Wayne's Crazy Idea for Today...

Wayne 962 · Wayne 962's Garage

Okay, there has been quite a bunch of talk about producing 914-6 GT flares over on the 911 board. Not enough people have expressed interest in order to justify the $100K+ investment that will be required to produce them.

So, I came up with another novel idea, that would also work for hard-to-find parts for the 911 as well, and would be a pretty good investment in this climate of low interest rates:

Even if there were 75 presold at $1000, that would only cover $75,000. Honestly, there just doesn't seem to be enough overwhelming interest in this to make it low risk enough to justify the investment.

Another thought I had in the back of my mind was this. Unless I'm assured of making back the original $100K investment within 1 year, then it's not going to fly. Period. So, alternatively, I could arrange 10 investors in the flares (I would be one), who would invest $10K to have the flares manufactured. The Co-Op would be the suppliers of the flares to Pelican, and Pelican would sell them at a markup.

If each flare costs $100, then the Co-Op would mark them up 35% or so. When Pelican sells them, we would buy them from the Co-Op and mark them up 25%, selling them for $168/flare. That would come out to be approximately $675/set. The Co-Op gets a return of 35% of their money (probably over 1-3 years, which would be 11.6% each year in a relatively safe investment), Pelican makes it's markup on the flares and treats the Co-Op as a simple supplier, and the flares get manufactured for eveyone to use on their 914s.

Trouble is, coming up with 10 people who have $10K to pony up in a flare investment Co-Op.

By the way, this model might work well for manufacturing other hard-to-find parts such as 911 Marelli distributor caps and rotors.

What do you think, am I crazy?

-Wayne

Randy Webb · 03-23-2003, 11:31 AM

A legal morass. What happens when a coop member doesn't get a return on their 10k and files a lawsuit?

Chuck Moreland · 03-23-2003, 11:38 AM

That's not a 35% return on their money. It's a 35% gross margin on sales. That's an apples-to-oranges difference.

Does it really cost $100k to do this?

JMPRO · JMPRO's Garage

Wayne, are you talking about fiberglass flares or stamped metal.It should'nt cost more than about 4-5 thousand to make molds for all 4 fenders for fiberglass, metal stampings thats a different story.
Jerry

john_colasante · 03-23-2003, 03:42 PM

Can't you still get the OEM 914-6 GT flares from Porsche for about $900?

Adam · Adam's Garage

Wouldn't the Co-Op make 11.6% (per flare) before tax, Wayne?

avi8torny · 03-23-2003, 04:12 PM

This is not the best of ideas....I don't seem much return on the original investment. It would be easier just to pay a little more for a set.

Wayne 962 · Wayne 962's Garage

Hmm, either a whole bunch of you didn't read the post carefully, or I wasn't too clear. I'll assume I wasn't too clear.

- Okay, the flares are steel.
- Anyone participating would be a member of a partnership. Any legal problems would be dependent upon the rules and regulations of the partnership.
- It would be a 35% return on their money, as that would be the difference between the cost and the wholesale price. In this case, the gross is the realize profit because there would be no expenses for the coop.
- Yes, it most certainly does cost $100K to make the flares @quantity of 300 sets. $84K if there are only 150 sets made.
- The cost of original Porsche flares is now $2600/set, if you can find them.
- If it took 3 years to sell all the flares, the coop would make a theoretical 11.6% return. Much better than stock investments, and there would be an actual underlying product backing up the investment. There will always be a demand for these - it just might take 2-3 years to sell them all.
- As for a good return, where else can you get 20-30% return on your money. The only risk is that a) I will rip you off (not likely), or b) that the coop will be stuck with a lot of product that it can't sell quickly. Risk factor (b) is really the only risk.

This probably isn't going to happen, but I'm just tossing out ideas...

-Wayne

schulr · schulr's Garage

I think its a great idea to meet this kind of demand. How about a targa hard top? Just search on the board and you can see the demand!

Bob

pwd72s · 03-23-2003, 05:26 PM

"Much better than stock investments, and there would be an actual underlying product backing up the investment" Wayne? Have you checked the market lately? Cindy got us back in on the 11th. The "on paper" return for us since the 11th of this month? It's now the 23rd? 6%. But then, I also don't have a 914, don't need or want the flares. That could be clouding my judgement.

speeder · 03-23-2003, 07:30 PM

Well, he did call it a crazy idea.

I would be afraid of door #2, lack of demand.

Chuck Moreland · 03-23-2003, 07:45 PM

I thought the $100k was setup, then $100 cost per flair. That didn't seem right.

So you're saying 250 sets are produced for $100K including design work, setup and production - or $100 per flair.

My opinion - hard to move 250 sets of steel GT flares. How many 914s in existence? How many of those are going to drop $675 for a set of steel flares?

Many who want GT flares want fiberglass for weight savings.

dtw · 03-23-2003, 07:56 PM

So let me get this straight- 100% ROI in Year 1 is your benchmark for "acceptable" investments? Care to share some tips, Mr. Buffett?

As far as investing goes- I'm no expert but people who are keep telling me to get back in the market. It's on my to-do list for tomorrow morning.

Randy Webb · 03-23-2003, 08:19 PM

"Any legal problems would be dependent upon the rules and regulations of the partnership.

- No. You can't contract around state law. Many legal problems would depend on state law -- maybe just the state you create the partnership in, but perhaps also the [many] states in which the partners reside and/or in which business is done. Unhappy podnuhs could sue and even if they lost, would create the problem of legal bills for the podnuhship. You want to visit with a lawyer before setting this up....

RoninLB · 03-23-2003, 08:32 PM

IMO

#1) Demand
#2) Business plan
#3) Partners.. like guys have lunch/drinks together and toss around ideas.. they may then call the CPA botiques that do this all day long for the big guys.. the law/CPA section makes it legal.. the CPA does this kind of paper work routinely at $225/hr.. and her big boss gets maybe $450/hr for managing the paperwork.. go figure.. but these things are routine in big cities.. gotta find the right CPAs.. among other things, enjoy........Ron

cstreit · cstreit's Garage

Add a 12 plug distributor to the list and I'm all ears.

Superman · 03-23-2003, 08:34 PM

Pelican Parts Co-op. I like the sound, Wayne, but aren't you a capitalist?

Wayne 962 · Wayne 962's Garage

Right - that is why I mentioned the Marelli distributor cap in the first thread, but no one seemed to pick up on that?

"So let me get this straight- 100% ROI in Year 1 is your benchmark for "acceptable" investments? Care to share some tips, Mr. Buffett?"

DTW, you got it all wrong. I would say that if I spent $100,000 in one year, I would expect to make back that $100,000 within that one year. That would be my minimum expectations, not 100% return.

Chuck, there were about 130,000 914s made over a six year period. I would estimate that there are probably 30,000-40,000 still around.

-Wayne

dickster · 04:50 AM

doesn't sound crazy.

imho, it all depends on you being able to shift them. obviously your biggest risk.

how quick you're shifting 'em. 100k in the first year seems optomistic - but you're in that business.

you're gonna have lots of "other" costs as i think someone else pointed out (professional fees if nothing else).

where you gonna store 'em?

dickster · 03-24-2003, 03:05 AM

for what its worth wayne a firm called "rimmer bros" do a similar thing here in the uk for a few triumph models. they reproduce alot of parts, and one of the cars is the "triumph stag" - i believe only 25k cars were built.