How Are Domestic Markets Changing?
With the virtual elimination of credit lines, many manufacturers are being forced to operate on cash flow which has dramatically reduced the size of orders placed with suppliers. Companies may have increased the frequency that they order, but much smaller orders have forced companies to re-evaluate how they manufacture products. Gone are the days when a company would purchase a two or three month supply of parts. Today their purchases are based on a "pull system" where they only order the exact number of parts to produce orders currently in house.
As the economy continues to improve and people have more available cash to spend, the limiting factor will be a sufficient number of skilled workers to produce the products that people are willing to purchase. As far as the lumber supply goes, when is the last time you heard a junior high school student say that their goal in life was to become a logger.
Regardless if the logs are being shipped export, or sold to a US manufacturer, prices will be irrelevant if there is no one willing to cut the logs to bring them to market.
The other important consideration for many companies is the ability of their good customer to pay their invoices. As more and more companies are operating on cash flow, they are only able to pay their supplier when they are paid for their product. It all rolls down hill. We have heard of more companies going out of business and closing the doors in 2017 than all of 2016 and 2015 combined. Remember, just being busy does not guarantee that the company is profitable or working with a positive cash flow.
With more and more orders being "re-shored" from Asia, we are seeing much smaller quantities of very specific products being requested.
In order to compete in today's marketplace, manufacturers will be required to be more nimble and able to adapt to more specific requests.
Since 1929 WPMA has been working with its members to assist them to be able to compete in a global economy. Keeping members posted on changes in the marketplace is one of the many services we provide.
For more information please contact Philip Bibeau, Executive Director at 978/874-5445.