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Wal-mart Canada CARRYING LEGO AGAIN!!! ***NOW OFFICIAL***
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Winbrant



Joined: 07 Feb 2005
Location: Calgary, AB, Canada

PostPosted: Wed Feb 06, 2008 12:44 pm    Post subject: Reply with quote

Official Press Release

Tiny links are always better -dW

There must have been a lot of enquiries to this or Wal*Mart Canada decided to use this release to assist on their pressure on other suppliers...hmmm.

And, yes, I can see them trying to push LEGO in their other North American retailers (US and Canada) to take up the slack.
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Big Cam



Joined: 12 Jun 2007
Location: Frozen ND

PostPosted: Wed Feb 06, 2008 12:52 pm    Post subject: Reply with quote

good read
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SW Lego Nerd



Joined: 13 Aug 2006
Location: Barely South of Igloo's

PostPosted: Wed Feb 06, 2008 8:34 pm    Post subject: Reply with quote

Very good read.

I guess we guess to see who gives in. Honestly, the only loser I see here is Lego. Wallie World does not survive off of Lego products. That space on the shelf will be filled by some other product.

Lego on the other hand was commenting on profits and not making any gains by meeting the terms or considering more balanced exchange rates.

Good thing I am not too far the border Smile
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Wed Feb 06, 2008 10:55 pm    Post subject: Reply with quote

Thanks for the link, but it pretty much just confirms a lot of the speculation that went on in this thread. The only really new part is that the pressure on Wal-Mart to lower their prices was coming from the Canadian government. Everything else is pretty much the basic Wal-Mart business model. They were either going to pass the buck onto their consumers in the form of consistent prices despite the rise of the Canadian dollar (with respect to the U.S. dollar, not other world currencies) or pass it on to their suppliers. If the suppliers comply and drop their wholesale prices, they lose money, Wal-Mart continues with steady profits and looks good in the eyes of the consumers because they now can lower prices. If the suppliers don't comply, Wal-Mart drops them and they lose money. Like SW LEGO Nerd said, It's a win all around for Wal-Mart and a loss for everyone else involved.
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thrasher zombie
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Joined: 17 May 2007
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PostPosted: Wed Feb 06, 2008 11:04 pm    Post subject: Reply with quote

I don't want to sound offensive but.....What is Wal-Mart thinking, why would you replace fine quality LEGOs with crappy quality MegaBlocks. They obviously don't sell as well. I don't live in Canada and I don't shop at Wal-Mart, but for those that have to get there supply of LEGOs from Canada Wal-Marts, I feel sorry for you, since there aren't anymore. But you still have Lego.com.
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legoguy.ca



Joined: 06 Dec 2006
Location: Calgary

PostPosted: Thu Feb 07, 2008 1:45 am    Post subject: Reply with quote

the thrasher wrote:
I don't want to sound offensive but.....What is Wal-Mart thinking, why would you replace fine quality LEGOs with crappy quality MegaBlocks. They obviously don't sell as well. I don't live in Canada and I don't shop at Wal-Mart, but for those that have to get there supply of LEGOs from Canada Wal-Marts, I feel sorry for you, since there aren't anymore. But you still have Lego.com.


We also have lots of other outlets...TRU, lots of various ma and pop shops, eBay...and one of the best I just discovered prior to Xmas is BN.COM...they ship to Canada for extremely reasonable rates, and are US pricing for Lego.
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Flesh Skywalker



Joined: 30 Aug 2006
Location: Cincinnati, Ohio

PostPosted: Thu Feb 07, 2008 7:14 am    Post subject: Reply with quote

I'm just glad someone is standing up to W@lM@rt (I hate using explitives). I never shop there, I don't like them. I would think that Lego might look to put more of the product in competing stores if not look for new competing stores to carry the product up north. I am very interested to see how this plays out, if Lego isn't harmed, we might see other companies saying no to EvilMart.
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legoguy.ca



Joined: 06 Dec 2006
Location: Calgary

PostPosted: Fri Feb 08, 2008 2:51 am    Post subject: Reply with quote

Flesh Skywalker wrote:
I'm just glad someone is standing up to W@lM@rt (I hate using explitives). I never shop there, I don't like them. I would think that Lego might look to put more of the product in competing stores if not look for new competing stores to carry the product up north. I am very interested to see how this plays out, if Lego isn't harmed, we might see other companies saying no to EvilMart.


