First Half Sales Down, Optimism Up
Jim Phillips, Contributing Editor
"Overall, I would say 10 to 15 percent is about right," commented one spinner. "It depends a lot on the product, though. Our ring-spun operation has managed okay, but open-end is completely hit and miss."
"It has not been good, but it hasn't been as bad as we had feared," another spinner said. "We are off about 10 percent, but business has been picking up. We haven't seen an upward spike, just a slow, but steady, increase in orders."
Looking ahead to the next six months, many spinners anticipate gradual improvement. "It is getting better. Orders are still shorter than we would like, but there is more business coming in. Hopefully, this is not just a small uptick before another drop. Earlier in the year, we noticed some positive developments one month, and then the following month was slower than ever. We have our fingers crossed that, this time, the improvement will be more sustained."
With most economic prognosticators forecasting an end to the global recession later this year, there is room for some optimism, but few expect an immediate and substantial impact on sales. "From what I am hearing now," said a Southeastern executive, "the anticipated recovery is expected to be mild, at least at the beginning. So I guess you could say we are guardedly optimistic about the third and fourth quarters."
According to one industry observer, manufacturers in all segments of the economy would do well to take a conservative approach in the initial stages of recovery. "If anyone is expecting consumer spending to return to pre-recessionary levels, I believe they may have to wait for quite some time. The depth and scope of the current recession and the accompanying credit crisis revealed the precarious financial position of many consumers. Belt tightening, which in the past might have been a temporary measure to curb spending, is likely to become a way of life for many people for quite a while. Fear of job loss, fear of foreclosure, fear of bankruptcy -- all these have become very real for a lot of people over the past year."
In any economic environment, focusing on customer value is a key to business success, a manufacturing consultant noted, but it becomes absolutely essential when times are lean. "You have to be able to provide to your customers a differentiating value proposition that sets you apart from your competitors, especially when you can't compete on price alone. True value is represented by the combination of price, quality, delivery and service. For those companies that have a viable value proposition, and are committed to executing it, recovering from depressed sales is inherently easier. For US industry, for which competition on price alone is difficult, providing value is based on matching product precisely with customer needs, quick turnaround of flawlessly manufactured product, expedited delivery and post-sale follow-up. Those companies that can execute against those elements will be in a good position to take advantage of any economic recovery."
One specialty spinner agreed: "The way we've been able to get business is by providing higher quality and faster service than our competitors in other parts of the world. We know we can't always be competitive on price, but we can make the commitment to have the best quality, fastest delivery and best service."
For those companies that haven't yet felt any signs of recovery, the manufacturing consultant offered this advice: "When sales are off and earnings are down, obviously you have to look at where you can take out cost. However, one of the biggest mistakes many manufacturing companies make is pulling in the reins completely. In difficult times, the priority should be on generating sales, and that requires aggressively positioning your product relative to your competition. And that means maintaining - or even increasing - your marketing program."He went on to say, "History is full of examples of people and companies that actually made their fortunes in down times because of how they positioned themselves."
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