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Letter to the Editor
Asher Tourison of Acme Pallet in Michigan shares some insights on surviving during difficult economic times.
Date Posted: 8/1/2008
†† The July issue of the Pallet Enterprise carried an article entitled, ďSurviving and Thriving During a Recession.Ē When writing this article we interviewed our friend Asher Tourison of Acme Pallet in Michigan. The rough draft of the article had already been written before this interview, so the article was published without Asherís valuable contributions. With Asherís permission, we present his thoughts in this Letter to the Editor. The Enterprise welcomes similar contributions from readers. Please email to email@example.com.
†† I have some thoughts to share on surviving during difficult economic times. The train left the station a long time ago. If you are not prepared for a slower business environment now, it is too late.
†† The true key to survival in a slow economy doesnít rest in what one does during the recession. It depends on how you have prepared your company and your customer base when times were good. The more professional your companyís products and services are, the better position you are in to survive any slowdown. This is a long range direction that pays dividends every day along the path of growth. Running your company in this fashion will help ride through the tough times as well as prosper during better economies. While it is true that differentiating yourself in the pallet supplier arena is more difficult than it may be in many industries, it can still be done.
†† A style of business and living that we have established over time helps us ride the waves. When riding the crest of a wave, remember you didnít make the wave.
†† Establish regular contact with your customers. Distinguish your company and its products. Most people are not looking for change; it involves risk. People dislike change, but change is the one constant that we have.
†† Our industry is changing. We are going to end up with fewer pallet companies, fewer and larger that will be more capital intensive. The point is shifting from labor to capital intensive. It will continue to change. Remember that a big project today may not bear fruit for a few more years. You canít wait until you are there to decide what you are going to do.
†† What kind of relationships and equipment options are we looking at? I am pretty sure what will happen with our base of lumber suppliers in five to ten years. Plan today so we are not in trouble in the future.
†† As the industry becomes more capital intensive, the risk factors are tougher. The highs are higher and the lows are lower. Be flexible. Elasticity helps you react quickly. Be prepared with answers so your company can adjust.
†† Keep in mind, however, that the buyer may not care if a low priced supplier can maintain his momentum. To the buyer the life of a supplier may not be his concern. This is where relationships can play a big part.
†† Surviving price pressure is easier when you have structured your business so that you do not have to run your plant at 85% or more in order to break even. Unfortunately this is all too common in the pallet business. If you havenít even thought about lean manufacturing processes, you are toast. When busy, work a touch of overtime. When slow, pull them back. Live on the premise that you do not give somebody something that you do not have. Do not build a bunch of pallets that you donít have purchase orders for.
†† Keep your debt a small proportion of your business. Pay cash for machinery, or pay it off quickly. If your debt is small in relationship to your business, you can live through just about anything. If you do not get your break-even below 50% of your designed capacity, you will never make good money. A low break-even point, lean manufacturing supplier, and long term employee retainership are necessary parts of every day living. There is no quick fix.
†† I will conclude with another suggestion. When looking to expand, donít bet the ranch. Donít even bet the ranch house. Itís OK to bet the out house. Remember that things will still go wrong, in spite of your best planning. That is what life is all about. If you have not lived a certain life style in the good times, you are in trouble during a recession. Trouble is like a cancer. Get it early or it gets you.