PSA - Loki Price Increase 2022/03/08

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Frank Kosdon was an expert at the big guys tactics....and the detractors. ..they all did much the same to him.

He told em all to smooch his shredded shorts covered but...that he wasnt going anywhere!

So glad Scott has the same mentality ...or wed all b screwed out of snap ring motors!!
 
While you have very valid points for a small business that serves a niche market segment, local on-site dealers are the lifeblood of many well attended launches. Its common practice for many fliers to patronize their local vendors. Sometimes that included pre-orders, other times on-site day of.

Even if Loki does continue with a direct to consumer model, it does not address the lack of available stock on their website as highlighted in this thread many times.
At LDRS-39, Cris’ Rocketry Supplies was there, and I took the opportunity avoid paying HAZMAT fees to stock-up on his remaining 54mm Loki supplies and even an AT RMS M motor for my eventual L3 attempt. My credit card really took a hit.

I highly compliment dealers for the service they do at launches and providing online ordering services. My speaking up for Scott at Loki is not meant to disparage dealers at all. The are competitive issues among businessmen as each try to earn a living.
 
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The slower burning and thicker the propellant is, the harder it has been to make corrections with good results. During this time, I have been testing like crazy, but we also have to keep products moving out the door so we can keep the bills paid and food on the table. This company provides 98% of our income. (My wife sells Avon and Mary Kay. If your wife/girlfriend needs anything, let us know.) The harder an issue is to solve, the longer it takes because we still have to keep the rest of the business going and providing income. So meanwhile, certain products are not available while we move the ones we still can.

If I had all of this extra time back, if I didn’t have to spend the time sifting crap out of AP and testing it till it’s allowable again, OR the cost of purchasing replacement AP earlier than expected at 4x the price, maybe then our shelfs would be stocked enough so that our dealers couldn’t clean out or inventory with their orders. With the way the rules & codes are written, I either pay through the nose to keep things in check, or I start selling lower quality propellant to our customers and hope for the best. I decided to take the first option. If you’d like me to try out the second option so that our reloads are always stocked everywhere, let us know. Most people only ever see the cost in the product itself. They will never see or experience the cost of keeping the products the same, year after year, after year. That time has to be paid for somehow.


On the price increases. Last fall our competitors had a price increase. We did not. We were late to increase our pricing until late in the 1st qtr of this year where we continued to see additional price increases into the new year. This caused another smaller increase. I expect that you will see a new price increase coming from AT and CTI in the coming months perhaps. AT has hinted as much when posting about Ti sponge. Zinc has tripled in cost, Titanium sponge has gone up 1/3rd in cost since our last purchase, AP 4x the old cost and those are just the top ones above the aluminum, phenolic and graphite increases. What I find really difficult to understand is why people like Jim seem to think that Loki Research should be able to operate on the same business structure/model as our much larger competitors when they know for a fact that we have a very small fraction of the resources and scale at which these much larger companies operate. Yet they still throw more stones at us when times get tough, as they are now.


Hey Brian, that $49 I-405 from 2009 still might have been made by me. I made all Loki propellant and reloads from around May 2009 to March 2010 and from April 2011 and on. This includes the Proteus 6 full P-motor. At $69 today, that’s only a 29% increase for the I-405. By today’s inflation standards, that’s not bad, is it?

Speaking of inflation. What most people will never grasp is the unseen burden of time this current inflation puts on a small business, let alone a 2 person business. I cannot tell you the amount of time I have spent in keeping up with the current day pricing on all the many different types of materials we source to produce our products over the past 12-18 months as they continually increase. I have only one vendor who I get an automatic email from every time DOA or R-45 increase in price. Since 7/22/2020 I have received 10 price increases from them. I have only one vendor who sends an email about 2-3 weeks before they hike their prices. Not much time to for us to react there. Everyone else I purchase from I have to request a new quote which is good for 30 days in order to know if the price has gone up at all. In some instances, like anodizing, I have had to find a new vendor all together. They don’t have the workers/staff any more to meet their work demand but they still have large government contracts they must fulfill, so the govt gets the work and small businesses get kicked to the curb. Some vendors won’t even take on any new business now for the same or similar reasons. Just about everything we purchase both for business and personal use (food/fuel) has gone up in cost one way or another. If we gave a 2-week notice before a price increase, it would only put us further and further behind. I don’t think CTI or AT announces their increases ahead of time. Do they? I don’t see this really anywhere in the retail world normally. Sure, it would be nice to know, but I don’t think it is a realistic expectation.

