This 2017 forecast is being rewritten for the fourth time. All changed a number of Tuesdays ago with the elections. Not only President-Elect Trump, but what took place in the Congress and the various state capitols was not only a surprise for many, but also has an impact on next year’s economic and shop outlook.
That said, it’s important to consider the Titanic does not turn on a dime. So, depending on whether you see the changes to come as positive or negative, their impact may not be realized until later years. But, of immediate interest is going to be how the average person, or customer, reacts next year. It is impossible to overstate that the consumer makes up two-thirds of the spending in this country. Anything that helps them feel better about their future will come through in spending, and ultimately manufacturing.
Some economists predict a slowdown in the next year or two. Others say full speed ahead. There is a pile of data to suggest either. However, we have two headwinds against us in the macro economic sense. First, the level of unemployment and underemployment remains high no matter what the overall numbers suggest. Someone who now makes $12 an hour but once made $25 an hour simply has less to spend. Add to this a staggering current and structural deficit and there is plenty of pressure against some crazy growth following the recent years of a flat growth.
What will all of this mean at the shop level? In my humble opinion, as the stock market is already suggesting, it appears we will have the most schizophrenic consumer ever! On one hand, more dollars in their retirement and savings accounts (if they have any), while at the same time a fear that lives just below the surface about the future, our nation’s debt, their ability to retire and much more.
As an aside, I find the current building boom in apartments to be interesting. While some explain it away as millennials not wanting the hassles of home ownership, it is my belief it is an adjustment in budget towards lower wages and desiring a more stable, predictable monthly outflow. And, the most troubling aspect of this trend is the impact on personal wealth.
For many, the single largest asset they have is the equity in their homes. In the past many would go into retirement with their homes paid for resulting in a sense of security. For the “professional” apartment dwellers there will be no such equity. The result will be mortgages long into retirement and little equity. This would be OK if they were saving elsewhere, but they aren’t and may well be unable to amass savings. This will impact our shops as people see their net worth shrink.
Let’s try to put a wrapper on all of this. Again, an opinion, but it is my belief 2017 will be pretty much “same old stuff.” In other words, the kind of demand and work flow we’ve had will be pretty much the same for 2017.
So, if all is stable as thought, what do we do to improve our operations? Here’s a short list:
• At the risk of being repetitive, take a price increase! Get paid for your hard work. Many are shy to raise their labor prices and parts margins thinking they will upset customers. But, a 3% increase on an average RO of $500 is $15! You are worth $15 more in 2017! Don’t wait for higher health benefit costs, wages and technology costs to simply keep eating away at your dollars.
• Get creative. You may have noticed there is not a line of people in your shop who are happy to show you ways to increase margins and sales at no charge. These folks work hard and earn their dollars too. But, that also means 2017 is a great time for you, your family and staff to get creative and figure out ways to get your name and dedication to quality work at fair prices out in the community.
• Find partnerships with other businesses this year to develop coordinating marketing programs that help you both and reduce expenses.
• Take a good hard look at your expenses. Maybe you have some areas that could be reduced easily with little pain. But remember, no one cuts their way to prosperity. Price increase this year is the medicine for that malady!
Here’s wishing you an amazing, happy and healthy 2017! You are already ahead of the curve simply by reading this magazine, attending tech and marketing programs and other tech-training programs.
Truly my soul finds rest in God; my salvation comes from him – Psalm 62:1
Patience, persistence and perspiration make an unbeatable combination for success. – Napoleon Hill