 “We’ve been looking overseas a lot more than we have in the past,” said Bones “We have a number of new distributors in Europe and Australia, [and are] doing our best to make sure that we have our eggs in a few different baskets.”
“It hasn’t directly affected us much,” said Naylor. “All of our products are imported, but we’re not currently buying foreign currency to pay our suppliers. On the plus side, our export business has increased substantially.”
“Almost two years ago we made a pivotal corporate decision to sell direct to consumers in the U.S. market,” said Babicz. “We offer online buying options to musicians on our entire product line of acoustic and electric guitars, including accessories and apparel. Though we still use a handful of U.S. retailers, most of our clients buy directly from us and we do not ship directly overseas, which protects our international distribution. Because they are dealing directly with us, we have found that our consumer client base will buy a Babicz product almost regardless of the status of the U.S. dollar, or the overall condition of economics. We also provide direct customer service as well, so overall we offer the consumer a comfort level that is hard to beat.”
“Like everyone in our industry, we have been very concerned with not only the weak U.S. dollar, but the increasing costs of raw materials and freight,” said Rose. “Our expectations had been to experience sales declines and dramatically reduced profits as a result. Indeed, we have had a number of component cost increases that we have had to absorb ultimately impacting profits, but our sales have remained surprisingly strong through the first quarter. As a global manufacturer, the weak dollar has made our products more competitive in some of our export markets. Our most formidable competitors manufacture in Europe. Needless to say, our products have a greater price advantage there compared to European-made loudspeakers when the dollar is weak and we are trying to use that to our benefit. Custom-made loudspeakers sold to OEM customers constitute the bulk of our business, but we also distribute our branded, raw frame loudspeakers worldwide as replacements and upgrades for enclosures that are already in service, and for do-it-yourself consumers who aspire to build their own enclosures. Historically, we’ve seen the market for these products remain strong and even grow during periods where sales of other MI and pro audio products may suffer. This period has been no exception and we are focusing to meet this demand as quickly and efficiently as possible. In addition, we are trying to keep our margins and prices to our customers as low as possible while focusing on increased efficiency and maintaining costs throughout every facet of our business.”
“We use the U.S. dollar for sales to our U.S. dealers and our distributors abroad,” said Janis. “The low U.S. dollar exchange rate on international markets has forced us to increase prices. We have carefully managed price changes to keep increases as low as possible while targeting very specific MAP price levels. We have also worked with our vendors to find ways to help them reduce their costs. Examples include investing in special parts to improve productivity such as custom vertically-mounted potentiometers and die-cuts for metal work that allow us to stamp out products faster at a lower price point. Most recently, we have started to switch from manual part insertion to automated robotic insertion.”
“Unfortunately the shifting exchange rate has caused us to raise our prices,” said Emmerman. “We manufacture most of our products in either Europe or China and there really wasn’t any other choice for us in this situation. Independent of the exchange rates, we expect to see additional cost increases coming out of China due to rising raw material and labor costs there. Please note that we aren’t enacting price increases in order to earn any ‘windfall profits,’ we’re just trying to maintain our margins and continue doing business.”
“I still have USA manufacturing in house, and are making products that use almost entirely USA-made components and materials,” said Spector. “What a tricky concept and I didn’t even need a management consultant to figure that out.”
“Since our factory is located in Cortez, Colorado, and all of our raw materials are made in the USA, the weak dollar does not affect our domestic sales, but it definitely helps our international sales,” said Mangan.
Said Moran: “A weak U.S. dollar has virtually no impact on U.S. domestic sales for a US-based vendor. Although a weak U.S. dollar can impact the price of imported products and makes it more expensive for us to travel to many of our favorite countries, it also presents tremendous opportunities for export. At Namba Gear, we have been working hard at solidifying our export distribution network with good success.”
“In a slow market….you have to make your brand more valuable,” said Lynn. “I am not talking discounts, rebates, or other incentives…..I mean actual ‘value’ to a dealer. What do they want to see to make your brand more appealing? Innovative product, good margins, and easy to work with…..you would be surprised how many people are surprised we actually answer the phone!”
“When the dollar is weak, it provides an opportunity for our export customers,” Boak said. “So while we are not taking our eye off of the domestic market, we are certainly focusing extra efforts on overseas, with great success.”
Sher looked at the question this way: “As I see the world, the U.S. economy’s troubles are a direct result of bad decisions for the last eight years, including a failed, immoral and disastrously expensive invasion of Iraq, the running up of huge trade deficits as U.S. jobs are shipped overseas, and the lack of a rational policy (which Europe has already begun to implement) to make the transition to a sustainable economy based on renewable energy. The answer? Let’s get some leadership in Washington that isn’t looking out for big corporate interests above all else.”
Vittek concluded the question succinctly. “Sell more! Especially overseas. Generate an even more aggressive advertising and marketing campaign.”
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