I have a customer who has his own small business. He makes custom turntable plinths, by hand out of exotic woods and parts for his small customer base who happily pay a premium for his gorgeous products. I seriously doubt that his business could easily scale up and grow simply by hiring and training new help on the art of custom working wood into stable turntable plinths in order to increase his production numbers while maintaining the same level of quality and service his current customers expect, all so that he could sell his new increase in volume to a few dealers at a discount the customer never sees. That would require a mighty BIG step up in production to cover the wholesale discount loss.

In a small rocket motor company, it isn’t a matter of just having a bigger grill and cranking out more hamburger patties. We’re not selling hamburgers here or anything close to that. You’ve got to have a LOT of money that you are able to invest, AND potentially loose in order to make “production line” volume level rocket motors. I don’t have that. I’m no big wig. I cut every 38/1200 reload and larger BY HAND. Everything is done by hand, manually except for mixing propellant. Even the lathes are manual. I can’t afford a quality employee in a college grad at the top end of pay, and on the bottom end, our states new minimum wage will be $12 by 2023. $12/hr to sweep the floor, clean/dip tooling and put the correct items into plastic bags, not to mention, teach them what every single rocket related item and/or term is and means. By the time I train a $12/hr employee that I can trust with the work we do, they’re gone to another less difficult job for $15/hr or more within 4-6 months. Or now they’ll just stay at home and make more money on incentivized unemployment. Don’t forget to add on about $8,000/yr for that employee’s taxes. This is not a job you can keep turning over part time help every 4-6 months and get ahead. It only gets us behind. I’m the only one who can train them every single time. I can’t do much else while I train someone, and they don’t make electronic kiosks for making rocket motors either.

We are not nearly large enough to support a dealer structure like AT and CTI have, or do so in the ways they do. We are not nearly large enough to absorb all of the recent price increases in the same way as AT & CTI have. We are not nearly large enough to operate on the same economy of scale that AT and CTI do, yet the detractors of Loki Research believe that if we are to operate at all in their rocketry community, we must have a $1,000,000/yr business that only sells through a dealer network. Well, we’ll take your investments directly, large or small at any time in order to get there. We only have two people here at Loki Research, my wife Carma and I. Without a HUGE outside investment that I cannot make myself, it's not going to happen. I seem to possess the knowledge and skills required to make motors of equal or greater quality than our competitors, but we lack the rest of their infrastructure and financial backing to easily compete for a larger share of their market, let along the required paperwork & personnel needed to enter the commercial/govt sector.

I hope that answers most of the questions in this thread. Thank you to all of you who continue to support us and have posted supportive, positive comments. Happy hunting to the rest.
Thank you, Scott for your detailed explanation.

The problems you’ve faced as a small rocket motor manufacturer are a whole lot more difficult than I had ever imagined.

We are lucky that you have been able to remain in business.

It must take a real love of rocketry and making motors that keeps you able to endure all of the AP supply and motor certification issues, much less the chaff you have to put up with some customers.

Hang in there with our gratitude.
 
One of Scott's point was them selling direct. I don't think there is any manufacturer in the business that doesn't sell direct. So what's the big deal? In fact I would guess by buying direct your getting more recently manufacturered motors. Yes with a dealer network your company gets more exposure. As far as price increase all reload manufacturers raise their price as they need to. You got to remember this hobby only as 3 reload manufacturers left we can't afford to loose another.
 
^ Nailed it.

