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#21
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Price fixing among tire manufacturers
Mileage (life) ratings are not part of the UTQG. Treadwear is. You are
generally OK to compare treadwear ratings among tires from the same manufacturer. There is too much wiggle room in the grading specifications to make comparing treadwear ratings between manufacturers worthwhile. A 400 rated Michelin may last longer than an 800 rated Goodyear. And then again, maybe not. A 400 rated Michelin will almost certainly not last as long as an 800 rated Michelin. > You're saying the mileage ratings (400, 620, or whatever) are not part > of the UTQG? �UTQG is only temperature and traction ratings? > > Bill Putney > (To reply by e-mail, replace the last letter of the alphabet in my > address with the letter 'x') |
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#22
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Price fixing among tire manufacturers
clare at snyder.on.ca wrote:
> On Mon, 31 Dec 2007 01:07:44 -0800, "Ted Mittelstaedt" > > wrote: > >> "Ray O" <rokigawaATtristarassociatesDOTcom> wrote in message >> ... >>>> What happened to competition? Seems to me there ought to be a big >>>> case here for an anti-trust price fixing lawsuit against the tire >>>> manufacturers. >>>> Anyone have any ideas? >>>> >>>> Ted >>>> > > In checking prices for tires for my daughter's car, I found the > difference in price for THE SAME TIRE to vary 15% from the cheapest to > the most expensive tire reseller in my market area. The difference > between the private branded tire built in an American BFG owned > (Kelly) plant and Michelin, Toyo, and Bridgestone for the same quality > tire was about 10-13% at a dealer that sold all of them except the > private brand, and accross the market, about 15% between the highest > and lowest across brands. > I bought the private branded (Moto-Master from Canadian Tire) because > they had them in stock, could install them in a short time, and the > price was near the bottom of the range. > > The chinese built tire from the same retailer was only a few bucks > less, and I don't buy Chinese CRAP if I have another alternative that > makes sense. I don't buy crap, regardless of where it is made. Of course, I do buy good quality stuff from China as well as the US, India, Singapore, Canada, Europe, Isreal, and other countries. Just because it is from China doesn't mean it is (or isn't) crap. Jeff > That is in the Kitchenr/Waterloo trading area in Ontario Canada. >>> It is possible that all of the tires you shopped were made in the U.S., >>> which would reduce the disparity in manufacturing cost. >>> >> That might be true, and it is true that there are not a lot of other tire >> manufacturers >> that make that size AND that mileage and UTQGS rating I looked at. >> >> But, if I went to a treadwear and UTQGS rating of about 1/2 of what I >> surveyed, >> then there's an order of magnitude larger number of tire manufacturers >> making that >> size. But, they are ALL the same tire price ALSO (or within very small >> amounts >> of each other) for that treadwear and UTQGS rating. I'd find it hard to >> believe >> they all make tires in the US. >> >> After surveying I found NOT a lot of price coorelation between tire mileage >> warranty and price, but I found a LOT of price coorelation between different >> tires of the same UTQGS rating. I found a LOT of tires with DIFFERENT >> mileage rating but the same UTQGS specs. So I tend to discount the stated >> mileage as marketing fiction. What matters is UTQGS. And another telling >> indicator of the importance of UTQGS is that some manufacturers hide it. >> Goodyear, for example, doesen't post that on their website - they tell you >> you have to get it from the tire brochure at the tire dealership. >> >> However, it's pointless. The cheapest tire I could find in that size is a >> 40K tire and it's only 1/3 cheaper for 1/2 the treadlife. For >> only 1/3 again more of the price you get double the tire life. Plus the >> mounting >> costs are all the same cost as well as the road hazard warranty. In other >> words >> I can buy a road hazard warranty for 40K miles or a road hazard warranty for >> 80K miles - but they both cost the same. If the road hazard warranty was >> 1/2 the cost for the lower-mileage tire it might be worth it - but the way >> it's >> priced at the tire dealerships, it's cheaper-per-mile for the more expensive >> higher mileage tire. Not to mention with a 40K mile warranty you have to >> replace the >> tires twice as often so your doubling your installation costs. >> >>> Tires are a competitive business and a company whose products are priced >>> higher will