Industry question

[[email protected]]

My civilian employer is paying for me to get an MBA. As part of the
program, we design and evaluate mock business plans. As a pilot and a
builder, I naturally chose to do an airplane company as my project.
Once the other folks in the program realized that there really was such
a thing as a homebuilt airplane (I had to show them websites, they
thought I was making it up) they all got into it.

During the evaluations, some interesting points came up. One of the
most interesting was the issue of insurance, not for the builder but
for the manufacturer. I know that in the eyes of the FAA a kit
manufacturer is not the airplane manufacturer, that is instead the
builder.

But that is the FAA's standpoint, what happens when there is a crash
and the lawyers go after the kit manufacturer anyway? No one in my
program, including the professors, can imagine that kit manufacturers
are able to carry liability insurance--the cost would be astronomical.

So, I guess the meat of the question is-what are kit manufacturers
doing to cover themselves? Do they have liability insurance? Do they
self-insure? Are they just using liability waivers and going naked?

One the one hand, I can see going naked, on the other hand I can't
see an entire mini-industry without liability insurance. Van's maybe
yes, but what about all of the other guys?

I have made a couple of phone calls to a couple of makers, lest anyone
think that I am too lazy to find this out for myself. The two places I
called were not wild about discussing the whole topic, which I can
understand.

I then called a couple of insurance companies (commercial ones that do
high-risk stuff) and they said they probably wouldn't touch it,
although if they did the premium would be "staggering" the actual
word one guy used.

I hope that people will find this an interesting question, thanks for
any information anyone might have.

Matt McCoy

[Rich S.]

"Richard Riley" > wrote in message
...
>
> I also don't know of any successful product liability suits against
> kit manufacturers. Rutan was sued several times, but won each time,
> and countersued after the last one.
>

I believe that Rutan finally got out of the business when his legal costs
equaled his net profits. He didn't lose - the lawyers won.

Rich S.

[Bill Daniels]

Interesting thread. I've got a similar problem related to another aviation
product.

I assume that they use several LLC's and limit the assets of each to
complicate the suit filing and make sure there are few assets at the end of
the process. In most cases that should discourage "contingency fee" lawyers
who go after the lowest hanging fruit. Buying liability insurance just
makes for bigger, lower hanging fruit and attracts lawyers like flies.

However, if a litigant wants to 'make a point' and spend his own money on
lawyers fees, I guess they can sue anybody. I sure hope we get tort reform
soon.

bildan


"Richard Riley" > wrote in message
...
> We ran bare. Few assets to attach, those that we had were tied up as
> secured interests. I don't know of any manufacturer that has
> liability insurance beyond a policy on their demonstrator aircraft,
> and often not even then.
>
> I also don't know of any successful product liability suits against
> kit manufacturers. Rutan was sued several times, but won each time,
> and countersued after the last one.
>
> I'd submit that the greatest problem facing a kitplane manufacturer
> right now is market saturation. When a used, completed kitplane costs
> less than the price of a kit and an engine, it's hard to convince
> someone to spend years assembling it. Vans and Lancair have countered
> it with constant new, significantly improved products. You may note
> that they're about the only ones left standing, and even Lancair has
> gone through a rough time and an ownership change.
>
> Richard Riley
> MBA UCLA '89
>
> On 23 Mar 2005 13:53:47 -0800, wrote:
>
> :My civilian employer is paying for me to get an MBA. As part of the
> :program, we design and evaluate mock business plans. As a pilot and a
> :builder, I naturally chose to do an airplane company as my project.
> :Once the other folks in the program realized that there really was such
> :a thing as a homebuilt airplane (I had to show them websites, they
> :thought I was making it up) they all got into it.
> :
> :During the evaluations, some interesting points came up. One of the
> :most interesting was the issue of insurance, not for the builder but
> :for the manufacturer. I know that in the eyes of the FAA a kit
> :manufacturer is not the airplane manufacturer, that is instead the
> :builder.
> :
> :But that is the FAA's standpoint, what happens when there is a crash
> :and the lawyers go after the kit manufacturer anyway? No one in my
> :program, including the professors, can imagine that kit manufacturers
> :are able to carry liability insurance--the cost would be astronomical.
> :
> :So, I guess the meat of the question is-what are kit manufacturers
> :doing to cover themselves? Do they have liability insurance? Do they
> :self-insure? Are they just using liability waivers and going naked?
> :
> :One the one hand, I can see going naked, on the other hand I can't
> :see an entire mini-industry without liability insurance. Van's maybe
> :yes, but what about all of the other guys?
> :
> :I have made a couple of phone calls to a couple of makers, lest anyone
> :think that I am too lazy to find this out for myself. The two places I
> :called were not wild about discussing the whole topic, which I can
> :understand.
> :
> :I then called a couple of insurance companies (commercial ones that do
> :high-risk stuff) and they said they probably wouldn't touch it,
> :although if they did the premium would be "staggering" the actual
> :word one guy used.
> :
> :I hope that people will find this an interesting question, thanks for
> :any information anyone might have.
> :
> :Matt McCoy
>

[PHILLIP COYLE]

When will people get their heads out of their ass's and understand that it
is not always someone eles's fault for everything that goes wrong. As for a
kit of anything people should be responsible for putting it togather. If not
for product liability insurance we should be able to buy most anything for a
3rd. of what it cost's now. People have gotten so sue happy anymore I wonder
when someone will sue charmon when their finger goes through the T P and
they get s**t on their fingers and put a big scratch on their butt. After
all it would not have happen if the paper had been stronger so it is not my
fault they would say.