Many people do not understand what the business relationship between a dealer an a supplier. A dealer provides value to a supplier in 2 ways, 1)A dealer expands marketing and distribution, 2) a dealer holds inventory and bears the cost of holding inventory which give the manufacturer cash flow.

Inventory at the manufacturer is a financial albatross.

Without #2, the value add of a dealer is greatly diminished to the manufacturer.
Called drop shipping….Amazon promoted this in their beginning….all the risk is on the manufacturer, but volume sales by all these probable dealers is supposed to offset this…good in theory, but…
 
He has few dealers by his own choosing and the decisions he has made haven’t helped.
It takes money to make money. Scott's post 3 of 3 acknowledged LOKI is "not nearly large enough to support a dealer structure like AT and CTI have" so I'd rather see Scott do what he has to do to survive.
 
He has few dealers by his own choosing and the decisions he has made haven’t helped.
My decisions and choices have not helped who exactly?
They have not helped Loki?
How do you know this?
How can you know this?
You can’t.
It looks to me like you're just trying to paint on our canvas, trying to draw a different picture to the viewer. No offense but I don't even know why you have an opinion to share here on this, aside from misdirection.

Not Loki you were referring to?
My decisions have not helped my dealers then? On average they account for about 1/3rd of our yearly sales, less than 1/4 last year.
If so, am I suppose to do what helps my dealers first and foremost?
What help is there in the long run for my dealers (who I make a much lower profit margin from) if the decision I make hurts the larger profit earning portion of our revenue stream as a result? Everyone suffers then.
If Loki isn’t around anymore, how will that “help” the dealer exactly?

What if I increase their discount to 50% and just give them the product at my cost? That would sure help everyone out a lot, right? Right up until the point products stop being shipped to them because it would bankrupt us in no time at all.

BTW, in 2009 Loki dealer sales were only 36% of total revenue and Al's Hobby Shop was the #1 dealer by more than a 2:1 margin to 2nd place. It would seem something killed consumer interest in that part of the country ever since then. On average dealers account for about 1/3rd of our yearly sales and last year less than 1/4. You the flier however have been misled to believe that our dealers are the LIFE BLOOD of Loki Research, which is factually not true. They do help a great deal yes, and I am very thankful for the ones who have worked hard to build and give us their local business support, but they do not up make up our revenue the same way they do for our much larger competitors.
 
Bits of corroded steel from the drum? The only time I've seen this is from an old drum of AP that had corroded the drum, then had been repackaged. AP in contact with the drum will go through the paint and corrode the steel. It's very hard to sift it out as the bits crumble and still go through the screen.

Drums are brand new. The best I can tell, the dark pieces are organic matter, dead bug parts, mice/rat poop or something else, most likely all of it mixed together. They are not magnetic. This stuff was scooped up from whatever or where ever you store 230,000 lbs of surplus 200 micron AP for a decade plus.

At the bottom of this mega pile of AP, apparently you find a lot of these balls of white stuff. These are little balls of agglomerated fines, the stuff that falls thru a 45um screen with ease. The stuff that breaks off the larger pieces. Agglomerated together, they do not break up in the mixer. You can not screen out the poo without removing these agglomerated fines, not that I can or want to leave them in there. If I tried to break up the fines through the screen, I just break up the poo along with it. Still not good. Whatever I do to it, it will not become the same 200 AP as the last shipment. I'm not allowed to sell any of it if I want to purchase more down the road. It's in our seller/buyer agreement.

To get more for 4x the old cost, but grade 2 material, I need to spend $60,000 plus shipping and find a place to store it. For 4.7x the old cost, I can pick up my normal smaller quantity which includes a $2,000 small lot charge. (apparently, just because, for the small folk like me) Come to think of it, that quote is now over 2 years old, so I'm quite sure that it has gone up in price since then. This is but one of 3 sizes of AP needed, and one of MANY costly supplies needed, and one of the seemingly endless number of headaches running this business for the enjoyment of fliers.
 
Drums are brand new. The best I can tell, the dark pieces are organic matter, dead bug parts, mice/rat poop or something else, most likely all of it mixed together. They are not magnetic. This stuff was scooped up from whatever or where ever you store 230,000 lbs of surplus 200 micron AP for a decade plus.

