Lex Reynolds of The Reynolds Co. offers suggestions on how to ensure the health and viability of companies in the adhesives and sealants industry in 2010 and beyond.

It’s difficult to look back at the last couple of years; 2008 in particular challenged us with skyrocketing raw-materials costs. Though our industry suffered in 2009, raw-material prices did moderate somewhat, and I hope everyone was able to regain some of the margin erosion from 2008.

While it is painful to do, I believe it is beneficial to look back on tough times to ensure that we do not repeat our mistakes. I dare say that, after 2008, very few companies did not suffer severe erosion of margins as a result of economic difficulties and our failure to respond accordingly. As we are already seeing, most raw-materials prices are increasing again, and 2010 promises to be a tough year - perhaps tougher than the recent past. The convergence of rising costs and stagnant revenues will make for some interesting times; our response will be crucial to the industry’s future. I doubt many of us want a repeat of 2008.

What lessons have we learned from past years, and how do we ensure the health and viability of our businesses in 2010 and beyond? Following are my suggestions.
  • Act responsibly. As raw-material costs rise, demand accountability from your salespeople. Be proactive, not reactive.
  • Reign in sales managers who care only about volume, not margins.
  • Stay clear of online bids. They are a one-way trip to the bottom.
  • Stop allowing customers to dictate sales terms. We’re the suppliers, not them.
  • Do not offer extended terms. In addition, ride receivables carefully. Many bankruptcies are expected in 2010.
  • Get involved in holding our politicians accountable. The health of our nation impacts the health of our businesses.
  • Join the ASC and/or other trade associations; they are critical to our survival.
This recession is far from over, despite what Washington might say. If we are to survive and thrive in the future, we must exercise discipline and self-control and learn from the past.

With kind regards,

Lex Reynolds, The Reynolds Co.

Any views or opinions expressed in this column are those of the author and do not represent those ofAdhesives and Sealants Industry, its staff, Editorial Advisory Board or BNP Media.