"Bill Daniels" > wrote in message
...
> Interesting thread. I've got a similar problem related to another
aviation
> product.
>
> I assume that they use several LLC's and limit the assets of each to
> complicate the suit filing and make sure there are few assets at the end
of
> the process. In most cases that should discourage "contingency fee"
lawyers
> who go after the lowest hanging fruit. Buying liability insurance just
> makes for bigger, lower hanging fruit and attracts lawyers like flies.
>
> However, if a litigant wants to 'make a point' and spend his own money on
> lawyers fees, I guess they can sue anybody. I sure hope we get tort
reform
> soon.
>
> bildan
>
>
> "Richard Riley" > wrote in message
> ...
> > We ran bare. Few assets to attach, those that we had were tied up as
> > secured interests. I don't know of any manufacturer that has
> > liability insurance beyond a policy on their demonstrator aircraft,
> > and often not even then.
> >
> > I also don't know of any successful product liability suits against
> > kit manufacturers. Rutan was sued several times, but won each time,
> > and countersued after the last one.
> >
> > I'd submit that the greatest problem facing a kitplane manufacturer
> > right now is market saturation. When a used, completed kitplane costs
> > less than the price of a kit and an engine, it's hard to convince
> > someone to spend years assembling it. Vans and Lancair have countered
> > it with constant new, significantly improved products. You may note
> > that they're about the only ones left standing, and even Lancair has
> > gone through a rough time and an ownership change.
> >
> > Richard Riley
> > MBA UCLA '89
> >
> > On 23 Mar 2005 13:53:47 -0800, wrote:
> >
> > :My civilian employer is paying for me to get an MBA. As part of the
> > :program, we design and evaluate mock business plans. As a pilot and a
> > :builder, I naturally chose to do an airplane company as my project.
> > :Once the other folks in the program realized that there really was such
> > :a thing as a homebuilt airplane (I had to show them websites, they
> > :thought I was making it up) they all got into it.
> > :
> > :During the evaluations, some interesting points came up. One of the
> > :most interesting was the issue of insurance, not for the builder but
> > :for the manufacturer. I know that in the eyes of the FAA a kit
> > :manufacturer is not the airplane manufacturer, that is instead the
> > :builder.
> > :
> > :But that is the FAA's standpoint, what happens when there is a crash
> > :and the lawyers go after the kit manufacturer anyway? No one in my
> > :program, including the professors, can imagine that kit manufacturers
> > :are able to carry liability insurance--the cost would be astronomical.
> > :
> > :So, I guess the meat of the question is-what are kit manufacturers
> > :doing to cover themselves? Do they have liability insurance? Do they
> > :self-insure? Are they just using liability waivers and going naked?
> > :
> > :One the one hand, I can see going naked, on the other hand I can't
> > :see an entire mini-industry without liability insurance. Van's maybe
> > :yes, but what about all of the other guys?
> > :
> > :I have made a couple of phone calls to a couple of makers, lest anyone
> > :think that I am too lazy to find this out for myself. The two places I
> > :called were not wild about discussing the whole topic, which I can
> > :understand.
> > :
> > :I then called a couple of insurance companies (commercial ones that do
> > :high-risk stuff) and they said they probably wouldn't touch it,
> > :although if they did the premium would be "staggering" the actual
> > :word one guy used.
> > :
> > :I hope that people will find this an interesting question, thanks for
> > :any information anyone might have.
> > :
> > :Matt McCoy
> >
>

[Kent Ashton]

When there is no insurance, there is not much reason to sue. What are they
going to win? Some epoxy, molds, maybe the rights to an airplane. Not
something most lawyers would find lucrative.
--Kent

> From:
> Organization: http://groups.google.com
> Newsgroups: rec.aviation.homebuilt
> Date: 23 Mar 2005 13:53:47 -0800
> Subject: Industry question
>
> My civilian employer is paying for me to get an MBA. As part of the
> program, we design and evaluate mock business plans. As a pilot and a
> builder, I naturally chose to do an airplane company as my project.
> Once the other folks in the program realized that there really was such
> a thing as a homebuilt airplane (I had to show them websites, they
> thought I was making it up) they all got into it.
>
> During the evaluations, some interesting points came up. One of the
> most interesting was the issue of insurance, not for the builder but
> for the manufacturer. I know that in the eyes of the FAA a kit
> manufacturer is not the airplane manufacturer, that is instead the
> builder.
>
> But that is the FAA's standpoint, what happens when there is a crash
> and the lawyers go after the kit manufacturer anyway? No one in my
> program, including the professors, can imagine that kit manufacturers
> are able to carry liability insurance--the cost would be astronomical.
>
> So, I guess the meat of the question is-what are kit manufacturers
> doing to cover themselves? Do they have liability insurance? Do they
> self-insure? Are they just using liability waivers and going naked?
>
> One the one hand, I can see going naked, on the other hand I can't
> see an entire mini-industry without liability insurance. Van's maybe
> yes, but what about all of the other guys?
>
> I have made a couple of phone calls to a couple of makers, lest anyone
> think that I am too lazy to find this out for myself. The two places I
> called were not wild about discussing the whole topic, which I can
> understand.
>
> I then called a couple of insurance companies (commercial ones that do
> high-risk stuff) and they said they probably wouldn't touch it,
> although if they did the premium would be "staggering" the actual
> word one guy used.
>
> I hope that people will find this an interesting question, thanks for
> any information anyone might have.
>
> Matt McCoy
>

[Ernest Christley]

PHILLIP COYLE wrote:
> When will people get their heads out of their ass's and understand that it
> is not always someone eles's fault for everything that goes wrong. As for a
> kit of anything people should be responsible for putting it togather. If not
> for product liability insurance we should be able to buy most anything for a
> 3rd. of what it cost's now. People have gotten so sue happy anymore I wonder
> when someone will sue charmon when their finger goes through the T P and
> they get s**t on their fingers and put a big scratch on their butt. After
> all it would not have happen if the paper had been stronger so it is not my
> fault they would say.

