs. Great to see but will they keep it up?

[southernfriedcj]

My guess is that they will have to. Good for us! They'll probably make more $ because of the volume. That's a business model I like. Of course, I could be wrong.

[Lew Ledyard]

I thought that it was interesting that when someone said that it would only take a day to machine an aluminum block on the CNC, David K corrected them to say that it only takes half a day. From what I have observed, David K doesn't speak up just to hear himself and little things about which he has hinted have come to life shortly thereafter. Makes you wonder what is next.

[Bluedog]

It's quite possible that the kirkham's could become the dominant leader in the Tier 1 cobra market. They have a huge competitive advantage by owning an offshore manufacturing facility and the ability to take advantage of economies of scale. In the high tech market, companies like Extreme, Foundry, and 3COM will pay Solectron or Flextronics 20%+ to outsource manufacturing which impacts their COS or OPEX (depending on how they do their accounting) giving competitors who own their own manufacturing facilities the ability to undercut their business.

Obviously, in order to drop the price to $40K, Kirkham would have to significantly increase their sales volume. Given what I recently witnessed...they can! At the end of the day, who would buy an ERA, Superformance, or CAV Shelby when you could have an "authentic looking" alloy cobra for the same dollars. It's a no brainer for me! Cheers to innovation and risk taking!!!

Bluedog

[Tout]

As a business move I dont know why anyone would do twice the work , only to see the same profits as they were getting before hand.Expecially when you really are the only game in town,sell your product for what it is ,no discounts to compeitors using your product, this keeps things in tangent,from your first sale to your next, this all but reminds me of the computer wars a few years back, no winners there either.
Tout

[jhl1963]

I was also thinking that due to all of the apparent tension b/t Brent F. and D. Kirkham (recall the price increase comment with regard to the 427 bodies made by Brent F.) as mentioned before maybe that relationship is ending...so instead of selling bodies/chassis at wholesale to SA they can sell those bodies at higher pricing to the public..thus offsetting the need to sell significantly more cars to to achieve the same profit at the $40K level.

Just a thought...

Jordan

[gsharapa]

I think this was more of a shot over the bow response to Brent but was interesting to see how fast they sold........

[Richard Hudgins]

Originally posted by Lew Ledyard


I thought that it was interesting that when someone said that it would only take a day to machine an aluminum block on the CNC, David K corrected them to say that it only takes half a day. From what I have observed, David K doesn't speak up just to hear himself and little things about which he has hinted have come to life shortly thereafter. Makes you wonder what is next.

Lew,

I do not what is next.

But I would love to see someone machine a complete block in 4 hours. ( outside of a OEM, and they take 9 machine hours to do a block.)

Maybe Daid K. has some process that no one knows about.

You really have to think of the setups and machine time involved.

4 hours does not get it.

There was also a statement made about just leaving the machine alone and spitting out bits.

Well, I would like to see that as well.

Lights out factories are a reality. But only if you build a gazillion of the same thing. (Note: this is mostly done in the plastics business. You seldom see this done in the metal business. Operators are still involved.)

They must have some magic.

I would like to see it.

Anything to reduce costs, you know.

[Jamo]

Excuse me gentlemen. David K., in response to a post that a block could be machined "in a matter of days", said that it could be done "in less than a day".

He did not say in a half a day (12 hours), and he sure as heck didn't say four hours.

Richard, I know you really don't like folks that comment on your statements when they have misread them, so I was sure you'd want to know what David's actual statement was. Obviously Lew was not making the technical point you expounded on.

[750hp]

I seem to remember that Keith Black Racing Engines can mill a billet block within about 5 hours. I believe they were using a 5 axis CNC with more than a dozen different fittings that auto loaded as they were required. One of the staff was telling us that it was nice to load a healthy sized chunk of billet into the CNC machine, then come back 5 hours later to see a fully machined block that only required finish honing of cylinder and lifter bores.

Craig

[cobrashoch]

I assume you guys are taking about rough core casted blocks. It would be quite a new feat to CNC hidden water passages in a block from a billet. I too have seen complete machine(ing) of blocks done in about a day, without being in much of a hurry either. Many times, matter of fact. Were time figures into this thing is how well it's done, and to what specs that are required. All machine shops are not created equal you know.
cobrashock

[750hp]

Hi Ron,
No - I was talking about billet drag racing blocks without water jackets. Not comparing apples to apples, was ?!? Don't let Brent from SAI know that....

[wilf leek]

As to the "more cars per year for lower margin" issue. I can only trot out my favourite business mantra:

Turnover is vanity
Profit is sanity
Cash is king.

I am sure some folks in Utah have heard that one too. Whatever else they are doing, they will be hanging on to their margin like grim death. And so they should, because to do otherwise can only lead to disaster. Ask the big car manufacturers. Take a look at their financials.