have a tough time competing without a product attribute that a >>> consumer is willing to pay for, especially in the most common sizes like >>> 205/70-15. >> That I understand well. But that isn't how competition is carried out these >> days. In most commodity markets there are maybe a maximum of 2-4 >> manufacturers who are >> dominant players plus dozens of small fry. For example, in computer software >> it's Microsoft >> and Linux distributions. In computer hardware it's Dell, HP & IBM. In hard >> disk >> drives it's Seagate and Western Digital. In soft drinks >> it's Coke and Pepsi. In cars it's GM, Ford, Toyota, Honda & maybe Chrysler. >> In US crude oil it's Exxon, Texaco and a few others. And so on and so on >> and so on. >> >> All these commodity markets got this way because these dominant players >> gobbled >> up competitors until they ran up against the anti-trust regulators of the >> world's >> governments who prohibited further market acquisitions. Manufacturing >> economies of scale in today's markets dictate that the larger you are the >> cheaper you can make things. In most markets, consolidation sets in >> and continues until the governmental regulators put a stop to it, or declare >> a monopoly market and start regulating the dominant monopoly. >> >> Naturally, in these markets the few dominant competitors have the same >> product price since the margins are so thin - these companies make money >> on volume. >> >> It's only in niche markets (ie: specialty foods, etc.) that there's still a >> large >> number of companies, or in commodity markets (like milk) where the >> product cost is so low that freight charges make global distribution >> uneconomical, and you cannot reduce the product bulk (ie: freeze >> dry it) to reduce shipping But tires are very expensive and they are also >> very complex and take a lot of technology to manufacture. >> >> As you say, tires are competitive. And since there are so many many cars >> out >> there, there's huge amounts of tires sold. And since tires are complex and >> not >> easy to manufacture in the barnyard, the product lends itself to a commodity >> manufacturing model of single-source manufacture with wide distribution. >> But >> the reality is that the market does not appear to work this way. It seems >> to me >> that in reality, tires are far more expensive than they should be, because >> the >> tire companies have spent so much money on making hundreds if not hundreds >> of >> thousands of slightly different but almost the same model of tire. So you >> have >> a situation where there's a lot of small manufacturers all making small >> production runs, >> instead of a few large manufacturers making a few giant production runs. >> >> The situation seems really ripe for a well-heeled tire manufacturer to start >> acquiring >> other ones and killing off product lines right and left, and substituting a >> few >> much cheaper product lines, then making their profit on bulk. That is the >> pattern that has happened in the past in most other commodity industries >> with >> this kind of product, and the only reason I can come up with that it hasn't >> happened in the tire industry is that all of the tire manufacturers have >> gotten >> together and formed a secret cartel of some kind to fix prices. >> >> Is this it? Or is there something I'm missing about the tire market that >> lends >> itself to this incessant brand fracturing. >> >> Ted >> > > |
#23
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Price fixing among tire manufacturers
Ted Mittelstaedt wrote:
> Hi All, > > I've been recently looking for tires (size 205-70-15) and I am finding > among the retailers that for the mileage I'm looking for (80K) and > the UTQGS ratings (treadwear 700, traction A, Temp B) that the > prices are virtually identical. The biggest difference is pricing for the > road hazard warranties and for balancing, etc. from the tire dealers. > > What I really don't understand is why this is the case. For example, > Goodyear tires are manufactured in the US, by an American-owned company. > Michelin, and Bridgestone/Firestone tires are manufactured in China by an > American-owned company. Lastly, Toyo/Tourevo tires are an Asian-owned > firm and are manufactured in Asia. > > I understand reading from the trade rags that US companies have > outsourced manufacturing to Asia to save money. I also understand from > the trade rags that CEO's of Asian companies don't take the gigantic > pay amounts that US CEO's do. > > So, in principle, the Goodyears should be the most expensive, followed > by the Firestone, then the Toyo stuff should be the cheapest. For most things we buy, the cost to produce an item has little to do with its selling price (companies don't spend billions on advertising every year for nothing, after all) <snip> > What happened to competition? Gets a lot of lip service, but companies & CEOs hate it in real life. > Seems to me there ought to be a big > case here for an anti-trust price fixing lawsuit against the tire > manufacturers. > Anyone have any ideas? Just between you & me, I'd save my energy. Look around for your best deal and get the tires you want. Have you considered how little gasoline prices differ regardless of where the oil comes from, where it's refined, the price the oil co. is actually paying for its crude by virtue of its futures contracts, etc.? It's a good way to drive yourself mad if you worry about it too much. |
#24
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Price fixing among tire manufacturers
"Bill Putney" > wrote in message ... > Ray O wrote: >> "Bill Putney" > wrote in message >> ... >>> Ray O wrote: >>> >>>> The UTQGS was developed to provide a uniform method of comparing tires, >>>> and since mileage ratings are not part of the grading system, tire >>>> makers have and use mileage ratings for "wiggle room" in their >>>> marketing. >>> You're saying the mileage ratings (400, 620, or whatever) are not part >>> of the UTQG? UTQG is only temperature and traction ratings? >>> >>> Bill Putney >>> (To reply by e-mail, replace the last letter of the alphabet in my >>> address with the letter 'x') >> >> The uniform tire quality grading system has a treadewear rating with a >> control tire assigned a rating of 100. A tire with a rating of 400 would >> have a tread life that is 4 times the control tire; a rating of 620 would >> be 6.2 times, etc. Mileage is not necessarily the same as treadwear due >> to differences in tread pattern and tire circumference, so rather than >> list expected mileage, they compare tread wear. > > Ahh - got it. When you say mileage, you mean when they state that "this > is a 75,000 mile tire". Thanks. > > Bill Putney > (To reply by e-mail, replace the last letter of the alphabet in my address > with the letter 'x') The treadwear ratings, while technically more accurate, is a concept that some consumers have difficulty understanding so a lot of tire makers advertise that their tires will last 75,000 or whatever miles they think their tires will last because mileage is easy for the consumer to understand. -- Ray O (correct punctuation to reply) |
#25
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Price fixing among tire manufacturers
My Name Is Nobody wrote:
> "Ted Mittelstaedt" > wrote in message > ... >> "Ray O" <rokigawaATtristarassociatesDOTcom> wrote in message >> ... >>>> What happened to competition? Seems to me there ought to be a big >>>> case here for an anti-trust price fixing lawsuit against the tire >>>> manufacturers. >>>> Anyone have any ideas? >>>> >>>> Ted >>>> >>> It is possible that all of the tires you shopped were made in the U.S., >>> which would reduce the disparity in manufacturing cost. >>> >> That might be true, and it is true that there are not a lot of other tire >> manufacturers >> that make that size AND that mileage and UTQGS rating I looked at. >> >> But, if I went to a treadwear and UTQGS rating of about 1/2 of what I >> surveyed, >> then there's an order of magnitude larger number of tire manufacturers >> making that > > > There arn't that many tire manufactures... > > >> size. But, they are ALL the same tire price ALSO (or within very small >> amounts >> of each other) for that treadwear and UTQGS rating. I'd find it hard to >> believe >> they all make tires in the US. >> >> After surveying I found NOT a lot of price coorelation between tire >> mileage >> warranty and price, but I found a LOT of price coorelation between >> different >> tires of the same UTQGS rating. I found a LOT of tires with DIFFERENT >> mileage rating but the same UTQGS specs. So I tend to discount the stated >> mileage as marketing fiction. What matters is UTQGS. And another telling >> indicator of the importance of UTQGS is that some manufacturers hide it. >> Goodyear, for example, doesen't post that on their website - they tell you >> you have to get it from the tire brochure at the tire dealership. >> > > In my business, I have found that if I want to (and I don't generally) have > the cheapest price (cheaper than any or all of my competitors) every dollar > beyond one dollar cheaper than the competition is a dollar flushed down the > toilet. Why do it? I am not involved in "price fixing", but I do monitor > the market, and if my prices are substantially lower than the competition I > will generally raise mine. not unlike the airline industry, or your local > gas stations. There is absolutely no benefit to being half the