Please, God. Not another string of bad urine puns.

--
This is by far the hardest lesson about freedom. It goes against
instinct, and morality, to just sit back and watch people make
mistakes. We want to help them, which means control them and their
decisions, but in doing so we actually hurt them (and ourselves)."

[Denny]

The last time I was sued was when I had a one million dollar umbrella
policy - that's nearly ten million in todays money, btw... I got rid of
that policy minutes after the judge dismissed the case against me...
If you go into the manufacturing business - and I'm up to my hips in
the early stages of another venture, Oh Gawd will I ever learn! - get
good legal advice on layering of LLC's and holding companies to
insulate against contingency fee attacks...
For example, the sales firm is an LLC which buys the product from a
distributor LLC upon execution of each order, so that the sales arm
never has a significant amount of unsold product in stock to be
seized...
The distributor LLC orders the product from a production LLC..
The production LLC uses:
1. Leased machinery
2. Leased plant space
3. Contracted labor supplied by an LLC - which in turn contracts for
the labor from temp work firms with contractual restrictions (ala
Microsoft)
4. The patents / intellectual property / engineering drawings / product
rights / copyrights / Brand Name are held by either an LLC or a holding
corporation, which leases them to the production LLC on a per unit
basis... It is crucial that the engineering drawings, etc., are not in
paper form at the factory but are viewed online by computor work
stations over the internet with the server offsite from the factory and
under the control of #4, or perhaps even a #5 layer on top of the
cake......
Any competent CPA can show how to make the money flow rapidly upstream
and out the top leaving only enough cash in the till at each level for
each months lease payments, etc...

Yes, a bit of paper shuffling and dollars to create the layered
structure, but inexpensive compared to even one quarterly premium for
insurance - and magnitudes cheaper than defending a suit...
Now, for those who will start yelling that they can get a judge to
seize everything, bygawd! Maybe they can in our insane contingency
fee, system - and maybe they can't - but they have a steep mountain
to climb for no reward (other than psychological) in the end...

BTW, my personal recommendation is to form the LLC's in Nevada...
No I'm not an attorney, but I played one in high school drama class...

denny

[larsen-tools]

What are they going to take you ask?.... how about EVERYTHING YOU'VE GOT.
Product liability insurance is but ONE of the barriers to entry. Some of
the others are, having a good idea, developing your idea, making it
"manufacturable," packaging, having the money for molds, tooling, R&D, and a
production run.
IF for instance (a big if) a hardware store buyer is willing grant you an
audience and IF they are magnanimous enough to let you display your stuff -
on consignment - you have to have product liability insurance, "we don't
care if it's a putty knife."
At one time I too was interested in the original question of this thread
and called around to some kit manufacturers. I concluded, those I spoke with
didn't have product liability insurance .... they sell materials, you make
the product. That seems overly simplified.
Maybe, despite "the parade of imagined terribles" some things just don't
happen. However, it's easier to sleep at night if you are insured (I was),
just don't plan on making any money. I could have had an airplane.




"Kent Ashton" > wrote in message
...
> When there is no insurance, there is not much reason to sue. What are
they
> going to win? Some epoxy, molds, maybe the rights to an airplane. Not
> something most lawyers would find lucrative.
> --Kent
>
> > From:
> > Organization: http://groups.google.com
> > Newsgroups: rec.aviation.homebuilt
> > Date: 23 Mar 2005 13:53:47 -0800
> > Subject: Industry question
> >
> > My civilian employer is paying for me to get an MBA. As part of the
> > program, we design and evaluate mock business plans. As a pilot and a
> > builder, I naturally chose to do an airplane company as my project.
> > Once the other folks in the program realized that there really was such
> > a thing as a homebuilt airplane (I had to show them websites, they
> > thought I was making it up) they all got into it.
> >
> > During the evaluations, some interesting points came up. One of the
> > most interesting was the issue of insurance, not for the builder but
> > for the manufacturer. I know that in the eyes of the FAA a kit
> > manufacturer is not the airplane manufacturer, that is instead the
> > builder.
> >
> > But that is the FAA's standpoint, what happens when there is a crash
> > and the lawyers go after the kit manufacturer anyway? No one in my
> > program, including the professors, can imagine that kit manufacturers
> > are able to carry liability insurance--the cost would be astronomical.
> >
> > So, I guess the meat of the question is-what are kit manufacturers
> > doing to cover themselves? Do they have liability insurance? Do they
> > self-insure? Are they just using liability waivers and going naked?
> >
> > One the one hand, I can see going naked, on the other hand I can't
> > see an entire mini-industry without liability insurance. Van's maybe
> > yes, but what about all of the other guys?
> >
> > I have made a couple of phone calls to a couple of makers, lest anyone
> > think that I am too lazy to find this out for myself. The two places I
> > called were not wild about discussing the whole topic, which I can
> > understand.
> >
> > I then called a couple of insurance companies (commercial ones that do
> > high-risk stuff) and they said they probably wouldn't touch it,
> > although if they did the premium would be "staggering" the actual
> > word one guy used.
> >
> > I hope that people will find this an interesting question, thanks for
> > any information anyone might have.
> >
> > Matt McCoy
> >
>

[darthpup]

A well known attorney in Washington D.C. expressed it simply: We will
go after them in the courts and they will get out of it as best they
can. This philosophy is the foundation of the legal "profession".

