Finding Your Comfort Zone in Tomorrow's Economy

Published: November 01, 2003, By Yolanda Simonsis, Associate Publisher/Editor

Readers will be comforted to hear an improved, healthier economy is projected for the coming months, extending into and through the next four to five years.

This forecast is according to economist Dr. Lawrence Chimerine, guest speaker at the Tag and Label Manufacturers Institute annual meeting in Boca Raton, FL, in October. Chimerine believes the recent uptick in the economy is not merely a fluke. He points to several events (i.e., Y2K, the dot-com bust, 9/11, the Iraqi war) that have had serious negative impacts on the economy, but he is quick to add these negative events will leave only a temporary impression.

Ultimately, Chimerine thinks we will find ourselves in a better position to compete globally as we become more effective in controlling costs as an important means to increase profits as we focus on efficiency and productivity. Industry's investment in new technology will help facilitate these efforts.

The difficulties lying before us as obstacles with which we must grapple, explained Chimerine, deal with an immense trade imbalance, particularly with countries such as China and Japan, along with these same countries' unwillingness to address currency valuation. And, while we don't know how long it will take to conclude the Iraqi war, Chimerine feels certain meaningful growth will come with more US exports and less dependence on imports and by our addressing large budget deficits.

Chimerine gave some parting advice to tag and label attendees that has broad applications to the converting industry at large: With planning, you can identify your company's strategic issues; so to assure success, evaluate what these issues mean to you. Then determine what assumptions you must make to increase profits. Then anticipate the outcome if your assumptions are incorrect. Ask yourself what the consequences are in both circumstances to minimize their impact if the assumptions you made are wrong. Lastly, remember that planning a budget is no longer a one-time-per-year event. The key is in being able to recognize mistakes and adjust quickly by taking a more proactive approach to budgeting.

Interestingly, along similar lines, I received a letter from one of PFFC's readers who commented on the first of two articles appearing in our September and October issues titled “Considering China,” written by senior editor Teresa Koltzenburg. The reader, Lawrence N. Silverstein, CPA, is executive VP, CFO, and co-owner of Now Plastics. Following are excerpts from his letter:

The problem of China is only beginning to be known, but it has affected our customer base very significantly. The data that our government uses lags so much that by the time they see it in the statistics, the manufacturing base and hundreds of thousands of jobs — if not millions — will be irreparably lost.

As we speak, tens of thousands of companies are in the middle of plans to either manufacture abroad or give up manufacturing partly or entirely and just import the finished product — at costs that can be 50% of what it costs to make it here in the USA. The effects of these changes in strategy have not nearly been felt yet — but will soon. It is not a difficult exercise to understand why we have a jobless recovery….

We see Chinese products being sold to companies such as Wal-Mart at prices that are less than the cost of the raw materials. No efficiency program can be developed to combat this.

Silverstein feels definitive actions should be taken to address difficulties in manufacturing by involving Congress: Establish penalties for US companies that shift plants and jobs outside of the US for reasons other than growing revenues in those markets. Enact 50%-100% duties against Chinese finished products in order to balance the playing field and to compensate for the slave labor differential. Force China to float its currency like other countries.

What are your thoughts regarding the economy? Write to This email address is being protected from spambots. You need JavaScript enabled to view it.. Use “China Debate” in the subject line.

For more information on the converting industry beyond this issue's contents, visit pffc-online.com. We offer content there you cannot find here, and it is updated weekly. Once there, be sure to e-mail your feedback to me, This email address is being protected from spambots. You need JavaScript enabled to view it..