Monday, October 02, 2006

insiderbericht aus florida

immer wieder gut mal ungefiltert was abseits der spröden statistiken zu hören.

dank geht an diogenes und ben

2006-10-01 06:39:56
Anedoctal story of the market’s demise.

I am watching the market in Florida and the Southeast deteriorate in real time. I work for a manufacturing company that directly supplies home builders. During the past 4 years (excluding the latter half of this one), sales volume had been continuously increasing.

Things started changing around Feb/Mar of this year. Till that time, there had been a year-end frenzy for builders to complete projects and get them on the market. Our management had interpreted this to mean that business was increasing. So, they did what they thought was best. They increased the production work hours and added additional warehousing. We produced six months of additional inventory to beat the coming deluge of new business.

Around Feb-Mar, things began to slow just a little, volume still close to the prior year, but by April-May, the sales began to slide. From that time till about August, sales were running about 80% headed down to 70% of the prior year’s volume. Under normal production levels, the warehouses are FULL, and we are having excess production capacity.

The last 2 months, orders have fallen off a cliff. We are now shipping 30-40% of prior volumes. And remember our warehouses are Full. Orders are slow enough that with 2 work shifts, only one shift’s worth of volume is getting done. The rest is busy work.

Senior Management was living the dream. They didn’t see this coming, although I had tried to give some cautionary messages along the way, the Sales/Marketing types just view this as misguided “negativity”, so I have held my peace for the most part.

I have been working at my current position for 5 years now. For the first time, senior management required a BUDGET for the remainder this year and all of NEXT YEAR. I had 2 days to complete this and submit to my superiors. In all the time I have been here, costs were never an issue. If I needed to have something done, I just sent in a requisition. They were routinely approved. Now, we are looking at cost containment, warehouse/storage reduction, and no-one has said it yet, but I am sure the layoffs and cut-backs will be starting very soon. We basically just stopped hiring lost employees.Already, one of our buyers on the East Coast has laid off 300 people.Some of our customers have RETURNED inventory, anticipating slower sales.

This seldom happened in the past, unless the customer was changing suppliers, i.e. went with the competition and wanted a credit back for unsold supplies.Consequently, I expect I may have more time for blogging than I already do. The market here is falling fast, and no one in our company (me excluded) anticipated any of it. This is just ONE company. I wonder how many others are seeing the same thing??



Anonymous John Fleming said...

This will become the story of the very near future for lots and lots of companies, I think.
Maybe eyes are starting to open a little.

3:48 AM  

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