Judicial vermon are a plague on humanity. Watch your step.

[Bob]

I too am not a lawyer, but it seems to me that the suer would just name
all the LLCs in the filing and to me it seems perfectly reasonable to
do so.

Why Nevada?
Do you have to pay Nevada taxes?


Denny wrote:
> The last time I was sued was when I had a one million dollar umbrella
> policy - that's nearly ten million in todays money, btw... I got rid
of
> that policy minutes after the judge dismissed the case against me...
> If you go into the manufacturing business - and I'm up to my hips in
> the early stages of another venture, Oh Gawd will I ever learn! - get
> good legal advice on layering of LLC's and holding companies to
> insulate against contingency fee attacks...
> For example, the sales firm is an LLC which buys the product from a
> distributor LLC upon execution of each order, so that the sales arm
> never has a significant amount of unsold product in stock to be
> seized...
> The distributor LLC orders the product from a production LLC..
> The production LLC uses:
> 1. Leased machinery
> 2. Leased plant space
> 3. Contracted labor supplied by an LLC - which in turn contracts for
> the labor from temp work firms with contractual restrictions (ala
> Microsoft)
> 4. The patents / intellectual property / engineering drawings /
product
> rights / copyrights / Brand Name are held by either an LLC or a
holding
> corporation, which leases them to the production LLC on a per unit
> basis... It is crucial that the engineering drawings, etc., are not
in
> paper form at the factory but are viewed online by computor work
> stations over the internet with the server offsite from the factory
and
> under the control of #4, or perhaps even a #5 layer on top of the
> cake......
> Any competent CPA can show how to make the money flow rapidly
upstream
> and out the top leaving only enough cash in the till at each level
for
> each months lease payments, etc...
>
> Yes, a bit of paper shuffling and dollars to create the layered
> structure, but inexpensive compared to even one quarterly premium for
> insurance - and magnitudes cheaper than defending a suit...
> Now, for those who will start yelling that they can get a judge to
> seize everything, bygawd! Maybe they can in our insane contingency
> fee, system - and maybe they can't - but they have a steep mountain
> to climb for no reward (other than psychological) in the end...
>
> BTW, my personal recommendation is to form the LLC's in Nevada...
> No I'm not an attorney, but I played one in high school drama
class...
>
> denny

[larsen-tools]

"Bob" > wrote in message
ups.com...
> I too am not a lawyer, but it seems to me that the suer would just name
> all the LLCs in the filing and to me it seems perfectly reasonable to
> do so.
>

I believe it's called "piercing the corporate veil."

[Bob]

Piercing the corporate veil refers to getting past the corporation and
making the owners personally liable, both financially and jail time
wise.

Which can be done by: showing the LLC or other entity is not
functioning as an LLC, (mixing of personal and business assets), or by
showing the LLC was not carrying out the normal business processes of a
corporation plus some other stratgies which escape me at the moment.
Oh, yeah, showing the officers knowing broke the law.

By stacking LLCs or any other business entity it appears to me the
previous poster is trying to greatly increase the amount of work a
lawyer would have to do to work his/her way up the chain to the assets
and hence make it less appealing. But if they are ALL owned/controlled
by the same people/entities, it seems to me a judge would allow them to
be all grouped together. And that is my question, I am wondering how
good a strategy that is, in the case where all the entities are
controlled or owned by the same group.

Also a common strategy I hear about is signing your house over to your
wife. But again I wonder how good of a strategy is that?

When I ran a flying club that owned a plane, we quickly ruled out a
partnership, the assumption of shared liability is a given. So if
member X flew into a high dollar asset the members Y and Z are
automatically assumed to be co-liable. Not so in a corp. Hence the
XXXXX Aero Club LLC.








larsen-tools wrote:
> "Bob" > wrote in message
> ups.com...
> > I too am not a lawyer, but it seems to me that the suer would just
name
> > all the LLCs in the filing and to me it seems perfectly reasonable
to
> > do so.
> >
>
> I believe it's called "piercing the corporate veil."

[Vaughn]

> wrote in message
ups.com...
> My civilian employer is paying for me to get an MBA.

Such a deal! The best I could do was get my employer to pay for the
occasional class.

>
> But that is the FAA's standpoint,

Which does not matter to the courts.

>what happens when there is a crash
> and the lawyers go after the kit manufacturer anyway? No one in my
> program, including the professors, can imagine that kit manufacturers
> are able to carry liability insurance--the cost would be astronomical.
>
> I have made a couple of phone calls to a couple of makers, lest anyone
> think that I am too lazy to find this out for myself. The two places I
> called were not wild about discussing the whole topic, which I can
> understand.

I understand why they may be queasy about talking to a stranger on the
phone. It may take a letter first, or even a trip!

I was just reading an article about Wicks Aircraft Supply in the latest
Private Pilot Magazine and they would make the ideal case if you can pry any
information out of them. They sell kits, parts, and now..."almost" factory made
aircraft. That's right! According to the article, they will sell you a 99%
factory made Light Sport aircraft and you go to their facility for five days to
"finish" building your aircraft and get flight training in it. To take the
trouble to go through that process, they must think that they are getting
significant legal shielding from the "homebuilt" procedure; even if the thing is
essentially factory made!


