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Article | December 6, 2008
Where there is a downturn, there is opportunity
Where there is a downturn, there is opportunity I am fortunate that occasionally I can catch up on paperwork while working in my office at home.
During one of these recent times, I turned on the TV to catch the weather but first had to listen to how the stock market was going to open dramatically lower.
There was a prolonged period of the announcers shouting the news you could watch. It was mesmerizing to look at the ticker crawl across the bottom of the TV screen. Pick a stock, any stock, and it could be up a $1 and then down $2, up $1, down $3. After about an hour, I realized that this was about as productive as watching paint dry. Not that I turned the TV off, I just turned the sound off.
It was later that I remembered the adage that you can make money in an up market and in a down market; you just need to know where to look for value to help facilitate your objectives. Two months ago the market was north of 11,000, and as of this writing in late October, it was less than 8,500. Many media stories are talking about people who are converting their retirement accounts to fixed-income investments and bailing out of the market. Nothing like locking in your losses—and without the tax benefits of long-term capital losses.
Parallels to contract packaging
I dare say that the same thing is or will be happening in the contract packaging industry. Most companies will be facing harder times in 2009 than they did this past year. Some owners will decide that now is the time to get out. But this is the time of opportunity for those who are looking for bargains.
Where is the contract packaging industry going? All indicators point up! As big companies tighten their belts with cost-saving initiatives and downsizings, there is opportunity for contract packagers to take over the functions that are not their customers’ core competency. In which case both the co-packer and their customer accomplish their respective objectives. The customer cuts headcount, and reduces capital purchases and its supplier base while also increasing its flexibility to meet the market’s fast-changing demands. Don’t be surprised if your customer starts asking you to take more responsibility to buy, specify, and develop specs for materials, equipment, and other packaging services.
Look for bargains. There will be contract-packaging companies that want to exit the business in these slower times. Again, both parties can accomplish their objectives. Your objective is to be ready to capture the growth when things turn around.
Look for niche markets that are thriving because of the downturn.
Helpful report available
Our industry is changing. It wasn’t that long ago when there was no need for sophistication, no need to be ISO-certified, Six Sigma was for the big companies. If your plans for 2013 are to be doing more of what you’re doing today, the same way, look over your shoulder back to 2003. Where would you be today if you hadn’t changed?
If you would like to see what contract packagers and users of contract-packaging services say about the industry, there is a new State of the Industry report available.
Remember the opportunity in March 2009 to learn from other CPA members about new opportunities and growth potential. The association’s annual meeting will be March 20-23, 2009 at the Chateau Elan in Braselton, GA. Meeting details will be available soon at www.contractpackaging.org, so check back often.
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