[TR] An expensive lesson

[John Macartney]

>From the mid 80's to the early 90's, I was running a parts resourcing
company for a major UK engineering group. Our principal interest was an all
makes parts programme for Japanese cars in the middle and far east markets -
but we also had many approaches from various US based parts companies
(chains and independents) needing stuff for British cars. Simply, there was
nothing we could not supply and we had plenty of O.E.'s (e.g. Lucas, SU,
Dunlop, Sankey, Laycock, Borg & Beck, Lockheed, Triplex) willing to
participate. We knew the pricing from these firms was keen and they were
always happy to quote for parts that had basically reached end of life in
terms of vehicle manufacturer need so were effectively on longer term run
out. That said, the firms themselves were happy to keep on making the stuff
for as long as the demand was reasonably constant. We did plenty of
peripheral business with LBC parts in Europe, Australia, New Zealand, South
Africa, a worthwhile amount in Canada - but very little in the US

The problem was that over that period - and both prior to and later on, the
US$ was weak against Sterling and those seeking to buy from us steadfastly
refused to accept that if they wanted a quality OE part from a recognised
brand, they'd got to pay for it. All our US customers continually complained
the end user selling price was the only thing that mattered and why wouldn't
we take that on board? I lost count of the number of times I was given US$
selling prices that were way below our own cost prices (our selling price
less 5%) in sterling and our suppliers weren't interested. It might have
helped if the US order volumes reflected those in our other LBC markets -
but most did not. 

In the end, we pulled out of the whole market because neither we nor our
manufacturing suppliers were willing to trade at a loss. That was all a long
time ago but the moral still applies that "if you want Rolls Royce or even
dependable quality, you won't get it for loose change or peanuts."  And also
if you buy in one strong currency and sell in another strong currency you've
*got* to hedge your bets on exchange rate movements.

Perhaps this is why so many now find themselves buying parts made in Taiwan
from monkey metal because only those parts fit US$ pricing criteria?

Jonmac


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