price of > your nearest competitor. > >> However, it's pointless. The cheapest tire I could find in that size is a >> 40K tire and it's only 1/3 cheaper for 1/2 the treadlife. For >> only 1/3 again more of the price you get double the tire life. Plus the >> mounting >> costs are all the same cost as well as the road hazard warranty. In other >> words >> I can buy a road hazard warranty for 40K miles or a road hazard warranty >> for >> 80K miles - but they both cost the same. If the road hazard warranty was >> 1/2 the cost for the lower-mileage tire it might be worth it - but the way >> it's >> priced at the tire dealerships, it's cheaper-per-mile for the more >> expensive >> higher mileage tire. Not to mention with a 40K mile warranty you have to >> replace the >> tires twice as often so your doubling your installation costs. > > Unless you do not keep the car for more than 40,000 miles... > >>> Tires are a competitive business and a company whose products are priced >>> higher will have a tough time competing without a product attribute that >>> a >>> consumer is willing to pay for, especially in the most common sizes like >>> 205/70-15. >> That I understand well. But that isn't how competition is carried out >> these >> days. In most commodity markets there are maybe a maximum of 2-4 >> manufacturers who are >> dominant players plus dozens of small fry. For example, in computer >> software >> it's Microsoft >> and Linux distributions. In computer hardware it's Dell, HP & IBM. In >> hard >> disk >> drives it's Seagate and Western Digital. In soft drinks >> it's Coke and Pepsi. In cars it's GM, Ford, Toyota, Honda & maybe >> Chrysler. >> In US crude oil it's Exxon, Texaco and a few others. And so on and so on >> and so on. >> >> All these commodity markets got this way because these dominant players >> gobbled >> up competitors until they ran up against the anti-trust regulators of the >> world's >> governments who prohibited further market acquisitions. Manufacturing >> economies of scale in today's markets dictate that the larger you are the >> cheaper you can make things. In most markets, consolidation sets in >> and continues until the governmental regulators put a stop to it, or >> declare >> a monopoly market and start regulating the dominant monopoly. > > You can't earn 11,000,000,000 in quarterly profits, if you limit yourself to > some predetermined small profit margin now can your? These corporations > legal obligation is to earn a PROFIT, as high as the "market will bear, not > supply their goods at the cheapest possible price. The so called magic of the market is supposed to see to the best prices for the buyers (ref. Adam Smith & the like), but that has little to do with real world prices in the 21st century IMHO. |
#26
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Price fixing among tire manufacturers
"Tony Harding" > wrote in message ... > The so called magic of the market is supposed to see to the best prices > for the buyers (ref. Adam Smith & the like), but that has little to do > with real world prices in the 21st century IMHO. I don't think Adam Smith would agree with your assertion, at least if you mean the best price is the lowest price for you. I think even Mr. Smith understood things were a lot more complicated than that. And very few current markets are truly free markets or even truly competitive. All tire makers try to distinguish their brands and create the opinion (fact or illusion) that their particular brand of tires are inherently more valuable. If all tires of a given size and type truly were identical and there were no marketing impediments, then you might have a free market but this does not guarantee that you would get the lowest possible price. A manufacturer might decide that they would rather sell fewer tires at a higher price in order to maximize their profits. They might induce you to pay more by creating the illusion that there tires were better (even if they were not) or by providing superior service, or because they had outlets more convenient than a competitor that charges less. Ed |
#27
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Price fixing among tire manufacturers
On Mon, 31 Dec 2007 21:43:22 GMT, Jeff >