At the bottom of this mega pile of AP, apparently you find a lot of these balls of white stuff. These are little balls of agglomerated fines, the stuff that falls thru a 45um screen with ease. The stuff that breaks off the larger pieces. Agglomerated together, they do not break up in the mixer. You can not screen out the poo without removing these agglomerated fines, not that I can or want to leave them in there. If I tried to break up the fines through the screen, I just break up the poo along with it. Still not good. Whatever I do to it, it will not become the same 200 AP as the last shipment. I'm not allowed to sell any of it if I want to purchase more down the road. It's in our seller/buyer agreement.

To get more for 4x the old cost, but grade 2 material, I need to spend $60,000 plus shipping and find a place to store it. For 4.7x the old cost, I can pick up my normal smaller quantity which includes a $2,000 small lot charge. (apparently, just because, for the small folk like me) Come to think of it, that quote is now over 2 years old, so I'm quite sure that it has gone up in price since then. This is but one of 3 sizes of AP needed, and one of MANY costly supplies needed, and one of the seemingly endless number of headaches running this business for the enjoyment of fliers.

If you’re interested, I would buy your 200 with the poo additive from you, what would you want for 1,000lbs ???
 
If you’re interested, I would buy your 200 with the poo additive from you, what would you want for 1,000lbs ???

I sincerely appreciate the offer but again, a condition of purchase, and of all future purchases is that we are strictly a user and prohibited from re-selling. It’s just another benefit a larger company is able to enjoy over us. Even if we could, at this point the material is now more valuable to me than anything else you’d be willing to offer me in return. I know exactly what I have now, I know exactly what it is, and for the most part I know how to make it work exactly the way I need it to. Our next purchase will ultimately be a mystery until I run it through the sieves and compare it to past materials.

For the poo and snow balls themselves, I’d offer it to you but it’s worth the campfire value to me. Again, probably worth more than normal surplus AP since 1) I’ve paid for it, 2) I know it’s junk, and 3) I don’t feel bad burning pretty blue and red junk out in the camp fire pit at night when I know it’s pretty colored garbage.

I don’t want to alarm anyone here. This is a process we’ve gone through every few years since the beginning, with many different batches of the same chemicals coming in at one time or another. It's part of the business. It's just that this is the fall after “Peak 200 AP” has come and gone. It's all different, new and really expensive now. Available surplus chemicals that we have all been burning are all but gone from the market now and many of those “available” remaining chems are getting worse in condition by the year, unless they’re sitting in the deserts of the southwest perhaps, but the weight of the material alone is enough to degrade its commercial use to some degree by the time it is used. I can attest to that myself. The stuff in the desert however, good as it may be will likely never see a commercial market again though.

ATGM, I’m sorry if I seemed a bit coarse in my statements above. 1) I thought I knew who I was speaking with, but I’m not sure now. I thought I was replying to Charlie Savoie who I’ve met several times before and enjoyed dinner in Argonia, KS with once, but I forgot that he was fired by his father a few years back. I don’t honestly know who the ATGM is now. I’m sorry for being so coarse before an “online” introduction, but my opinions are still the same. Perhaps at a later time, I might expand on the reasons for my tone.
 
Well I don't know who Charlie is, but I ran into Bob from Mile High Rocketry at KloudBurst 30 over the weekend . Went home with a new Loki motor and reloads.
 
Per the post Jan 15, 2020 on the Aerotech Open Thread, Charlie left Aerotech more than 2 years ago. It looks like Charlie is still here on the forum as ATGM and someone, possibly Gary answers the AeroTech Open Thread as AeroTech, somewhat confusing. I think Justin already said this.
 
