Building a Future for Distributors and Dealers of Building Products
Volume 44, Issue 6 July/August 2005
A Viewpoint from the WMMPA
Where Have All the Sales Gone
2005 Not the Market Climate Manufacturers Had Hoped For
by Kellie A. Schroeder
If a moulding manufacturer were given a chance to take back the voluminous sales of 2004 and replace them with a steady order file for that year, would they do it to avoid the slow first two quarters of 2005? I think WMMPA members would agree that 2004 was a banner year for moulding manufacturers. Prices were firm, orders were plentiful, interest rates were holding at record lows and the housing market was sizzling. Flash forward to June 2005. The housing market is robust, interest rates are still low, but orders are flat and prices are as sour as bushel of lemons. We are heading into the third quarter of 2005 and the question on everyone’s mind is, “Where have all the sales gone?”
Shaken Not Stirred
Each of us realizes that our customers’ inventories are well stocked after last year’s millwork cocktail of (circle the one that best describes your agitating agent from 2004): lack of ocean freight carriers, container shortage, port fiasco, overland freight problem, fuel surcharges, lack of rail service and sheer panic from the buyers. These situations mixed together quickly in 2004, resulting in the culmination of the tall, sour drink with a bitter lemon finish the manufacturers are gulping down in 2005. July is upon us; would anyone like to put down the glass they’re drinking from and order a martini about now?
Er … maybe we should make that a shot of whiskey; it will sound better when I reference cowboys and the Old West below.
You might be wondering right about now if it is just the surplus inventory keeping the manufacturers’ bellies to the bar, drinking down the vile 2005 cocktail. No, that would be too simple. There are several factors chaining them to the barstool. One of the major cattle prods forcing them to pick up the glass arises from renegade moulding outfits and their inability to grasp a simple concept. If your customer is overstocked on inventory, you should not lower your price just to move more product into their warehouse.
What part of overstocked needs to be explained?
Why force your customer to buy more product for his/her moulding racks that he/she doesn’t really need just so you can move a stick of moulding to make one penny on a dollar? Your customer understands you need to make a dime here and there. Why throw cow pies at the market with lower pricing? The worst part of this scenario comes when the overstocked inventory is finally depleted (mid to late third quarter 2005?) and we return to a normal buying cycle with bottom-of-the-glass pricing in place. The moulding manufacturers should just hit themselves over the head with the whiskey bottle rather than drink themselves a slow death.
We’ve all seen those old western movies where the cowboy orders a bottle at the bar, picks it up with his shot glass, then slowly walks to a table in the corner of the room and takes the chair that allows him to survey everyone in the saloon. All of the manufacturers would be able to set down their glasses and even tip the bartender a few bits if they would pay attention to this concept.
Step back from the bar and survey your fellow cowboy manufacturers. Rally around. Cowboy up! When you’re riding a bucking bronco of a market, hold on! Don’t hop off in the middle of the ride, you’ll only land in the mud and get trampled on. Sounds like good ol’ commonsense to me, but then again, didn’t Festus from Gunsmoke coin that philosophy?
Truth of the matter is, the WM® manufacturers had hoped for a better start in 2005. And yes, we do kick the toe of our boot against the ground with a big “aw shucks!” wondering where all the sales of 2004 went—especially since farmhouses are popping up at a super pace all throughout the prairie in 2005. We realize, though, the bucking bronco will soon tire, bringing normalcy back to the market.
We’re also prepared to bet our long johns that it won’t be the market we recall from 2003 prior to the rodeo ride of 2004. This will be an entirely new type of market, one which those outlaw moulding outfits have created and the rest of us will have to deal with come September and October. As we head into the fall, we’ll probably hear many a sales manager growling, “Git ’er done!” to his sales teams. I guess we’ll find out who will be left to pick up the reins and ride into the sunset come January.
The WMMPA membership will be staging a round-up August 16-20, in Vail, Colo., at the Vail Cascade Resort & Spa. We’ll be pulling on our boots and, depending on the market, strapping on the spurs to have frank discussions amongst ourselves about the current and future market. It might get coyote ugly with so many manufacturers of differing opinions in the room (all six shooters will be checked at the door).
However, we think it’s better to know what your competitor is thinking rather than sitting around the campfire at night wondering what direction a few stray calves may head during the cattle drive.
If you’re a manufacturer of moulding and millwork that has a desire to sit around chewing the fat with a few cowboys that know a thing or two, then git yourself to a WM® meeting! Call the WM® office at 800/550-7889 to request a meeting registration packet or visit the events calendar page at www.wmmpa.com.
Kelly A. Schroeder is the executive vice president of the WMMPA.
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