UK INJECTION MOULDERS
Sales expansion could harm financial stability / 111 companies in danger / Plimsoll study
Successful UK injection moulding businesses that are seeking a further boost to their sales are likely to be jeopardising their financial health, according to a new study by Plimsoll Publishing (Stockton / UK; www.plimsoll.co.uk), which found that one-eighth of UK moulding companies are risking their long-term sustainability in order to increase sales. Of the 864 business that were analysed by Plimsoll, a total of 111, were found to be at risk of spiralling out of control and are likely to be heading for rocky ground.
The majority of organisations are making solid and informed decisions, says the report’s author David Pattison, but some firms need to think about their goals and be wary of their actions. “Of course it’s exciting to see these companies increase their market share and invigorate the market,” Pattison explains, “but if their financial health continues to decline then all these extra sales will count for nothing.”
In a market such as injection moulding that only displays modest growth, the 111 companies that are surging ahead with increased sales are obviously impacting the rest of this plastic processing sector. The Plimsoll analysis of these remaining 753 businesses shows that 35% of them have seen their sales decline dramatically. As Pattison says: “Due to the 111 companies surging ahead, the others in the industry are facing the consequences.”
A typical example of what can happen in order to increase sales, according to Plimsoll, is that a business will change its strategy and start to offer discounts and promotions. While such a move might boost sales, it is likely to have required increased investment and more staff. So profits are lower, or possibly non-existing, which incurs debt that, because of interest payments, further reduces profitability. If this situation is allowed to continue there are two probable outcomes: the business fails or is sold to a competitor.
Analysis of “Plimsoll Analysis – Plastic Injection Moulders” should allow business owners and managers to understand, recognise and embrace these vital signs in their operation, the group says. Crucially, it will allow them to take actions to avoid potential problems in the future.
Plasteurope.com readers are entitled to a GBP 50 discount on the GBP 400 price of this latest Plimsoll Publishing report by quoting reference PR/C143
The majority of organisations are making solid and informed decisions, says the report’s author David Pattison, but some firms need to think about their goals and be wary of their actions. “Of course it’s exciting to see these companies increase their market share and invigorate the market,” Pattison explains, “but if their financial health continues to decline then all these extra sales will count for nothing.”
In a market such as injection moulding that only displays modest growth, the 111 companies that are surging ahead with increased sales are obviously impacting the rest of this plastic processing sector. The Plimsoll analysis of these remaining 753 businesses shows that 35% of them have seen their sales decline dramatically. As Pattison says: “Due to the 111 companies surging ahead, the others in the industry are facing the consequences.”
A typical example of what can happen in order to increase sales, according to Plimsoll, is that a business will change its strategy and start to offer discounts and promotions. While such a move might boost sales, it is likely to have required increased investment and more staff. So profits are lower, or possibly non-existing, which incurs debt that, because of interest payments, further reduces profitability. If this situation is allowed to continue there are two probable outcomes: the business fails or is sold to a competitor.
Analysis of “Plimsoll Analysis – Plastic Injection Moulders” should allow business owners and managers to understand, recognise and embrace these vital signs in their operation, the group says. Crucially, it will allow them to take actions to avoid potential problems in the future.
Plasteurope.com readers are entitled to a GBP 50 discount on the GBP 400 price of this latest Plimsoll Publishing report by quoting reference PR/C143
09.10.2012 Plasteurope.com [223526-0]
Published on 09.10.2012