Spread the wealth
I was looking over the lift truck stats comparing 2013 to 2012 and even though there was a 10% increase in units delivered the historical sales for the period 2009- 2013 are still pretty flat. That being the case I suspect margins on that 10 % increase in unit sales was pretty slim.
To make up for the cyclical nature of lift truck sales many dealers provide some sort of consulting services to supplement the revenue stream. I remember when dealers started providing such services and it was tough to make a buck doing it unless you had real self-starters able to sell the service and build the business. These days value added services is the norm.
Of course dealers have options when it comes to the services they provide. You can select a value added program or service or product and bring it in-house, or build a group of affiliates who provide the services under your direction. Using affiliates allows a dealer to build a menu of services to offer as opposed to one or two. In addition, using independent contractors keeps the overhead and downtime off of your books, allowing dealer management to keep the relationship going even though business is slow.
Being a resilient group, lift truck dealers always find a way to generate enough cash flow to keep the boat afloat. Been that way for a long time even though a lift truck dealer is a capital intensive business; they always find a way.
I read and study numerous economic and industry reports on a daily basis. The bottom line is we are living in very confusing times. The stock market is riding high while most of the population is treading water and has been for years. It appears we are both coming out of a recession and at the same time are in the middle of a demographic cycle where the baby boomers are of an age getting ready to retire, and thus cut back spending to prepare for retirement. In the US, if you cut back on spending it comes back to haunt us in the form of a slowdown and thus our problem economy continues to slump along.
The makeup of the unemployment numbers or under employed numbers tells me our younger generations are in for a lengthy flat economic situation until the US regains the jobs we gave away or lost to locations where the price to produce products is substantially lower. It could and probably will take many years to add substantial jobs to our economy. But it will happen!
Joel Kurtzman has a book entitled “Unleash the Second American Revolution” which states and supports the theory that the US has no competition when it comes to creativity and work ethic to get ahead. With our ability to control the majority of the most important industries in the world, our ability to improve productivity annually, the resources and energy we have available for discount prices compared to the rest of the world all combine to make for a bright future for the US.
It is no secret what we did with technology where anybody could create a business in their bedroom requiring very little time or capital. Fortunes that would have taken 20 years to build at the beginning of the 20th century are now produced in a few years.
Our next generation will be Builders and Makers using technology related to 3D and 4D printers along with laser cutting tools. A generation of Makers who can produce customized products for sale using a very short lead time.
Add it all together and you can see how the US will grow in the not too distant future. Now throw in a revitalization of heavy duty manufacturing that is coming home but will take more time to become part of the mainstream business cycle, and the warehousing and logistics they will need to manufacture, store and move product and you can see that within 10 years the US will once again be a vibrant economic machine and again #1 in the world…..creating millions of jobs for our population.
The downside, of course, is that the process will take more time than you would like, but it will happen and bring back a much stronger lift truck industry. So hang in there and make sure your staff is looking for the opportunities that will be forthcoming.
Planning and risk assessment will be most important while waiting for the turnaround to happen….so don’t make any rash judgments without input from your management team and advisors.
I used the term “hang in there”, but with lift truck dealers that is not necessary.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail [email protected] to contact Garry.