Actually, it's Wal-mart Canada that rejected Lego...but that's also easy for you to say...do you think it's fair for Lego to charge Canadians up to 33% or more on their product when the US and CAN Dollar are so close to Par?

I am not saying walmart is good by any means, but not that I hate them either. But really, who do you think has a better chance of coming out of this? Walmart isn't going to loose sqwat, where as Lego, who was close to extinction just 10 years ago, looses one of their biggest customers (granted this is just Canada, but still)

Walmart is really sticking up for the consumer in this case. There is no reason when everything else around here is going closer to Par with US prices (magazine/books, cars, computers/electronics, etc) why does Lego think they are so special.

I realize this is Lego's choice...but from my consumer point of view, a stupid choice.
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Iare Zombite
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Joined: 04 Feb 2005
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PostPosted: Fri Feb 08, 2008 3:17 am    Post subject: Reply with quote

You guys are forgetting that USD vs CND is not the only factor. There may be tariffs and such that would cause Lego to lose profit if they even sell it there at all under lowered price.

Would you sell your product if it costs you 10 bucks to make, and price is at $15, and there are taxes that add up to 6 bucks? No.
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Fri Feb 08, 2008 11:30 am    Post subject: Reply with quote

That's true. LEGO isn't a Canadian product nor is it an American product. According to the information on the North American boxes and LEGO.Com, LEGO's only presences in both the United States and Canada (other than LEGO brand stores and the theme park in California) are distribution centers in Enfield, CT and Richmond Hill, ON. The manufacturing of LEGO is done in Denmark, Hungary, Mexico, and the Czech Republic. This means that in both the United States and Canada, LEGO is, technically, an imported product. And while I'll admit complete ignorance to Canadian import laws, I know that there are lots of ways to avoid import taxes in the United States, one of which is to establish a physical presence, i.e. distribution center or assembly plant, in the country. That way, the actual product sold is assembled and/or shipped to stores from withing the U.S., but manufactured with more cost effective foreign parts an labor. Cars are done this way. If you look at the parts breakdown on any "American" car on a lot, you will find out that typically 60-90% of the parts are made in a foreign country. "American" cars aren't actually made in the U.S., they're assembled here, but you don't pay and import tax on the final assembled car because it goes from an assembly plant in the country to dealers in the country. I would imagine the import laws are the major difference in the cost of LEGO between Canada and the United States, not a decision on LEGO's part to charge more to Canadian customers.
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jkanownik



Joined: 28 May 2007
Location: CA

PostPosted: Fri Feb 08, 2008 3:40 pm    Post subject: Reply with quote

HothTrooper wrote:
I know that there are lots of ways to avoid import taxes in the United States, one of which is to establish a physical presence, i.e. distribution center or assembly plant, in the country. That way, the actual product sold is assembled and/or shipped to stores from withing the U.S., but manufactured with more cost effective foreign parts an labor.


It doesn't work exactly that way in the U.S. By setting up a physical presence a company is able to pay import taxes at their purchase price versus their sales price. This effectively cuts the taxes 30-50% but does not eliminate them. Note that most toys in the US have zero duty attached to them, so this isn't really an issue.

I'm not really familiar with Canadian imports, but I don't think there are any large tariffs/duties being applied to Legos. I think this is more a case of Lego doesn't make a large profit precentage in the US, but they make up for it in profit volume. The US is effectively getting a volume discount. Given that Canadian market is 1/10th the size of the US market they don't want to set a precedent for lower margins.

There is really no one to blame here and no winners/losers. It is just a fascinating real life example of issues that can arise in the new global economy. I'd even bet that a few international business professors are using this specific example in their classes right now as a case study.
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Fri Feb 08, 2008 4:16 pm    Post subject: Reply with quote

I'm aware that the U.S. system doesn't eliminate import taxes completely. I guess I wasn't clear, but I was trying to say that it eliminates the visible portion of the import taxes for the consumers. With having a physical presence, there is no line item for directly paying a portion of import taxes on the receipt when a consumer buys a product under this system. If you actually buy an imported product that is shipped to this countries ports, and then goes to retailers, or directly to consumers, the import taxes are visible to and partially paid by the consumers.

