Rod making economics explained using Kentucky Windage

Ever mindful of the luxury of a readership whose unflinching interest in fishing related minutiae knows little boundary, whose tastes for gross exaggeration and half truths are met with unwavering good humor,  I’ll reveal why your fly rod will double in price over the next four or five years.

… and why you may skip a few mortgage payments simply because everyone else is doing it you may want to lay in a couple extra given the circumstances.

Shifting graphite demand trends are driving prices for the flake variety to all-time highs, a fact not lost on investors or the companies scrambling to produce it. Market capitalizations are bouncing higher for companies across the board, from early stage explorers to others closer to actual production.

Investors’ burgeoning romance with the graphite industry follows another love affair with rare earth companies, key to technological innovations in components for vent fans, jet engines and laser-guided systems for smart bombs.

– via the Globe and Mail

With the graphite market at all time highs and increased use forecast across a multitude of industries, we’re sure to hear some rod maker claim how his costs  are climbing exponentially and a thousand dollars isn’t near enough to break even …

… and were we to guess what it takes to build a typical fly rod given the current market, economic upheaval, a luxury industry, and a vendor trying to make up for a downturn in sales, will fact support such an outlandish claim?

The enthusiasm around Canadian graphite companies is almost palpable, and not for the first time. Many of the deposits being looked at today were already close to being put into production before they were shut down in the early 1990’s when No. 1 producer China raised output and prices fell to about $600 (U.S.) per tonne from more than $1,300 per tonne in the previous decade. Today, flaked graphite can fetch as much as $3,000 per tonne.

Cursory evidence (above) suggests raw graphite prices are in lockstep with rod prices. A Fenwick HMG rod in 1992 was between $250 and  $300, and in the 20 years since both the price of rods and the price of graphite per ton have increased five fold.

The US isn't in the top 10

Guess-timate Portion, containing unsubstantiated obscene profits:

If we assume the amount of raw graphite needed to build a paper-backed sheet of graphite is about three times more than what lands on the paper (loss and compression in the manufacturing process) and the typical three ounce rod is half epoxy resin and half graphite scrim, then about 6 ounces of graphite will be needed to make a single rod.

A metric ton (tonne) is 2204 pounds (35,264 ounces), which based on the above rationale, will make 5877 graphite blanks. Based on today’s prices, the raw material costs of making the paper-backed scrim … is all of fifty-one cents.

In between them and us is a lot of folks screwing a lot of other folks.

… and a goodly amount of manual labor, regular capitalism, insurance, 401K’s and the overhead of a trained workforce.

12 thoughts on “Rod making economics explained using Kentucky Windage”

  1. But you clearly haven’t factored in the huge investment in “Konnetic Technology” or “prepreg and scrim technology” or even “Carbon Veil hoop fiber construction”. It’s a research and development intensive industry, like pharmaceuticals. Heck, it’s don’t cost more than a few cents to make the average pill, but you gotta amortize that R&D expense (and all the fishing trips to conduct “clinical trials”) somewhere.

  2. Before you go chuckling too much, I’ll have to stress our rods aren’t made by cultivating an invasive species !!

    It may only be a bump in the road, but it looks like the moral high ground to me.

  3. Take a moment here….North Korea,Zimbabwe,Uzbekistan…All 3rd(or worse) world countries run by madmen or crazies or both…What say one of our big box store(or all of them) sporting goods conglomerates just BUY(or whatever) one of the damn places and viola! Your own personal graphite source!
    Plus your own ready made workforce to exploit,who will welcome the chance because it’s better than what they had…Winners all around!

  4. I was waiting for The Suddenly Affordable Underground to try and seize the green high ground also.

    Also, has anyone tried making a rod out of the bamboo growing wild all over here? It’s not quite as bad as kudzu, but it’s in the ball park.

  5. The affordable alternative is fiberglass. You can pick one up at Cabelas for $74.99.

  6. Hey man, my bamboo’s not an invasive in China…

    As for glass, I’ve gone on record as suggesting glass was the best all-around trout rod material, a stance which has curiously failed to endear me to manufacturers.

    Still, all this leads us inevitably to the following scientifically supportable fact: I am so far ahead of my time that most of you can’t even see my ass.

    I’m the Underground, and I approve this megalomania.

  7. Prepreg tech. alone has removed tons of weight from the current racing yacht fleet by reducing resin weight to as low as a 1/3 of it’s original figure. However, I’m not at all convienced that the CEO’s of the current rod manufactures are any more sane than the God-Emporer of Uzkbekistan. I believe Singlebarbed has published at lenght on that topic.

  8. The Visionary Underground wrote:

    “I am so far ahead of my time that most of you can’t even see my ass.”

    And for that, we are most grateful.

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