Expect Increases in Speaker Prices
Submitted by dpedigo on Tue, 10/04/2011 - 9:15am
One of the recurring conversations that I overheard at CEDIA EXPO revolved around the rapid price increase of Neodymium: a rare-earth element used to make the magnets used to produce high-quality loudspeaker drivers. If speaker prices do increase, one should realize that in this instance, the reasons are primarily out of the manufacturers control: meaning their raw materials costs have skyrocketed. And to hopefully help round this disussion a little, it should be noted that loudspeaker manufacturers are not the only ones seeing a significant rise in raw material costs. Over the last year, many commodities across the globe have skyrocketed, which will have either increased cost of production or will shortly do so.
OK, back to loudspeakers. There are several reasons for the exponential rise in cost for Neodymium: the first is an increased demand for the element in other product categories such as electric vehicles and cell phones. Secondly, China "which supplies 97% of the worlds rare earth needs1" is steadily reigning in the supply of Neodymium, which has drastically increased the cost of the rare earth element (see chart below from Bloomberg.com comparing the increase in cost of Neodymium vs. the value of the US dollar).
|What this means to the CEDIA ESC is that you will have to be very careful in your estimating costs for high-end speakers, as the manufacturers cannot absorb the increased cost in raw materials alone, and will ultimately have to be pushed along through the distribution and ultimately to the consumer. There is a very good article, which my colleague Mike Budd from Triad Speakers, sent to me from National Geographic, which explains the current situation pretty well.|