Keeping Rising Costs in Perspective

Business should not solely be about profits. Business is about relationships, finding answers to problems, goodwill, and contributing to the greater good of all. If you’re looking only to make as much profit as possible, you may be successful, but at what expense? Often it is at the expense of others, like not paying comparable wages or spending time constantly searching for lower costs, therefore missing areas of opportunity.

As costs continue to rise, let’s not sell ourselves short looking only for the lowest price. Rising costs are not an enemy when adequately prepared for.

Rising prices bring opportunities for innovative solutions. When executed correctly, this creates an opportunity to raise standards. Take China for example. It’s been one of the world’s low-cost manufacturing leaders for decades, contributing an enormous supply of goods to the global economy. Today, we see costs in China continue to rise and companies are reevaluating the cost/benefit analysis of manufacturing in China. China has been creating higher standards domestically and at the same time leveling the advantages of producing there.

2017 was by far the best I’ve experienced in my 11 years in the glass industry. In 2018, there are things to evaluate that will ensure continued success, even considering forecasts of continued growth. Most importantly, the continuous rise in costs of goods and services. Shipping lanes are full contributing; fuel prices are up about 10 percent from last year; wages are up; insurance never seems to go down; and specific to glass, large growth with lower supply across our industry contributed to shortages in 2017. Plan on these to continue in 2018 as demand may again outweigh supply. Nevertheless, know there are ways to prepare.

My advice (the two cents it is worth) is to forecast and plan the next couple years based off the current trends. We can expect growth in our market and must plan how to handle rising costs. A two-to-three-year plan should be continuously updated, especially in times of rapid change. Develop new relationships, find backup suppliers, plan for a possible shortage situation, expect prices to go up, and don’t leave the people who make the business what it is behind. Preparation is key, and without it you’ll be left scratching your head wondering where things went wrong.

Pete de Gorter is vice president of sales and marketing at DeGorter Inc. Contact him at pete@degorter.com.

The opinions expressed here are those of the individual author and do not necessarily reflect those of the National Glass Association, Glass Magazine editors, or other glassblog contributors.

Comments

Login to post comments