Vaughn

[Dude]

"Bob" > wrote in message
ups.com...
>I too am not a lawyer, but it seems to me that the suer would just name
> all the LLCs in the filing and to me it seems perfectly reasonable to
> do so.
>
> Why Nevada?
> Do you have to pay Nevada taxes?
>
>

Nevada and Delaware make revenue by having their governments create a haven
for cheaply formed, well protected corporations that pay no taxes on out of
state revenue. OTOH your state likely makes it so impossible to keep up with
all the regulations, fees, etc. that you wonder why anyone wants to own a
business.

As for filing against all the LLC's - To name all the LLC's, you first have
to find them. This takes time, and money. In the process you spend lots of
cash and start to learn that the guy you are suing has set things up in such
a way that the odds of a big collection look slim. If you have a good case,
he will likely drain all the money away before you can get to it. If you
have a REALLY good case he will take the money and move to a state based on
Spanish Common Law where he can spend it all on a homestead and you can't
touch it. Also, the intellectual property is often held in an offshore
corporation, though that is changing due to tax law reasons.

I am not a lawyer either, but there are plenty of them around except when I
need one it seems.

[LCT Paintball]

> the others are, having a good idea, developing your idea, making it
> "manufacturable," packaging, having the money for molds, tooling, R&D, and
> a
> production run.


I've got a leg up on most of that. I build plastic injection molds for a
living, so when I came up with a good idea, I built a mold from scraps I had
laying around the shop. I had a great idea, I had a patent, I had a mold, I
had great connections with molders, I figured the hard part was over. WRONG!
The hard part for me is figuring out how to market the darn thing at a price
the product can afford.

[TaxSrv]

"Dude" wrote:
> Also, the intellectual property is often held in an offshore
> corporation, though that is changing due to tax law reasons.
>

Where did you read that as applicable to kitplanes? Whether or not
that poses a problem come judgment time if the defendant loses, the
real issue is what that asset is worth. If a kitplane mfr loses
because the design is found to be dangerous, how much might a
plaintiff's attorney think the value of the design has just been
whacked? I doubt in most cases that the value of the design is all
that much, because unit sales volume is too low to place much of a
"capitalized value" on it. It's also reasonable for the attorney to
conclude the liquidation value is too unpredictable in this fickle
market. How often has the poor-selling Pulsar changed hands? Bottom
line, these companies generally are just not "deep pockets," with
numerous examples of empty ones.

Fred F.

[Bob]

Well, I'd like to know just how prevalent lawsuits are in the
experimental market place.

I know just one is all you need, and being prepared will discourage
lawsuits.

But of the people reading who are/were involved in manufacturing/design
for the experimental market, how many of you were sued? What effect
did it have on your business?

My impression is that it does happen, but lawsuits generally speaking
have not been very successful, which matters little if you spend a ton
of money answering and defending.

[Dude]

"TaxSrv" > wrote in message
...
> "Dude" wrote:
>> Also, the intellectual property is often held in an offshore
>> corporation, though that is changing due to tax law reasons.
>>
>
> Where did you read that as applicable to kitplanes?

I didn't, I was not limiting my remarks to kit planes, sorry for the
confusion. Most of my experience in this area is mostly NOT aviation
related.


Whether or not
> that poses a problem come judgment time if the defendant loses, the
> real issue is what that asset is worth. If a kitplane mfr loses
> because the design is found to be dangerous, how much might a
> plaintiff's attorney think the value of the design has just been
> whacked?

Excellent point.

I doubt in most cases that the value of the design is all
> that much, because unit sales volume is too low to place much of a
> "capitalized value" on it. It's also reasonable for the attorney to
> conclude the liquidation value is too unpredictable in this fickle
> market. How often has the poor-selling Pulsar changed hands? Bottom
> line, these companies generally are just not "deep pockets," with
> numerous examples of empty ones.
>
> Fred F.

I would agree with you except that there are companies that succeed or at
least entertain and pay the owners enough to keep them going. Some fight is
usually put up to keep the company intact. I look at layering as insurance
against attacks. If one were going to sue a manufacturer for a grievance,
and the attourney said that it was fruitless but that you could likely put
them out of business for some amount of money, then you might see a case get
filed just over emotion or principal.

Layering raises the amount of money needed, and will scare off even rightful
claims.

[larsen-tools]

In my opinion..........
Market it yourself.
Get yourself a website. Costco seems to have a good program -
costco.com/services/Web Site Hosting & Design Tools.
Advertise your website in magazines aimed at your audience........ boats,
planes, fishing,etc.
That's the key..... advertise your WEBSITE w/ a teaser describing your
product. A website is the cheapest way to get the information to the people
out there. Advertising can kill you.

Forget about getting your product into Home Depot, Costco, Sports
Authority,etc. ..... they really don't want to hear from you because.....
A) they have 35,000 sku numbers and they can't deal w/ 35,000 vendors
B) they don't buy "sole source".... meaning, from only ONE vendor/
manufacturer
C) somebody in the company has to back your idea as a good product.....
unlikely.... because if it bombs, that's not good for their career
D) whatever price you want, it's too high
E) if you could afford to put a million dollars of product into their
pipeline (for free) you wouldn't be in the game
F) I thought this was interesting..... stores don't own anything except the
cash registers .... all the merchandise doesn't get paid for (to you) until
60 to 90 days after it's been sold BY THEM. Neat, huh? In the mean time
you've re-stocked their shelves.
G) Forget about selling your patent to a big outfit like Stanley. They
don't want to hear from you either, for a different set of reasons.

Paintball, you do have a head start by being a mold maker. A product can't
involve cutting metal, wood or hand labor...... that means it has to be
injection molded, for it to be manufacturable on an industrial scale. The
best products drop from the press into the box.