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[snip]
It's just that this is the fall after “Peak 200 AP” has come and gone. It's all different, new and really expensive now. Available surplus chemicals that we have all been burning are all but gone from the market now and many of those “available” remaining chems are getting worse in condition by the year, unless they’re sitting in the deserts of the southwest perhaps, but the weight of the material alone is enough to degrade its commercial use to some degree by the time it is used. I can attest to that myself. The stuff in the desert however, good as it may be will likely never see a commercial market again though.
[/snip]

A good handful of the posts in this thread from various members are helpful in understanding the industry as an outside and this particular one is interesting to me.

If it is possible, I would be interested in learning more about the sourcing challenges of AP as Scott is alluding to. Specifically, why was there tons and tons of surplus AP (Shuttle program???) and what are some of the challenges (Scott obviously discusses some, but are there more)?

I can only imagine that running a rocket motor business is extremely hard and seeing behind the curtain (no chemistry or methods, just the sorucing challenges) would be educational for me at least and likely others. I imagine people who roll their own understand this more than me and people who have been around longer probably understand more as well, but I feel like there is an interesting story or two that would be interesting if shared based on the above quoted paragraph.

Please share some history if possible.

Sandy.
 
Specifically, why was there tons and tons of surplus AP (Shuttle program???)
It is my understanding that the surplus AP on the hobby market was from the shuttle program and in many cases, literal floor sweepings. Now I wish I would have bought a drum when it was cheap.

One a hobbiest scale, I think storing materials and processing them to your final needs to be the most difficult part. Some, like KNO3 are easy to work with and mill down without trouble. Quality consistency at a price and quantity point available for a hobby is also difficult. Potassium Perchlorate from China is notoriously variable in quality and the amount of additives in any given drum.
 
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Not sure if this was said before, but if Loki (or any manufacturer) would announce the price increases before they happen, there would likely be a flurry of sales right before the increase to get the old prices. Like a sale without offering discounts...
 
Not sure if this was said before, but if Loki (or any manufacturer) would announce the price increases before they happen, there would likely be a flurry of sales right before the increase to get the old prices. Like a sale without offering discounts...
Most all manufacturers announced it last year before it happened.
 
Snip…
I’m working the best that I can, but I myself with the help of my wife can only do and make so much product in a given day, week, month or year. Add in the number of issues we’ve encountered in the past 2-3 years and this is the result you get. I’m honestly surprised we are still here but we are, thanks largely in part to our loyal customer base. If you want this to change, improve, or if you want the possibility of one or two more motor manufacturers entering the market, you’re going to need to change the structure of this hobby when it comes to the rules around the rocket motors you can purchase and use. You’ll need to get into a position of power within the organizations that currently require motor certifications, available only through 1 of 3 privately ran clubs, so that you can change the rules and regulations around the use of hobby rocket motors. Our business would have double years ago if not for the certification restrictions of the private clubs/organizations whose members we primarily produce motors for. I can’t tell you the number of one-off L thru O motors I’ve been asked to make. Almost all of them I can make and sell but the customer can’t use them unless they are certified. There needs to be a new class of recognized motor, available only from commercial businesses, not weekend motor makers, that private clubs will allow to be flown and insured for its members. This is the only way in today’s world that you will ever see new, small upstart high power rocketry motor companies (not lots of talk thereof), and not loose companies like Loki Research. Instead we only see today all the new small commercial space-launch/research startup companies. I’ve seen only one certify a new motor and it’s as odd-ball of a HPR motor as they come.

I’m not interested in arguing, but the bold type statement above indicates a fundamental misunderstanding of motor certification requirements.
CPSC at the federal level, and state and local laws based on NFPA 1125, require motor certification as a condition for commercial sale of model rocket and high power rocket motors. The organizations have no choice in the matter.
The three organizations established motor certification committees in order to provide certification services at a reasonable cost ($50 per motor type) which is thousands less per motor than what a manufacturer would have to pay for a commercial lab like U.L. It’s a service that is done by volunteers (thank you!) and at a financial loss by the organizations in order to assure a supply of relatively safe commercial motors. Our certifications are also a prerequisite for other certifications such as required by the Office of the State Fire Marshall in California. If we were to lower our standards it might adversely affect access to motors in other countries as well where such certification is recognized.
 
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