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Why Are Good Speakers So Damn Expensive These Days?

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Revel-Salon2.gifGood, audiophile-grade speakers didn't used to be so damn expensive as they are today. Of course good speakers always cost a pretty penny but in the past year or two while our homes lost a solid 50 percent of their value, high end speakers have increased in price in ways that we could only dream of when it comes to our retirement accounts. Far more technically complicated products like front video projectors and uber-thin HDTVs have dropped in price like the Dow Industrials when Congress doesn't increase the "debt ceiling" At the same time, somehow the price of a good pair of speakers is rising like the price of gold. Alas, there are some strange forces at play in the loudspeaker market.

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Issue 1: 2000% Increase In Price of Neodymium
Neodymium is a rare earth material that is a very effective magnet. Ironically, it's not very rare but because of environmental concerns U.S. development of the material was ramped back a few years ago leaving China as the world's leader in Neodymium production. Currently priced at about $1 per gram, Neodymium is used in all sorts of applications but from an audiophile perspective, it's used in tweeters. As a magnet, Neodymium is about 10 times lighter than a traditional magnet; thus it allows for speaker applications and designs that are pretty unique. If weight isn't an issue, Neodymium can be replaced by traditional magnet material; the parts cost for magnets have also gone through the roof but not as much as Neodymium.

Kevin Voecks, the speaker designer behind Revel Speakers, cites sources for Neodymium quoting costs for the material with a "five hour guarantee" for the price as it might go up in that short a period of time. Traditional magnet material prices are being quoted with a five-day guarantee.

The demand for Neodymium is off the chart as it's used not just in audiophile tweeter magnets but its also used in vibrating components such as smart phones, military products, glass, lasers and much more. Make no mistake - no one factor has made speakers increase in price more than market fluctuations in Neodymium. Designers are rushing to use other materials and even looking back to old compounds not used since the 1960s that can play the role of speaker magnets.

Issue 2: Chinese Labor
Some audiophile speakers are still made in the United States, England and Canada but increasingly more and more are made in China these days. Chinese factories have respectfully become very good at making speaker cabinets and drivers in ways that simply wouldn't have been possible in the United States just a few years ago. With that said, Chinese workers who undercut traditionally unionized American labor come from rural areas, live at the factory for a year and work for a rate that would be unthinkable to you and me. One of the dirty little secrets that no speaker company will tell you is that after Chinese New Year in February, many of the workers return home after a year of training, work and gaining experience. And then they never return back to the factory to work again, as the lure of working in their local, rural communities while flush with cash makes them micro-capitalists even while living in a Communist country. The result of this migration of talent from the city factories to the rural areas causes either slow-downs in production or well noted manufacturing glitches in speakers that arrive in the U.S. during the late-March and April time period.

Issue 3: Other Raw Materials Costs
With migrant Chinese building most of the drivers and cabinets that make up our favorite speakers, amazingly labor isn't the biggest cost in making speakers as it is with, say, a GM automobile. $300 of every speaker doesn't go to pay into a union retirement fund as if some speaker was actually a Buick. What is really running up the cost of speakers is the costs of raw materials. Neodymium is its own issue but wood, paint, copper and other parts are also more expensive than ever. "Fair Labor" factories overseas do exist like the ones used by companies like Wharfedale, Harman and others. Those factories pay more reasonable wages and follow international standards for environmental controls. That of course costs more but those costs are nothing compared to trying, for example, to cost-effectively paint a large pair of audiophile speakers in a state like California.

Issue 4: Transportation and the Cost of Oil
A gallon of gas costs a lot less three years ago than it does today and that affects the price of good speakers in many ways. Petroleum products go into speakers, speaker drivers and speaker materials including boxes, packing materials and beyond. Additionally, a speaker made by affordable labor overseas at some point has to get to our shores and that cost is significantly higher today that it was just three years ago - and somebody has to pay for those costs. That person is you, assuming that you are buying new speakers.

Companies who produce high value products, be they made in America or overseas, are the ones who are winning the speaker wars. Consumers don't pay for extra frills today in the same ways they did in the past. You have to ask yourself - are you willing to pay a premium for a speaker made in the United States? If so, then there are plenty of very good choices for you sold at traditional retail as well as via online venues. Good speakers are not very different than commodities, as they are more expensive today than in the past. Unlike video and computers, the cost of producing heavy, durable goods like speakers are being passed onto the consumer for all of the reasons stated above. Will speaker prices come down? I don't see it any time soon but as long as performance is up, finishes are excellent and the value is there - buying a new pair of gleaming speakers is one of the world's great joys. As an owner of some new Paradigm Signature Reference S8's (made in Canada), I can guarantee that fact.

Additional Resources
• Read more unique content like this in our Feature News Stories section.
• See similar stories in our Floorstanding Speaker News section.
• Explore Floorstanding Speaker and Bookshelf Speaker reviews.
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