Monday, June 22, 2015

V 5 No 59 Billy Mills and Shoe Costs



Several pieces of information on this posting.

                                                                    Part One  

                                           Billy Mills  Running Strong Foundation

As I've said several times recently,  this blog often writes itself.  Many things we write come from the suggestions passed on by our readers.

First suggestion to come in  this Father's Day, was from Susan Ruiz Abuasba former Kettering Striders runner and racewalker  now living in Kuwait.  About 1980 Susan competed for the US as a racewalker in the world Junior Track and Field Championships in Sudbury, Canada.  Susan brought to our attention the project Running Strong sponsored by Billy Mills.   You can of course make a donation, but perhaps more importantly, you can send a message of support through Dream Starters directly to a youth living in challenging conditions.  A  few minutes of your time to send encouraging  words to a child living on a First Nations (Canadian term)  or Native American reserve can make a difference.   These kids could use your moral support as they grow to become responsible adults.  Most of us can look back and find someone who had a positive influence on us somewhere  in those days when we could have gone in a multitude of directions.  Most likely you have already been a role model.  Here's a good chance to do it once again.    I'm struck by the thought that verbal support is often more important than any other form of guidance.    I recall reading something by Jack Daniels saying that despite all his scientific research and documentation, the best coaching he ever did was just encouraging runners and telling them they were looking great, especially when they were having a bad day.   Another instance of good verbal support is a passage in the novel 'Cutting for Stone',  by Abraham Verghese,  In it a mentor is asking a medical student what is he best medicine that can be administered through the ear.   The answer:  "Words of comfort."  If you are interested in such an action,  click on the link below.

Dream Starters


                                                                      Part Two

                                               Cost of Running Shoes Then and Now

I've been wondering how much we spent in today's dollars on running shoes back in the 1970s.  I'm not an economist, but I know there is a lot of  moaning and groaning about the cost of running shoes these days, especially from the guys who were running forty years ago.  Some top model shoes are now over $200.   So I looked at ad and shoe evaluations in the October, 1976 Runner's World 2nd annual Shoe Report.    Of  the top 20 shoes evaluated by RW,  the cheapest were $19.95  the Brooks Villanova  to $34.95 for the Lydiard R.R.   In today's dollars that runs the gamut from about $82 to $222.  Sounds a bit like today's price range.

On the website  measuringworth.com  the following calculation and explanation of value of a commodity then and now comes up like this for the $19.95 Brooks Villanova.

simple Purchasing Power Calculator would say the relative value is $82.90. This answer is obtained by multiplying $19.95 by the percentage increase in the CPI (Consumer Price Index) from 1976 to 2014.
However this may not be the best answer.
The best measure of the relative value over time depends on if you are interested in comparing the cost or value of a Commodity Income or Wealth , or a Project. 
If you want to compare the value of a $19.95 Commodity in 1976 there are three choices. In 2014 the relative: 
real price of that commodity is $82.90
labor value of that commodity is $77.10 (using the unskilled wage) or $89.80 (using production worker compensation)
income value of that commodity is $126.00
The same values for the $34.95 Lydiard  R.R. would be
real price     $145
labor value  $135
income value $222

"What are these different values?"  you must be asking yourself.  Again I'm not an economist, but here are the definitions given by Measuring Worth.

Real Price is measured using the relative cost (fixed over time) of a bundle of goods and services such as food, shelter, clothing (running shoes), etc.  This bundle does not change over time.  The measure uses the Consumer Price Index (CPI).

Labor Value is measured using the relative wages a worker would use to buy the commodity.  This measure uses one of the wage indexes.

Income Value is measured using the relative average income that would be used to buy a commodity.  This measure uses the GDP per capita.

My view is that the Income Value is what we should use to compare prices back in 1976 to compare to 2014 upon which this number is derived.  My scientific reasoning:  Because it makes the cost look the highest.   "Sorry, George,  C+ for your reasoning.  Give more evidence".  Prof. Keynes

So without comparing today's actual prices (this would give me a D at best on an econ paper) for today's top of the line shoes, I would 'guess'   that costs of shoes are roughly the same.    What I can't determine in a short period of time for this posting is how much relative profit is being taken now by those companies.   If we consider that in 1976, New Balance, Nike, Brooks, Spotbilt, Pony,and Etonic were being produced in the US (Brooks in Puerto Rico), Pony in Canada, Reebok in England, Adidas, Puma, and Lydiard in Germany (some but not all  Nike in Asia)  at a relatively high labor cost per shoe than today's manufacturing in Asia, it is understandable that profits could be higher by taking the production outside  of the US.  So we would also have to ask,  "If the shoes were still made in the US with current US labor costs, how much would these shoes be retailing for?  However   Adidas, Puma, and Lydiard, were being made in Germany in 1976, and one would also have to look at German labor costs to see how they were making their shoes competitive in the American market.   Germany at this time was importing cheaper labor  from Italy, Turkey, and North Africa with their gastarbiter/guest worker policy.  

So are shoe prices really more than in 1976, are they holding steady, or are they lower?  I feel they are holding steady, but the profit margin may be much higher, as I don't see Asian wages today being anywhere near the equivalent of American wages in 1976.  Could a running shoe still be put on your foot at a significantly lower price and still give the manufacturer a profit?  Mind you I did not say 'reasonable profit',  I'm not sure anyone can agree as to what is reasonable profit.  Even with shipping the shoes half way around the world, it seems to be worth doing it that way if you are running a shoe company.  Capitalism is driven by profit, not necessarily providing a product at a reasonable price just at a price that the market will bear.  