I'm wishing for a surface grinder and an EDM machine and struggling w/ the
question...... should I build an RV-7A .... or .... continue ****ing away
time and money on "bright ideas" and molds. The plane is a sure thing,
developing products is more creative and potentially could pay for a
Bonanza...... see the dilemma?

Above all, KEEP YOUR DAY JOB.
Do it yourself. The fewer people you have to deal with, the better.




"LCT Paintball" > wrote in message
news:vIL0e.987$NW5.104@attbi_s02...
> > the others are, having a good idea, developing your idea, making it
> > "manufacturable," packaging, having the money for molds, tooling, R&D,
and
> > a
> > production run.
>
>
> I've got a leg up on most of that. I build plastic injection molds for a
> living, so when I came up with a good idea, I built a mold from scraps I
had
> laying around the shop. I had a great idea, I had a patent, I had a mold,
I
> had great connections with molders, I figured the hard part was over.
WRONG!
> The hard part for me is figuring out how to market the darn thing at a
price
> the product can afford.
>
>

[LCT Paintball]

> In my opinion..........
> Market it yourself.
> Get yourself a website. Costco seems to have a good program -
> costco.com/services/Web Site Hosting & Design Tools.

You mean like this one www.lctproducts.com ? ;)


> Advertise your website in magazines aimed at your audience........ boats,
> planes, fishing,etc.

I looked into that. A one month add in a popular womens magazine can cost
over $100,000. I'm not sure I could get enough orders to cover that kind of
expence.


> That's the key..... advertise your WEBSITE w/ a teaser describing your
> product. A website is the cheapest way to get the information to the
> people
> out there. Advertising can kill you.

I've even given away free product for clicking on an add. Again the cost of
advertising usually excedes the number of orders I get.


>
> Forget about getting your product into Home Depot, Costco, Sports
> Authority,etc. ..... they really don't want to hear from you because.....
> A) they have 35,000 sku numbers and they can't deal w/ 35,000 vendors
> B) they don't buy "sole source".... meaning, from only ONE vendor/
> manufacturer
> C) somebody in the company has to back your idea as a good product.....
> unlikely.... because if it bombs, that's not good for their career
> D) whatever price you want, it's too high
> E) if you could afford to put a million dollars of product into their
> pipeline (for free) you wouldn't be in the game
> F) I thought this was interesting..... stores don't own anything except
> the
> cash registers .... all the merchandise doesn't get paid for (to you)
> until
> 60 to 90 days after it's been sold BY THEM. Neat, huh? In the mean time
> you've re-stocked their shelves.
> G) Forget about selling your patent to a big outfit like Stanley. They
> don't want to hear from you either, for a different set of reasons.

Ah,, I see you've done this before. I decided my product would go great in
the grocery store right beside the taco products. Just like you suggested,
large chains don't want 100,000 different vendors. Most of them buy from one
of about 4 major wharehouses. In order to get your product into their
wharehouse, you have to "rent" the space from them at around $10,000. Then,
you have to convice each individual store to place an order. And, for some
of the large chains, you have to "rent" the shelf space too. I can afford to
produce the product, and wait 3-6 months for payment, but I can't afford to
grease all the pockets. ;(



> I'm wishing for a surface grinder and an EDM machine and struggling w/ the
> question...... should I build an RV-7A .... or .... continue ****ing away

You've come to the right place. I've got a manual EDM for sale that has an
orbiting head on it that lets you produce undercuts like threads for about
$7,000... Or, I know a guy that has a large old machine that runs that he'd
give away if somebody would hall it off. Both machines are near Kansas City,
Mo


> time and money on "bright ideas" and molds. The plane is a sure thing,
> developing products is more creative and potentially could pay for a
> Bonanza...... see the dilemma?

Yep, I LIVE the dilemma. ;)

>
> Above all, KEEP YOUR DAY JOB.
> Do it yourself. The fewer people you have to deal with, the better.

My day job may be tough to keep. Mold work is heading to China. ;(
Anybody want to buy a mold shop? ;)

[larsen-tools]

I like the story about the guy who goes to his 20 yr high school reunion.
Everybody remembered him as being a slow learner and they were surprised at
how well he'd done financially.
"Well, I knew I wasn't as smart as the rest of you so I looked around for a
simple product and found one that I could make for $1 and that I could sell
for $5. You know, you'd be amazed at how fast those little four percents add
up."

I'm a retired architect in San Diego, CA. After some expensive lessons in
product design & mold engineering I decided to get some machine tools and do
molds myself. (Lagun FTV-2 mill, Emco-Maier maxi-mat 11 lathe) As a means of
learning to use the machinery, I made shop accessories. (for tap alignment,
a knock-off Burr-Beaver, lots of stuff) It takes 3 or 4 prototypes to get it
right and then I made finished drawings to sell.

I advertised my website in HomeShopMachinist. My cost was $1/sheet and I
priced the drawings at $15 ..... $20 if it involved a motor. I figured that
a lot of basement machinists would be interested in plans for useful shop
stuff and that trial & error would exceed the cost of the plans. Well, to
make a long story short, even with that mark-up, no inventory, no tooling or
overhead........ I broke even. It wasn't worth the effort. Advertising is
the killer.

In summary, I really don't know what the answer is to the selling part of
the equation. Once you get bit by the invention bug, it's hard to let
go....... booze & women are a less expensive addiction ;-)

Good luck Paintball.



