Garry Bartecki Keep them short
Keep your planning process short. From what I see this is a must regarding 2023 and maybe even 2024. The plans I am suggesting for 23 have accounted for not more than three months. You work that plan and while you are doing so you add a month to the three-month plan and subtract the month just completed. You really don’t want to wait until the middle of month 3 to devise the plan for months 4. 5 and 6. You just keep adjusting to having three months on the drawing table at the end of any month.
Why am I suggesting this? BECAUSE NO MATTER WHAT YOU HEAR, IT IS STILL SCREWED UP OUT THERE AND WILL PROBABLY BE SO FOR 23 AND INTO 24. Last month’s article by Allen Polk kind of spelled it out for you. The supply chain is still not fixed. Pricing is out of control. The OEM backlog is still not under control. Interest rates doubling over the last year. Customers with needs and problems you cannot solve at this time. Add to that the labor shortage and the need for technology and you find yourself in an almost impossible situation putting a gameplan together.
But there is some good news to share as well. If you recall, I recommended a book titled THE END OF THE WORLD IS JUST THE BEGINNING, which basically maps out the collapse of Globalization written by Peter Zeihan, a geopolitical strategist. It basically spells out the history of the world economy and Uncle Sam’s involvement in protecting globalization as a result of increasing the standard of living throughout the world. But now that the USA is no longer finding globalization to be as profitable or useful as anticipated. The result is that many countries that build up an economy because of globalization will find their economy shrinking without a meaningful way to reverse the downfall. On the other hand, those countries hoping to continue to produce and grow their CDP numbers will need to have a certain availability of energy resources, land able to grow all the crops needed, industrial centers where the work can be performed and a population with flexible pay grades to allow for product costs acceptable to the market. Mr. Zeihan suggest that the best location in the world where this program could be developed was the space occupied by Canada, the United States, and Mexico. Working together these three countries will control the world’s economy. THAT IS GOOD NEWS FOR YOU AND IT IS COMING FASTER THAN YOU THINK. MANUFACTURING, HERE WE COME!
As I was reading the book, I could spell the lube oils, hear the milling machines operating, and see the steel bars waiting to be processed. This was at my father’s Machine shop. All when well until the time we started allowing foreign steel into the country. When the price of domestic steel alone was more than the full cost of our products made with foreign steel ….globalization put us and many friends out of business. Now the collapse of globalization is going to put the US back on top of the Manufacturing Hill and take the lift truck industry with it.
Buy the book, read it, pass it along and start planning how to get your piece of this pie.
Since I do a lot of work with construction equipment and how it is used by contractors, I looked over the Dodge Report for 2023. And guess what? Expect housing and warehouse construction to be down, and manufacturing buildings to be up. MANUFACTURING, HERE WE COME!
As we plan ahead let us not forget:
Some inflation will reverse, and some will not. Many prices will move up and stay there. Remember, you have FIXED COSTS, SEMI-FIXED COSTS, AND VARIABLE COSTS. Are you prepared to adjust costs and billing to maintain margins?
Labor costs will stick and even go higher because there are few eligible folks out there to hire. Better review your entire employee package for techs and tune it up so that they cannot leave.
94% of CEOs are planning for a recession in 2023. Hopefully, it is a normal recession (forget the soft landing) where inflation remains high and the Fed keeps hiking to 5% or more, with unemployment heading up and GDP down. Do not assume it will be business as usual in Q2 of 23.
Customers need equipment. How about selling them refurb units? Or renting them refurb units. Or refurbing their units with them providing the core. Refurbs work and can be quite profitable for both dealers and customers. A recent email I saw about a contractor that gave his old pickup to a place that refurbs it in 3-4 weeks with a new drivetrain, interior, and parts as necessary replaced. It is a hell of a lot cheaper than a new one.
There are probably many firms out there that do not want to own and operate their lift trucks. Work out a deal to manage their fleet.
If there ever was a time to belong to a 20 Group, it is now. Believe me, with what you have on your plate, 15 heads are better than one when it comes time to plan for Q1 23.
About the Columnist:
Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail [email protected] to contact Garry.