There is a small car manufacturer here in the UK that is a reasonable role model - Morgan. They keep volume down to just below market demand. They don't offer even the hint of a discount, ever.
They have an order book stretching well over 12 months, and have had this for as long as I can recall. And they make a profit. And they have been around since the year dot.

[casaleenie]

twelve hours is half a day where I come from.....

Give people a little room to work....Jeez...

[mr bruce]

We are having a shake-up in the replica bizz, hence ,the cost cutting of the various mfgs.Rite now ,the K bros. are in a position to crush the market, The WHOLE market, If they have the man power in their factory, and can ramp up production.

[southernfriedcj]

When you guys are talking about lower margins and more volume to make the same profit consider that SAI buys frames and bodies. If KMS were to sell the cars they alloted to SAI as rollers, they could make the same profit on the frame and body, plus huge margins on the bits to make the car a roller.
Just a hypothetical: Frame and body to SAI for 15k, make it a roller for 42k, and you just made 27k for installing seats, gauges, suspension, wheels, tires, brakes, windscreen, and a wiring harness.
Looks like a good business model from my POV. Then ad in high profit extras like stripes, carpet, door panels, ect. and you have another revenue stream.
So, you had a product line with one revenue stream, bodies/frames to SAI, and you turn it in to 3 product lines, bodies/frames, complete to roller, options/upgades. All the while you take up a larger % of the replica business, because at your new price point everyone in the 40k roller market will have to make a choice, aluminum or glass?
Not to mention KMS has spent years building up good will, and people who could have purchased a real Cobra choose to purchase a Kirkham based in part on this(remember Jamo's old sig line).

Disclaimer:
This post includes broad assumptions to prove a point of view. It is not the intent of the poster to claim that any of the content is fact. I don't know how long it would take to CNC a block out of a chunck of aluminum.

[Tout]

Im not so sure about the "crush the market "statement, the glass market is there not only for cost reasons,an aluminum body car is not as forgiving as glass and most buyers should know that. The aluminum market may gain some share if prices go down ,but it will never take all, and to think that would be a huge mistake.I still think that a 40,000 price target would be to low for KMP to keep up to,a jump in sales at first ,but then you have to do that every year, they already have the market ,why give it away?Yes the whole market is changing, but when you are in the drivers seat ,never panick or make decisions that can hurt you in the long run.Good for the consumer at first ,but what if it causes a buisness to go under, then what?KMP has many options ,without giving the store away.
Tout

[Richard Hudgins]

Originally posted by Jamo



He did not say in a half a day (12 hours), and he sure as heck didn't say four hours.

Richard, I know you really don't like folks that comment on your statements when they have misread them, so I was sure you'd want to know what David's actual statement was. Obviously Lew was not making the technical point you expounded on.

Jamo and company,

My apologies.

I made the assumption that Lew was and David K. were using the standard of a "DAY" to mean a "SHIFT".

Shifts are normally 8 hours. Therefore, I took half of a day to mean 4 hours.

In the production businesses that I am familar with, this is still the standard and all production records are based on this number. (8)

However, using your terminology and definition of a "DAY", then David K. is quite correct in his statement.

Once again, my sincere apologies.

We were speaking different languages.

[Turk]

Wilf,
There is such a company here with similar backlog. ERA.

I don't see them giving anything away either.
I believe it is quality and customer support that sells anything and everything. Perception plays a huge role as well.

Most of you only have your Cobras to base your marketing ideas on how it should be done. One car and a hobby at that.

I deal with various makes and models and assortment of rebates and discounts day in and day out.

$4000.00 rebate on a $14,000 Cavalier did not move the needle.
People perceive the car to be boring. They know very few people who own one, and have no first hand knowledge of the ownership experience, and don't have a clue as to it's reliablity.

Giant rebates did not work! The car is perceived to be no good. Couldn't be further from the truth.It didn't matter, that was the perception.

If price alone sold, FFR would be the one dominating the market. Everyone else would be history. It did not happen.

If Road Serpents came up with a $6000.00 Cobra kit, I doubt it that it would hurt anyone including FFR. Sometimes the market expands to make room for the new comer rather than capitulate to the new comer.

A few years ago Motorola was IT, when none of us owned a cell phone. Today there is room for 30 manufacturers and they are all doing better than Motorola did in it's early years. WHY? Because there is a market for everyone now.

Very few companies can own the entire market. Kirkhams won't or would want to.

What do I know?

TURK

[Lew Ledyard]

My point was not the actual time that it takes to create an alloy block, but rather that David K knew how much time it takes. It seemed, to me at least, that he was speaking from experience. That is what made me wonder whether KMP had looked into producing engine blocks.