"LCT Paintball" > wrote in message
news:a8Z0e.2760$NW5.1868@attbi_s02...
>
> > In my opinion..........
> > Market it yourself.
> > Get yourself a website. Costco seems to have a good program -
> > costco.com/services/Web Site Hosting & Design Tools.
>
> You mean like this one www.lctproducts.com ? ;)
>
>
> > Advertise your website in magazines aimed at your audience........
boats,
> > planes, fishing,etc.
>
> I looked into that. A one month add in a popular womens magazine can cost
> over $100,000. I'm not sure I could get enough orders to cover that kind
of
> expence.
>
>
> > That's the key..... advertise your WEBSITE w/ a teaser describing your
> > product. A website is the cheapest way to get the information to the
> > people
> > out there. Advertising can kill you.
>
> I've even given away free product for clicking on an add. Again the cost
of
> advertising usually excedes the number of orders I get.
>
>
> >
> > Forget about getting your product into Home Depot, Costco, Sports
> > Authority,etc. ..... they really don't want to hear from you
because.....
> > A) they have 35,000 sku numbers and they can't deal w/ 35,000 vendors
> > B) they don't buy "sole source".... meaning, from only ONE vendor/
> > manufacturer
> > C) somebody in the company has to back your idea as a good product.....
> > unlikely.... because if it bombs, that's not good for their career
> > D) whatever price you want, it's too high
> > E) if you could afford to put a million dollars of product into their
> > pipeline (for free) you wouldn't be in the game
> > F) I thought this was interesting..... stores don't own anything except
> > the
> > cash registers .... all the merchandise doesn't get paid for (to you)
> > until
> > 60 to 90 days after it's been sold BY THEM. Neat, huh? In the mean time
> > you've re-stocked their shelves.
> > G) Forget about selling your patent to a big outfit like Stanley. They
> > don't want to hear from you either, for a different set of reasons.
>
> Ah,, I see you've done this before. I decided my product would go great in
> the grocery store right beside the taco products. Just like you suggested,
> large chains don't want 100,000 different vendors. Most of them buy from
one
> of about 4 major wharehouses. In order to get your product into their
> wharehouse, you have to "rent" the space from them at around $10,000.
Then,
> you have to convice each individual store to place an order. And, for some
> of the large chains, you have to "rent" the shelf space too. I can afford
to
> produce the product, and wait 3-6 months for payment, but I can't afford
to
> grease all the pockets. ;(
>
>
>
> > I'm wishing for a surface grinder and an EDM machine and struggling w/
the
> > question...... should I build an RV-7A .... or .... continue ****ing
away
>
> You've come to the right place. I've got a manual EDM for sale that has an
> orbiting head on it that lets you produce undercuts like threads for about
> $7,000... Or, I know a guy that has a large old machine that runs that
he'd
> give away if somebody would hall it off. Both machines are near Kansas
City,
> Mo
>
>
> > time and money on "bright ideas" and molds. The plane is a sure thing,
> > developing products is more creative and potentially could pay for a
> > Bonanza...... see the dilemma?
>
> Yep, I LIVE the dilemma. ;)
>
> >
> > Above all, KEEP YOUR DAY JOB.
> > Do it yourself. The fewer people you have to deal with, the better.
>
> My day job may be tough to keep. Mold work is heading to China. ;(
> Anybody want to buy a mold shop? ;)
>
>

[[email protected]]

wrote:
> One of the
> most interesting was the issue of insurance, not for the builder but
> for the manufacturer. I know that in the eyes of the FAA a kit
> manufacturer is not the airplane manufacturer, that is instead the
> builder.

Interesting that you should mention that. My buddy and I were
discussing that last week while putting together the RV-10. In our
professional opinion <g>, Van most of his assets socked away offshore.
When the 1st big lawsuit hits, he'll close up shop and be off to the
Caymans.

John Galban=====>N4BQ (PA28-180)

[Steve S.]

I can only speak from my own experience, and I am yet another
non-lawyer, but here is the proverbial anecdotal evidence (evidence of
what? That I have anecdotes):

Exhibitors at OSH were/are required to have liability insurance for
ourselves and to also name EAA as co-insureds. Fine and dandy, this is
normal trade-show stuff. It's like interlocking fields of fire-if
someone gets hit by a crashing plane in YOUR booth, you just shove them
into your neighbor's booth and act like you didn't see a thing.

So, when we first shopped around for the insurance for the show, I
phoned up various agencies and told them that I needed insurance for a
trade show.

Agency: "No problem. What product, what show, where, how many
attendees" etc.
Me: "The EAA airshow in Oshkosh . . ."
Agency, "Stop talking. Go away."
Me: "We're not selling anything, we're just exhibiting. Not even
giving anything away." (we had a mock-up)
Agency: "You promise?"
Me: "We promise. We don't even HAVE anything to sell."
Agency: "OK, one time price of . . . $,$$$."
Me: "Uhhhhh, that's more than it cost us to get a booth at the
show. Is that for a whole year or what?"
Agency: "That's just for the week of the show."

I asked the nice lady, off the record, if that was pretty steep. It
seemed steep to me, compared to other trade shows I have done in other
industries. She said it was much more than the biggest one she had
ever seen before. I asked her why, even though we all know the answer.
She said, "If the word 'airplane' even gets mentioned, your
premium will triple." And that, folks, was just for a mock-up.

A REALLY interesting question will be when various manufacturers want
to sell turn-key LSA's. I hope it didn't take ~10 years to create
a hybrid category of planes that no one can really afford to sell
because of the insurance.

Steve S.

(Matt McCoy-if you are Major Matt McCoy in the Marine Corps from the
Mountains of Missoula, Montana and your Mom is named Mary and your Dad
is Mark and you are currently in Minneapolis, Minnesota with your wife
Meg and your dog Mugger and the head of your MBA program is Marshall
Miller and you owe me money-3M is looking for you . . . just kidding.
Give me a call.)