You're right about the effective volume discount, though. That's the biggest factor as to why prices for LEGO (and other toys) are lower in the U.S. than most other countries in the world. The U.S. is the largest toy market in the world. Currency exchange rates are going to fluctuate, but the comparative sizes of the toy markets are pretty stationary. Until global toy markets start to rise in relation to the U.S. toy market, we're likely to see higher prices for LEGO globally than in the U.S. It's not really the most fair pricing system, but it is the reality of a global economy.
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tbennet2



Joined: 22 May 2005

PostPosted: Sun Feb 10, 2008 3:37 pm    Post subject: Walmart Reply with quote

Lego wins either way. Those shoppers who normally buy lego at Walmart will have to shop @ other retailers or buy from Lego.com. Lego is a VERY STRONG BRAND with tons of appeal. I wouldn't settle for Megabloks just because Walmart doesn't carry Lego. Would you?
And those customers who have buy directly from Lego.com actually sweeten Lego's bottom line because they just cut out the middle man(Walmart) and made more profit on the sale. I am sure Lego executives sat down and made an informed decision to not meet the demands of Walmart. It was a Great decision. Smile
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Sun Feb 10, 2008 4:41 pm    Post subject: Reply with quote

No, LEGO most likely looses. You're thinking in terms of the AFOL market. While the typical AFOL that buys LEGO for themselves (or brand conscious parent buying for their children) will shift over to LEGO Shop@Home or other retailers to buy LEGO, the parents of children (and the children themselves) who are more swayed by what's available and eye-catching while browsing the toy aisles will simply shift over to an alternative product. We're a fringe group of LEGO's overall sales. LEGO is a toy company that markets to children. Brand loyalty is almost non-existent in their core market. If a child and their parents typically shop at a Wal-Mart, the disappearance of LEGO from the shelves will just shift attention to other toys. However, since it's only one retailer in one country (and according to the linked article there is still a possibility for Wal-Mart Canada to start carrying LEGO again), this isn't likely to do long term damage to LEGO's finances. It's not good, but it's not catastrophic either.
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mshiels



Joined: 01 Mar 2005
Location: Mississauga, ON, Canada

PostPosted: Sun Feb 10, 2008 7:48 pm    Post subject: Reply with quote

And just for clarity, a properly declared LEGO parcel will have no duties coming into Canada (or at least used to based on Denmark as production) since Denmark is a preferred trading partner. A number of European countries are so I am not sure how it works now that it's made in 3-4 places. But that was how it was being handled in the past, as a preferred trading partner, plastic construction toys had no duty applied, last time I checked.
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Sun Feb 10, 2008 8:30 pm    Post subject: Reply with quote

Thanks for that information. Do you know if the Canadian duties are based off of where the elements are made or where the final product is made? Even though the some of the individual elements are spread across multiple production facilities, the North American LEGO (as far as I can tell from this link ) is assembled, packaged, and distributed in Enfield, CT.
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mshiels



Joined: 01 Mar 2005
Location: Mississauga, ON, Canada

PostPosted: Mon Feb 11, 2008 9:40 am    Post subject: Reply with quote

not anymore, current stuff is assembled in Mexico now.

Sounds like I need to re-research this possibly. I don't think NAFTA covers it since only assembly is done here, but who knows, I'll see if my broker can give me an opinion on current state of the codes/duties.
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Mon Feb 11, 2008 2:10 pm    Post subject: Reply with quote

I guess they haven't updated that part of their site then. I knew that they had scaled back the Enfield location. I just didn't know the assembly was what they moved.
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zombly42
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PostPosted: Thu Feb 21, 2008 3:57 pm    Post subject: Reply with quote

According to this article, Walmart Canada has reached an agreement with TLG.
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theZombieAbides
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Joined: 15 Oct 2007
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PostPosted: Thu Feb 21, 2008 4:52 pm    Post subject: Reply with quote

To me, this just seems like a publicity stunt. Lord knows Walmart isn't the most popular brand out there, and could stand to get some positive PR. My guess is that that was the whole point. Walmart wanted to make it appear as though they care more about their customers than they do about profit. LEGO realized this and just said "screw you, we'll just sell our stuff elsewhere." When Walmart heard this, they had no choice but give in. We all know what their primary motivator is (hint: take the "o" off of "Greedo.").
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Blacknight



