Another industrial revolution?
Is there any doubt we are engaged in another Industrial Revolution? I think not.
There have probably been at least two prior IR’s, with the most current similar to what is going on in China where they are attempting to bring the rural citizens into the cities to work in factories and other industries so they can improve their standard of living and spending levels.
The U.S. kind of had that worked out until we allowed our manufacturing base to disappear overseas now leaving us in a lurch with so many under and unemployed with not many manufacturing jobs to be had. It appears we are more data driven and technology oriented leaving a great many employable people without the skills to make a living in this economy.
The Fed can stimulate until they are blue in the face because they are pushing on a string that is going nowhere. I have personally talked to many lenders who tell me they have cheap money to lend but they can’t find any takers.
It seems the U.S. is on the cusp of some major changes if we hope to generate income growth for our workers. Schooling has to change, training has to be more available and job specific, funding for entrepreneur’s must continue without all the red tape, and the government has to just get out of the way and let these small businesses fight their way into profitability.
So how about you and your material handling dealership? Are you coping with this continued slow, slow, slow recovery?
If you watch the financial channels you keep hearing about how many public companies are getting their earnings increases by doing more with less. Let’s see, more with less. Less what? Probably less investments, less overhead and less personnel cost. And, you can just bet on it that once they learn how to achieve these profitable results with “less” they are not going back to their less efficient ways.
So when was the last time you sat down to review your financial statements to see if you are doing more with less? In this day and age I suggest you do it at least quarterly to see that your margin dollars are growing faster than overhead and expenses and that you keep what you earn by avoiding investments that offer less than your minimum ROI requirement.
I keep hearing that any increase in your top line these days is going to come at the expense of your competitor, because there is not much new business out there to get. What that means is you have to do more with less and at the same time be good enough to keep your current customers and be even better to snare some from your less efficient peers who are not properly running the store.
When you add this all up you can see what is going to happen. Top managers are going to profit with less, increase their absorption factor and be efficient enough to offer very competitive terms to their prospects and follow up with service that is better than average. Are you in that category?
If not, you may be in for a very tough ride. Margins slipping, operating results slipping, cash flow disappearing, problems with OEM’s and finally bank covenants being missed that bring out the work-out crew.
The point here is this is going to be a very slow recovery until we start reshoring our manufacturing base because of our cheap energy supplies and weaker dollar. Thus every company out there needs to be able to wait it out and figure out how to do by more with less. The required changes will start with systems and procedures, to make your company more efficient, followed by offering superior customer service throughout the organization. If you can get the computers to replace man hours and have an ample supply of tech trainee’s on hand and enough service vehicles to be able to keep downtime to a minimum, you may have a chance to show up the competition and sign up some new business.
I spend a few days a week working for an 800 unit rental company and the CEO says “This is the year for the big comeback, and the folks who have the inventory and superior service capability are going to be the ones to control their market.” So what did he do? He didn’t go out and buy more rental equipment; he went out and ordered a bunch of new service vans and delivery vehicles to meet the contractor’s needs. And guess what, it is working.
Our next industrial revolution is coming and you are in the middle of it whether you like it or not. Think it through and I believe you will find that the place to be is with superior customer service whether you are talking sales, product support or rental.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail [email protected] to contact Garry.
