Cost Reduction Ideas
What to do about the increasing cost of gold?
The price of gold has climbed about 50% in the past year and we believe that the factors driving that cost increase are still, and will continue to be, in effect into the foreseeable future.
Globalization and industrialization are rapidly occurring all over Asia and India. Huge numbers of rural citizens of China, Vietnam, India and other nations are migrating to cities in search of increased income and improved standards of living. For the already developed economies of the world this means increased competition for resources: jobs and raw materials. The cost of all metals has been skyrocketing for the past year. Not just the precious metals, but steel, nickel, copper, aluminum and tin as well, along with all the others.
Also, whenever major economies have downturns there is a temporary "flight to safety" where investors tend to prefer investments in things that have "intrinsic value". Metals and gemstones have intrinsic value. If a national market totally collapses (not very likely these days), you can trade with trinkets and beads and metals and gemstones much more readily than you can with pieces of paper printed with green ink that read "United States Treasury".
Some of our current run-up in metals prices may be due to a tough economy, but we believe that the major driver is the irreversible trend of industrialization around the world. So we can't really wait this out. We're going to have to work smarter. There are a lot of opportunities to conserve and reduce what we are paying for precious metal finishing. The following are a few ideas:
This seems obvious, but there are a lot of supply chain programs that are stuck in the past. There are plenty of situations where the momentum of history and established specifications and the perceived cost of exploring and qualifying a change of specification appear to be higher than the cash savings would warrant. That said, we see many plating specifications where the required amount of a given metal seems much higher than necessary. Any particular application could have a unique set of circumstances which make the written specification mandatory. But it's always a good idea to look critically at what is written, especially if the drawing is old, with an eye toward economy. Older drawings may have specifications developed in an era when the cost of the deposited metal was sufficiently low that conservatively thick, and untested, specs were economically acceptable. Many older specifications will call out a metal thickness that is 2 or more times as thick as newer specifications for products in comparable applications.