Joined: 11 Feb 2007
Location: Canada

PostPosted: Thu Feb 21, 2008 5:06 pm    Post subject: Reply with quote

Walmart's propaganda news release says: "We are pleased we have resolved the situation." Does that mean we Canadians finally get fair US prices on Lego at Walmart stores?? Question Question Question I already know the answer is NO, which means Walmart achieved absolutely NOTHING with their little boycott. They could have at least stuck to their guns and maybe Lego Canada would have eventually relented. Instead as soon as they realized Lego was not going to be intimated like so many other manufacturers are, Walmart comes crawling back on its greedy knees begging to carry the product as before. I bet other manufacturers are going to take note of this. At first what was "best for the consumer" was to push for lower prices. A month later, they say "what is best for our consumers is that we provide them an opportunity to purchase Lego products through our stores". Which is what they were doing originally. Rolling Eyes What a waste of time this whole affair was. The only one who suffers is the consumer. A plague on both their fat-cat houses. Evil or Very Mad
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Thu Feb 21, 2008 7:12 pm    Post subject: Reply with quote

That's a pretty harsh assessment Blacknight. I wouldn't exactly call LEGO a "fat-cat house". LEGO has been facing some heavy financial strain this decade. They posted their first loss ever in 1998 and continued to alternate through large losses and smaller profits until 2005. Just because you think you should be paying less for a product doesn't mean that the company that makes that product is taking cash baths and using $20 dollar bills as cigar lighters and toilet paper. If you fell that LEGO is treating you unfairly with their pricing, or that you can't afford LEGO, you can choose not to buy their products (and let them know in a calmly worded complaint). No one forces you to buy LEGO and not buying a product is a good way to send a message to a company that you are unhappy with.

Edit: Here is a breakdown of the last decade of LEGO net profits and losses.
1998 DDK 282m Loss
1999 DDK 500m Profit
2000 DDK 1.070b Loss
2001 DDK 530m Profit
2002 DDK 626m Profit
2003 DDK 1.400b Loss
2004 DDK 1.931b Loss
2005 DDK 702m Profit
2006 DDK 1.526b Profit
2007 DDK 1.414b Profit


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Blacknight



Joined: 11 Feb 2007
Location: Canada

PostPosted: Thu Feb 21, 2008 7:26 pm    Post subject: Reply with quote

I am directing my comments toward Lego Canada not Lego as a whole. Living in the US I don't think you appreciate the pricing situation up here. The Canadian and American dollars are at parity yet Lego Canada's prices are not. If you had to pay a 33% markup on every set you bought just because you lived a few degrees further north you would probably be pretty ticked off too.
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Thu Feb 21, 2008 8:22 pm    Post subject: Reply with quote

The price of LEGO in Canada isn't just a markup based on where you live, though. The economics of Canadian toy pricing are more complicated than that. This whole situation arose because of the fall of the value of the U.S. dollar, not the rise of the Canadian dollar. If anything, we should be seeing LEGO prices rise in the U.S., not prices fall in Canada. However, the U.S. is the largest toy market in the world, so toys across the board are cheaper here because of the volume of business done compared to other countries. Baring some sort of great depression like devaluing of the U.S. dollar or massive surge in demand for toys in Canada, the disparity in volume of toy sales between the U.S. and Canada will likely keep the difference between pricing in place despite any fluctuation is the exchange values of the respective currencies. It's not fair at all, but it's the reality of a global economy.
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Blacknight



Joined: 11 Feb 2007
Location: Canada

PostPosted: Thu Feb 21, 2008 11:55 pm    Post subject: Reply with quote

Good posts Hothtrooper. You are more or less right in your analysis, but it's still a bitter pill to swallow. Many other commodities in Canada (except big ticket items like cars) can be bought for a direct conversion of the US price. This makes the Lego prices stand out quite conspicuously on our store shelves (hence part of the reason for the Walmart fiasco). While I agree our local market conditions play a role, there seems little doubt that Lego Canada takes in more revenue per set sold than its US equivalent. Whether this also means they take in more profit per set is harder to say, and would depend on their overall expenses, but it is a distinct possibility. At the end of the day, rightly or wrongly the price disparity just leaves us feeling gouged, and does not leave us with warm and fuzzy opinions of Lego Canada as a company. We are supposed to have Free Trade with the US, after all, and we're right next door to the US so transportation costs cannot be a major issue. In fact, I bet Lego for sale in Alaska and Hawaii (small and isolated markets if there ever were ones) is cheaper than it is in southern Canada. Rolling Eyes
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speaknspell
LEGO Community Relations Coordinator


Joined: 21 May 2005
Location: Connecticut

PostPosted: Fri Feb 22, 2008 4:06 pm    Post subject: Reply with quote

one thing that does need to be added in here in your discussions Hoth & Black is that LEGO being a Danish Company means that all of its business is done with the Kroner. The Canadian Dollar hasn't changed vs the Kroner and thus we'd be taking a huge hit by lowering the Canadian price which is where we want our prices to be so we're not losing money by selling in Canada (hard pill to swallow I know, but its true).

Also, the people in the LEGO Canada office and call centers aren't the ones who determine this, its all done by looking at global economic factors from a Danish perspective, since thats where the business is.

Anyways, hope that's helpful.

Steve
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theZombieAbides
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Joined: 15 Oct 2007
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PostPosted: Fri Feb 22, 2008 4:56 pm    Post subject: Reply with quote

So really what you're saying is that its not so much that you're making more on sets sold in Canada so much as you're making less on sets sold in America. (I would assume since the Canadian/Kroner exchange rate is constant, the American/Kroner rate has dropped).

Of course, I guess this means LEGO should raise the price of sets in America. Sad *Slaps myself* I mean... uhh... LEGO is awesome, and shouldn't change!! Cool

My guess is that, although LEGO makes less money per unit sold in America, they make up for it with a greater amount of total units sold. While LEGO could raise the price, doing so would undoubtable decrease sales. I would assume LEGO has done market research to ensure optimal price and unit sales.

The good news is, there may be a solutions for Canadians and Europeans: Buy more LEGO. By increasing the number of sales, LEGO won't need to make as much per unit, and will drop prices. So, you get more LEGO and lower prices - Win:Win Very Happy
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Big Pete



Joined: 30 Sep 2005
Location: UK

PostPosted: Fri Feb 22, 2008 5:05 pm    Post subject: Reply with quote

theJudeAbides wrote:

The good news is, there may be a solutions for Canadians and Europeans: Buy more LEGO. By increasing the number of sales, LEGO won't need to make as much per unit, and will drop prices. So, you get more LEGO and lower prices - Win:Win Very Happy


That's a bit silly ... Why would a company drop prices on sets where sales are increasing?! Plus, it's not really possible for us Europeans to just buy more, the sets are expensive here anyway, so for most of us, it's not easy to just buy more!
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jkanownik



Joined: 28 May 2007
Location: CA

PostPosted: Fri Feb 22, 2008 5:34 pm    Post subject: Reply with quote

Prices are going up in the US. The $119.99 for the RGS is $20 higher than the lead sets the last 4+ years. I thought they were going to drop piece count and stay at $99.99, but I guess with all of the big fall 2008 toys having increased price points, the strong 2007 results and media release they felt they could push past the $100 barrier.

It's funny because this Lego/WM Canada spat came up in a meeting I had today. People were laughing at both Lego and WM Canada for letting the dispute go public. Although based off of the stories they were telling they weren't surprised it happened.
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HothTrooper



Joined: 05 Feb 2005
Location: Marion, VA

PostPosted: Fri Feb 22, 2008 5:39 pm    Post subject: Reply with quote

Big Pete wrote:
That's a bit silly ... Why would a company drop prices on sets where sales are increasing?! Plus, it's not really possible for us Europeans to just buy more, the sets are expensive here anyway, so for most of us, it's not easy to just buy more!

There are economies of scale to any manufacturing operation. If a manufacturer's sales increase, there is typically a decrease in production and distribution costs per unit up to the company's manufacturing capacity. This means that they can sell at a lower price and still make the same profit per item while potentially even increasing overall profit from the increase in sales.

speaknspell wrote:
Anyways, hope that's helpful.

That was helpful Steve. I'll admit my knowledge of the state of the U.S. dollar is limited to the evening news comparisons which are almost always to the Euro, Pound, and Canadian dollar. I don't really have a frame of reference for the Kroner


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