wrote: >clare at snyder.on.ca wrote: >> On Mon, 31 Dec 2007 01:07:44 -0800, "Ted Mittelstaedt" >> > wrote: >> >>> "Ray O" <rokigawaATtristarassociatesDOTcom> wrote in message >>> ... >>>>> What happened to competition? Seems to me there ought to be a big >>>>> case here for an anti-trust price fixing lawsuit against the tire >>>>> manufacturers. >>>>> Anyone have any ideas? >>>>> >>>>> Ted >>>>> >> >> In checking prices for tires for my daughter's car, I found the >> difference in price for THE SAME TIRE to vary 15% from the cheapest to >> the most expensive tire reseller in my market area. The difference >> between the private branded tire built in an American BFG owned >> (Kelly) plant and Michelin, Toyo, and Bridgestone for the same quality >> tire was about 10-13% at a dealer that sold all of them except the >> private brand, and accross the market, about 15% between the highest >> and lowest across brands. >> I bought the private branded (Moto-Master from Canadian Tire) because >> they had them in stock, could install them in a short time, and the >> price was near the bottom of the range. >> >> The chinese built tire from the same retailer was only a few bucks >> less, and I don't buy Chinese CRAP if I have another alternative that >> makes sense. > >I don't buy crap, regardless of where it is made. Of course, I do buy >good quality stuff from China as well as the US, India, Singapore, >Canada, Europe, Isreal, and other countries. > >Just because it is from China doesn't mean it is (or isn't) crap. > >Jeff Correct - but "good quality" stuff from China is always a crap-shoot with their quality control issues. Also, too many of my friends and their parents have lost their jobs in the Canadian Rubber industry - BFG, Goodyear, and Uniroyal are all gone now. I'll still buy Canadian/American and even Euro and Japanese before I'll buy Chinese. -- Posted via a free Usenet account from http://www.teranews.com |
#28
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Price fixing among tire manufacturers
Tony Harding wrote:
> Ted Mittelstaedt wrote: >> Hi All, >> >> I've been recently looking for tires (size 205-70-15) and I am finding >> among the retailers that for the mileage I'm looking for (80K) and >> the UTQGS ratings (treadwear 700, traction A, Temp B) that the >> prices are virtually identical. The biggest difference is pricing for >> the >> road hazard warranties and for balancing, etc. from the tire dealers. >> >> What I really don't understand is why this is the case. For example, >> Goodyear tires are manufactured in the US, by an American-owned company. >> Michelin, and Bridgestone/Firestone tires are manufactured in China by an >> American-owned company. Lastly, Toyo/Tourevo tires are an Asian-owned >> firm and are manufactured in Asia. >> >> I understand reading from the trade rags that US companies have >> outsourced manufacturing to Asia to save money. I also understand from >> the trade rags that CEO's of Asian companies don't take the gigantic >> pay amounts that US CEO's do. >> >> So, in principle, the Goodyears should be the most expensive, followed >> by the Firestone, then the Toyo stuff should be the cheapest. > > For most things we buy, the cost to produce an item has little to do > with its selling price (companies don't spend billions on advertising > every year for nothing, after all) > > <snip> I would like to see your evidence for this. For gasoline, most of the cost is the crude oil, refining, transportation and cost of selling the fuel, like operating the station and taxes. For electricity, it is for the coal, oil, or carbon-containing substance or uranium or the cost of the dam, windmill, or solar panels, the cost of transmission and the cost of billing. For computers, almost all the cost is the cost of the raw ingredients (e.g., CPU, motherboard, disk drive) and putting the computer together. For paper, the biggest cost is trees and processing the tree at the paper mill. For car and trucks, the cost of making the vehicles is a major determining factor in the price of the vehicle, however, some cars get much higher prices than the cost of the vehicles, and for others, like GM's EV-1, the cost of the car was not related to the cost of manufacturing. For all of these things, market forces do play a major role. For example, if Dell could sell its $1200 notebook for $1500, it will. And if it costs ExxonMobil more to suck its oil out of the ground than it can buy crude oil for, it will buy the crude. There are other things where the cost has nothing to do with the cost of the product, like cell phones, which are basically an advertising thing to get people to buy cell phone service. And for prescription drugs under patent, the cost of manufacturing drugs has very little to do with the price of the drugs (actually the cost of marketing the drugs - essentially kickbacks to docs, dividends for stock holders and the price of development are the main costs). The cost of food crops (e.g., grain, corn, milk) has a lot more to with outside forces, like market forces and government subsidies than the cost of growing the crops. >> What happened to competition? > > Gets a lot of lip service, but companies & CEOs hate it in real life. Of course they hate