Garry Bartecki Economic decisions in an uncertain business climate
Our financial world seems out of whack and will probably continue to be for the rest of the year. This leaves dealers and their customers to generate two or three business plans for the rest of the year, hoping that the plan they decide to use generates positive cash flow and at least a decent gross profit margin for the full year.
I included your customers in this process because their decisions will impact both your top and bottom lines. Consequently, you will want to have discussion points to discuss with them, including thoughts on the economy and pricing expectations should costs increase due to tariffs and/or inflation.
However, dealers who purchase new units produced in the USA will be exempt from any tariff costs but may still feel the impact of inflation.
Dealers who receive units or parts with a tariff cost will have to decide whether to pass on the cost, not pass on the cost and thus reduce margins, or defer the tariff cost hit to a future date when there is an opportunity to pass it on to a customer: many options, and a headache for your CFO and Sales Staff.
Considering this a critical topic for dealers, I have read at least twenty-five expert reports on both inflation and tariff revenues and costs to customers and, thus, consumers. Does it surprise you that many of the expert reports were 180 degrees apart? Some made sense, and others you are saying to yourself, “What the hell are they talking about?” I had notes, charts, and diagrams all pointing in different directions.
However, as I suspected, my March 15 publication of John Mauldin’s Thoughts from the Front Line delved into the topic with nine pages of financial data and comments about inflation and tariffs. And this was only Part 1 of the report. Part 2 was part of the March 22 report, which contained numerous charts and discussion points that led to a reasonable conclusion, enabling you to have a meaningful conversation with customers and staff.
I sent Dean both digital issues and asked if we could provide access to their reports. He gladly agreed.
Danielle DeMartino Booth is the author of both reports. She used eighteen million data points and analyzed each component of the equation to ensure that all data was normalized and up to date when the analysis was completed.
The conclusion reads as follows:
- Tariffs will raise the cost for the initial buyers.
- Initially, the decision will be whether to increase the price or not.
- We are at the start of a recession where demand is slowing.
- Lower demand will result in lower prices, enabling steady sales.
- Inflation was 1.3 % in the last 12 months (March 24-25). To 1.5 % shortly.
- Recessions are deflationary.
It will take you an hour or so to get through the two reports. To support the soft demand, have the shopper in the house note how many discounts and specials they see at the store.
Now you should be able to plan the rest of 2025. You may want to sign up for Danielle’s daily newsletter. You will find it in the March 22nd report.
The good news about this report is that you can expect at least a 0.25% cut in interest rates, but more likely a 0.50% reduction. It would be a good idea to defer renewal discussions with your bank.
This information should also be helpful when explaining financing terms with potential or existing customers.
And, of course, something may blow up the entire expectation. What is the caveat investment companies use after giving some advice? Whatever it is, use it here.
Back to Robots for a few minutes.
In his most recent column about the future of robot technicians, Jeff Brown, the Editor of The Bleeding Edge, was asked a question by a reader who stated that he could not find any technical or trade schools that teach servicing, maintaining, and modifying industrial, manufacturing, and logistics robots and robotic systems.
Jeff responded by saying this is the perfect time to consider a career path in this field. He suggested that you contact the ARM Institute, which has a website at ROBITICSCAREER.ORG and offers tech training programs nationwide. Other sources were also listed. I plead with the Dean to include Jeff’s column as well so you can find as many sources as possible to address this area of expertise.
These may be the sources you need to extend your level of expertise to current and new customers. The schools will know who produces and installs robotic components. I believe this will become a substantial part of your future income.”
In another report, I came across an article about China’s dark manufacturing operations being up and running, with plans for many more. After reading the title, I asked myself, “What the hell is this all about?” As it turns out, these facilities are 100% without light in the factory. Do you know why?
BECAUSE THERE IS NO ONE INSIDE THAT NEEDS TO SEE!
YIKES!
Time to sign off.
About the Columnist:
Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.