I would suspect that Research and Development are higher costs now in the shoe business.  Companies are putting a lot of time and effort into trying to develop new products.  Better products, I'm not sure about.  In 1976 a company probably came out with about 2 new shoe models  each year in their trainers, racing flats, and spikes.  Now it seems that every month there is something new to convince runners to try something else that will make them faster or look cooler.  Plus the shoe companies are into every other sport on the planet, not just running and soccer as well as shoes for women and youth.  Each one of these new models is being developed by a product team, which is an additional cost.

I hope some of you Economics majors can provide more insight to this post.  Tear it to shreds, add more info if you so choose.  I only consider it a starting point.  For two other aspects to running look below the shoe evaluations.

Below are the top shoes of 1976 as evaluated by Runners World
These are the best training shoes.  There were also Racing Flats and Spike Flats  categories, but I'm not listing them.   Nike won the Racing Flat Category with the Nike Marathon, Tiger Spartan B won the Spikes category.










Part 3

Here's a business that is almost extinct, but was not uncommon in 1976.
In 1976 this company would resole your old shoes for $11.95
An acquaintance , Dan Paxton , back in 1976 had a retail shoe outlet in Centerville, OH, but he also would resole your shoes if you so desired.  He had a couple of belt sanders in the back of the store, and he would personally strip the old sole off and glue a new one onto your old running shoes.  I remember him sanding his knuckles to the bone once before he decided it would be wise to wear leather gloves while sanding.

Part 4
Shoe Goo still exists, but it's no longer something every runner keeps in his 
garage or workshop.  It's also very popular with glue sniffers.  You can get a hell of a buzz with it.
I bought some of this last Fall to do some non shoe repairs.  Really.   Keep on Truckin'.

1976 ad in Runners World

From my workbench 2015
With a few modern words of caution and bilingual for Canadian market.
Still made in the good ole USA by Eclectic Products, Inc. on Dixie Mae Dr., Pineville, Louisiana

I paid $6.00 for Shoe Goo last Fall in US dollar terms.   When I applied the same formula from Measuring Value to the 1976 Shoe Goo price ($2.95) and compared with 2014 values I got the following:
In today's values the $2.95 Shoe Goo would be

Real Price     $12.30
Labor Price   $11.40
Income Value  $18.70

Whoa !!! Wait a minute.  This little company Eclectic Products down in Loosiana is underselling their 1976  product in today's dollars by more than 67% percent less than they were selling it 40 years ago.

How did they Gooo it?  Did moving from California to Louisiana reduce costs?   Have they found better ways to make their product, using cheaper raw materials, imported cheap labor, or have they automated the hell out of their industry and gotten rid of the labor?  Are they sniffing their product and forgetting to raise their prices?  Are their executives and stockholders taking lesser rewards?  Perhaps they have no R&D costs, since the product hasn't changed in 40 years.   Maybe this should be a case study for some consumer advocate, or a econ doctoral student.   I think I'm going to call them up tomorrow.
Maybe the shoe companies could learn something from these folks.

                                                                        Part 5
                                        You bought your shoes, now let's go to the races.

Ok,  let me look in the cracks of the couch and find $3.00 to send in, so I can run the Island Marathon down there in Portland, OR, this Fall.  Whaaaaa!!!!!   Three freaking dollars?  Are they kidding?  If I apply the formula again to those 1976 dollars,  I come up with

                                                                 Real price    $12.40
                                                                 Labor price  $11.50
                                                                 Income value $18.80


I just looked up the cost of attending a marathon in Portland this year.  Mind you it's a different name and maybe on a different course, but it is still Portland, OR.

the Portland Marathon Oct. 4, 2015 entry fee is (drum roll please)
$140
The half marathon  (double drum roll)
$250

And they get thousands of runners.  They advertise their race as having the best 'swag'.  Here's what you get if you finish (not if you run well)
Long Sleeve Finisher's Shirt
Finisher's Medal
Collectible two sided coin
Pendant (replica of finisher's medal)
A Portland Rose (I can't wait for that one)
Tree seedling to plant (sorry, can't bring it into Canada)
Tons of Finish Food



Note:  The 1976 Island Marathon gave fifty trophies, and I bet they were not very big.  
There were probably 5 or 6 people on a committee sitting around someone's kitchen table organizing the whole race.

Today's races are often raising some significant funds for charities like cancer research, but there are also race directors making a very substantial living for organizing these monster races.  The quality of times is not improving for the most part.  Median race times forty years ago on less substantial shoes, virtually no nutrition enroute and not much water were hugely better.    Road racing has become a participatory recreational event for the masses.  Even ultras are getting so crowded there are wait lists and lotteries to get into them.  To this writer, the racing scene reflects the Little League mentality of 'Every kid gets a trophy for participating.'   I'm afraid this doesn't cut it in my view.  Here are some sour grapes.  In 1977 or so, I ran my best marathon, sixth place at Quebec City and got nada, zilch, nichts for it and was pleased as could be with my result,  and not for finishing a damn race.  In 1978, the qualifying time to get in Boston was anything under 2hrs. 50 min.  Hell, refugees do marathons on a daily basis with all their worldly possessions on their backs, while dragging their malnourished kids with them.  Let's not even consider  putting a pair of $150 shoes on their feet.  So modern road runners /walkers don't flaunt your medals at me.  Geez, have I become a grumpy old man?   Admittedly this posting is a little off the  track of our general blog subjects ie. 1950s and 60s track and field.    I guess that's what is called poetic license.           GB

No comments: