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jadedragon
Administrator
Canada
3788 Posts |
 Posted - 10/06/2008 : 15:12:13
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Saw this on the front page of the Vancouver Sun today while in a bank. I would guess it was widely distributed across Canada. Canada switched from zinc completely several years back - but it seems that even steel is too costly to make pennies from. This is the first time I've seen a report that steel pennies cost more then a penny to make. If the RCM can't make steel pennies pay, and the US is still back on zinc, this could spell the end of the penny.
Penny costs more than a cent to make
Jack Branswell and Ken Meaney, Canwest News Service
Published: Sunday, October 05, 2008
OTTAWA - Canada's venerable penny now costs more than a cent to make, according to secret documents obtained by Canwest News Service.
The documents, obtained through the Access to Information Act from the Bank of Canada, say that "due to rising labour, metal and other manufacturing and distribution costs, each penny now costs more than one cent to produce."
The line was contained in a "Facts-on-the-Penny" section, which was marked secret in notes, from a tripartite group of government officials - which include the bank, the Finance Department and the Royal Canadian Mint, a Crown corporation.
The group met last Dec. 5 and of the 22 pages obtained from that meeting, only the facts page and a list of attendees at the meeting came through uncensored.
The rest of the notes were blacked out under a section of the access law that allows the government to refuse to release some information.
The fact the documents state the penny costs more than a cent to produce is significant because the mint has always said it costs less than a cent to make and because the future of the coin is the subject of debate within the government and with independent economists.
The group - called "The Penny Review Group" - met at least twice last year, the documents show, with another meeting in January 2008. At both 2007 meetings there were 14 and 15 officials present, respectively.
The mint has been very coy about revealing the actual cost of the penny and what it includes to calculate that cost. It cities competition for not saying exactly how much a penny costs to make, even though it has a monopoly on coin production in Canada.
"When you take the material cost, the metal cost, currently it is just slightly less than a cent," said Christine Aquino, a mint spokeswoman. "But there are other things involved when you make a penny such as production, packaging and all that. Metal, alone, is less than one cent, but we do not give out the total value of that - the cost - because we're in a competitive business with other countries in making coins."
When asked to explain what the other things or costs are that are involved, Aquino said: "Well, there's a lot of other things such as production, direct labour, there's packaging, distribution of the coins, overhead costs - all those things."
Francois Dupuis, a vice-president and chief economist with the studies branch of the Desjardins banking group, estimates the cost of producing a penny at closer to 1.5 to two cents per coin once labour, production and transport are considered. "The mint has been saying for many years it costs .8 cents to produce a penny. . . . They only consider direct production costs, which are the costs of metals," he said.
New Democrat MP Pat Martin, who tabled a private member's bill to eliminate the penny last April, has said the actual cost is closer to six cents per coin, but the mint has flatly denied that. Other studies have pegged the cost at four cents.
With the federal election campaign underway, the Conservatives say they have no plans to do anything about the penny, which turned 100 years old in 2008.
The Liberals say it needs study, while the NDP is calling for its removal.
If the penny were to be replaced, prices would be rounded to the nearest nickel - either higher or lower - on the total amount of purchases.
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“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
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8 Posts |
Posted - 10/06/2008 : 17:54:56
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This makes the 4th article about pennies i have seen this yr. I have seen articles in my local paper, mutual fund news letters and other newspapers about eliminating the penny. I wonder if something may be brewing? I need to step up my sorting efforts before its to late |
And or course there are those, equally eminent, who believe the market is on the eve of the “biggest and strongest economic boom in history.”
There is only one thing to worry about in those words. They have been used before. On the eve of the day when the bubble burst. (Max Morgan Witts and Gorden Thomas) |
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41 Posts |
Posted - 10/07/2008 : 12:22:03
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| You know there's something very wrong if you can't even maintain a steel standard. |
I'm not gone, I'm just lurking. |
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Dan52
Penny Collector Member
USA
422 Posts |
Posted - 10/08/2008 : 15:19:31
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There have been previous considerations to do away with the penny. Purchases would round to the nearest nickel. If that happened, us penny hoarders would clean up.
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Edited by - Dan52 on 10/08/2008 15:20:03 |
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kieblera5
Penny Hoarding Member
USA
859 Posts |
Posted - 10/08/2008 : 15:34:46
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quote:
Originally posted by ironpoptart
You know there's something very wrong if you can't even maintain a steel standard.
Next thing you know, we will have a plastic standard |
Democracy is being allowed to vote for the candidate you dislike least.
Never argue with an idiot. They will drag you down to their level and then beat you mercilessly with experience.
Caller number seven gets the Peace Prize!
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Nickelmeister
Penny Hoarding Member
Canada
588 Posts |
Posted - 10/08/2008 : 15:54:57
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| The fact is, inflation has so eroded the value of "money" that $0.01 is no longer a viable unit of currency. I believe that it is currently impossible - in spite of the cost of raw materials - to design, manufacture, distribute ANY coin with the denomination of $0.01 CAD or USD in today's environment. You could make pennies out of thin air (let alone copper, zinc, or steel) and it would still cost more than one cent in overhead. The one cent coin's days in North America are numbered. |
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Standing offer for sale of quality, second-hand solid gold jewellery:
<$100 USD worth - spot +25%, plus actual shipping
$101-500 worth - spot +20%, plus actual shipping
$501-1,000 worth - spot +15%, plus actual shipping
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 10/08/2008 : 19:27:32
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| To prove Nickelmeister's point - check this out. 100 plastic pennies for $3.14. At least they can also sell 100 nickels for $3.14 which proves that a plastic nickel could work. You must be logged in to see this link. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
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deleted
146 Posts |
Posted - 10/08/2008 : 19:57:50
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quote:
Originally posted by Nickelmeister
The fact is, inflation has so eroded the value of "money" that $0.01 is no longer a viable unit of currency.
Sometimes I wonder if in the future, instead of $1.00 it would be $1.00K and the letter 'c' will be capitalized to C :( |
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Steel Pennies too expensive to make?
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