[LCT Paintball]

> In summary, I really don't know what the answer is to the selling part
> of
> the equation. Once you get bit by the invention bug, it's hard to let
> go....... booze & women are a less expensive addiction ;-)
>


If it was easy, I guess everybody would do it.

[Mark Smith]

Steve S. wrote:
>
> I can only speak from my own experience, and I am yet another
> non-lawyer, but here is the proverbial anecdotal evidence (evidence of
> what? That I have anecdotes):
>
> Exhibitors at OSH were/are required to have liability insurance for
> ourselves and to also name EAA as co-insureds. Fine and dandy, this is
> normal trade-show stuff. It's like interlocking fields of fire-if
> someone gets hit by a crashing plane in YOUR booth, you just shove them
> into your neighbor's booth and act like you didn't see a thing.
>
> So, when we first shopped around for the insurance for the show, I
> phoned up various agencies and told them that I needed insurance for a
> trade show.
>
> Agency: "No problem. What product, what show, where, how many
> attendees" etc.
> Me: "The EAA airshow in Oshkosh . . ."
> Agency, "Stop talking. Go away."
> Me: "We're not selling anything, we're just exhibiting. Not even
> giving anything away." (we had a mock-up)
> Agency: "You promise?"
> Me: "We promise. We don't even HAVE anything to sell."
> Agency: "OK, one time price of . . . $,$$$."
> Me: "Uhhhhh, that's more than it cost us to get a booth at the
> show. Is that for a whole year or what?"
> Agency: "That's just for the week of the show."
>
> I asked the nice lady, off the record, if that was pretty steep. It
> seemed steep to me, compared to other trade shows I have done in other
> industries. She said it was much more than the biggest one she had
> ever seen before. I asked her why, even though we all know the answer.
> She said, "If the word 'airplane' even gets mentioned, your
> premium will triple." And that, folks, was just for a mock-up.
>
> A REALLY interesting question will be when various manufacturers want
> to sell turn-key LSA's. I hope it didn't take ~10 years to create
> a hybrid category of planes that no one can really afford to sell
> because of the insurance.
>
> Steve S.


I was aksed to bring an MX over to a new mall in Evansville, IN many
years ago.

The exposure was fun and seeing all the new people was fun too.

I called to set up when I could come over and discuss the area to setup,
the forms to fill out, etc.

The lady said i would need a million in insurance, so I called the local
insurance guy and found it would be over three hundred for the two day
event.

The lady insisted the lawyers needed this coverage with them as named
parties. So I called back and found that adding them would add another
hundred.

I called the lady and said I'd pass on the show since the time, the
hassle and the last straw, the 500 or so bucks,, just decided i would
not do it.

Friday afternoon, the lady called back to say i could come and didn't
really need the insurance afterall, but i told her too, late to
disassemble, load, assemble, etc, and I had a bunch of studenets
scheduled for the weekend by then,,,,

Nut i asked if they had any problems where the insurance was needed,
accidents, etc.

She said there was an ongoing case where a painter had backed his ladder
laden pickup through a jewelry store window, set off the alarm, cops
came, broken glass, etc,,,,

I asked how much the insurance had to pay for that, and she said it was
in litigation as the insuyrance company was trying to weedle out of the
deal for some reason.

I told her I'd fix most anything out of my pocket really quick, but too
late for that,,,,,

Just goes to show, the insurance didn't pay for squat,,,,,,and i would
have,,,,

BTW, I never bought another insurance policy that wasn't mandated by
law,,,,,,,,,,,

--
Mark Smith
Tri-State Kite Sales
1121 N Locust St
Mt Vernon, IN 47620
1-812-838-6351
http://www.trikite.com

[Drew Dalgleish]

>A REALLY interesting question will be when various manufacturers want
>to sell turn-key LSA's. I hope it didn't take ~10 years to create
>a hybrid category of planes that no one can really afford to sell
>because of the insurance.
>
>Steve S.
I expect most if not all turn-key LSA's will be built off shore
partly due to labour costs but mostly due to insurance.

[Netgeek]

From the manufacturers perspective - it's the *tooling* costs that kill
off lots of great (but lower volume) product ideas. So, in that regard,
both of you ostensibly have a head start. BUT, there's the rest of
the equation which you've both mentioned - marketing and
distribution in particular. Venture capital pukes will throw literally
millions at marketing - but they hate paying for R&D - especially
"D" (and that includes tooling)...

Once upon a time a place like San Diego was great for developing
niche products because all of the infrastructure was in place for
"light manufacturing" - tooling, metal, plating, etc. Not so true
anymore, unfortunately. It's now less expensive to make multiple
trips to Hong Kong and Taipei even though it's a pain in the neck
(great for racking up airline miles though 8-)...

The high volume, heavily-automated work is probably gone for
good. But if small business is the key to rebuilding things here in
the U.S. - the small businesses better start banding together now
to get things moving.

My cheap advice to Paintball and Larsen? Find some other
entrepreneurs where you can contribute your piece of the puzzle
and go for it *together*.....

BTW, my apologies to the original poster for contributing to
taking this thread so far off-topic!

Bill
[wr_shields *AT* "yahoo" - and then add the "DOT com bit]

"LCT Paintball" > wrote in message
news:6e31e.3851$NW5.3085@attbi_s02...
> > In summary, I really don't know what the answer is to the selling part
> > of
> > the equation. Once you get bit by the invention bug, it's hard to let
> > go....... booze & women are a less expensive addiction ;-)
> >
>
>
> If it was easy, I guess everybody would do it.
>
>