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Tsunami finally hits the USA

May 27, 2011

But it wasn’t water, it was economical.  The Tsunami that so devastated Japan has had a ripple effect on industries that sell Japanese products, specifically automotive and office equipment.

I am by no means comparing the great tragedy and loss of life that the Japanese people have suffered to what we are experiencing. Instead I want to look at the economic impact of that terrible event here in America.

We keep hearing stories of how different dealers and branches are having trouble getting equipment. It has also effected the dealership I work at. We have heard mixed reports on how long this will last. Thankfully, we have a warehouse that has stock, and we are a two line dealer (Canon & Konica Minolta). Konica Minolta seems to be less affected and is pretty much still giving us what we order.

Canon USA had a large layoff & reorganization last week. A lot of good people were let go. Rumors of large Ricoh layoffs surfaced on several industry web sites last week. Independent dealers are not immune to these same industry pressures, and I have had to say goodbye to a few good people myself.

I have to wonder what the single line dealers of effected brands, and the direct branches are going to do? If you have no local warehouse, and you have built your sales model on Just-in-time (read not in time) inventory, what are you going to sell. For example I know an independent dealer that was bought out by Flo-tech, he tells me that they closed his offices, warehouse, and demo rooms. He said that they don’t order Canon equipment until they have a signed sales order in hand. Flo-Tech’s claim to fame is they manufacture their own printer cartridges, but they became a Canon Dealer a year or two back. They still retain the mind set of a printer company. But will not having any inventory bite them in the butt.

Large Independent dual line dealers (like the one I work for) have large local warehouses, six regional demo rooms filled with equipment that we can sell, as well as the resources, experience, and talent to refurbish, rebuild, and even manufacturer pre-owned (low mileage) Canon MFDs.

We recently received a new order of Konica Minolta equipment and our VP of Service (Mike McLaughlin) had the foresight to order 6 months worth of parts. Mike told his parts manager to put together a list of the most common parts that the technicians order, and then order six months worth. So NECS will be able to take care of our customers through this difficult time.

As many of you know the problem is not with the factories that make the MFDs, most of them are in China. The problem is with the supply chain. Many of the smaller parts that go into the MFDs were manufactured in Japan. It was those parts plants that were damaged by the tsunami, and the subsequent problems caused by the tsunami. All it takes is one critical part to be missing to stop an MFD from being completed and shipped from the factory in China.

I think our industry will have a tough three to six months in front of us. It could potentially mean a shift in market share depending upon who gets their supply chain & manufacturing back online the fastest. And I don’t think we have seen the last of the layoffs or the cost cutting. This will hurt all of us, and may kill off the weaker dealers, and direct branches. We’ll see!

That’s my $0.02
Vince McHugh
vince.mchugh@yahoo.com

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