it. Would you rather sell cars when there are only three makers or many more (lets see, Ford, GM, Chrysler, Diamler, Mitsibushi, Toyota, Honda, Hyundai, Kia, Subaru, VW, BMW, Fiat, Alfa-Romeo, Nissan, Isuzu and Mazda all sell cars in the US, but there are more, like Cherry who would like to sell in the US as well). >> Seems to me there ought to be a big >> case here for an anti-trust price fixing lawsuit against the tire >> manufacturers. >> Anyone have any ideas? > > Just between you & me, I'd save my energy. Look around for your best > deal and get the tires you want. Good advice. > Have you considered how little gasoline prices differ regardless of > where the oil comes from, where it's refined, the price the oil co. is > actually paying for its crude by virtue of its futures contracts, etc.? That's called "market forces." For a commodity, the cost of manufacturing matters little for the cost of a particular brand. > It's a good way to drive yourself mad if you worry about it too much. Perhaps you have been worrying too much about it. Sorry, couldn't resist. Jeff |
#29
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Price fixing among tire manufacturers
clare at snyder.on.ca wrote:
> On Mon, 31 Dec 2007 21:43:22 GMT, Jeff > > wrote: <...> >> Just because it is from China doesn't mean it is (or isn't) crap. >> >> Jeff > > Correct - but "good quality" stuff from China is always a crap-shoot > with their quality control issues. > Also, too many of my friends and their parents have lost their jobs in > the Canadian Rubber industry - BFG, Goodyear, and Uniroyal are all > gone now. I don't see how that is China's fault for producing a product for less. Of course, a lot of people who had the option of buying products made in North America chose ones from China instead for a few measly dollars less. However, the cost of the jobs lost was not figured in. > I'll still buy Canadian/American and even Euro and Japanese before > I'll buy Chinese. One thought that comes to mind is do you really need to buy it all? I mean, kids have so many toys, do they really need another toy from the fast food restaurant, especially when the toy is often made with some plastic from our used electronics (by "our" I mean the US's, for the US is the only country that allows its waste electronics to be shipped overseas to be recycled into lead-laden toys). It seems to me that we have too much stuff that we don't really need. Kids need toys -- that's how they learn, but they don't need a new cheap toy with every meal. Also, when it comes to food, I prefer local, because it takes so much energy to transport food half-way across the country or even half-way across the world. Energy is one commodity the world is using more and more of every day. The American Museum of Natural History in NYC has a neat exhibition called something like H2O - the stuff of life, that looks at how much water people, especially Americans, use, as well as the large amount of water it takes to grow the food to feed a cow for a single quarter pounder with cheese compared to the water to grow crops for the same amount of food energy say in a loaf of bread or a few ears of corn or other vegetables (not even adjusting for the toys). Jeff |
#30
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Price fixing among tire manufacturers
On Mon, 31 Dec 2007 15:52:47 -0600, "Ray O"
<rokigawaATtristarassociatesDOTcom> wrote: >"Bill Putney" > wrote in message ... >> Ray O wrote: >>> The uniform tire quality grading system has a treadewear rating with a >>> control tire assigned a rating of 100. A tire with a rating of 400 would >>> have a tread life that is 4 times the control tire; a rating of 620 would >>> be 6.2 times, etc. Mileage is not necessarily the same as treadwear due >>> to differences in tread pattern and tire circumference, so rather than >>> list expected mileage, they compare tread wear. >> >> Ahh - got it. When you say mileage, you mean when they state that "this >> is a 75,000 mile tire". Thanks. > >The treadwear ratings, while technically more accurate, is a concept that >some consumers have difficulty understanding so a lot of tire makers >advertise that their tires will last 75,000 or whatever miles they think >their tires will last because mileage is easy for the consumer to >understand. If every maker picks the same base mileage for that "100" tire to achieve - say 20,000 miles - then advertising a UTQG 375 tire as "75,000 Miles" would make more sense to the consumer. But if they inflate the claim it makes the advertising irrelevant. (Don't pick on my math, I'm just making a rough guesstimate. It's somewhere in the 365 to 385 neighborhood...) --<< Bruce >>-- |
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