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The Rupp Report: "Best Price" Or Return On Investment?

"What is your best price?" This question is as old as mankind. In times of a rough market climate, the question seems to be even more obvious. But is it really so?

As Textile World reported last week, IMB took place in Cologne, Germany, April 21-24. In view of the current economic situation, there were obviously fewer visitors. However, IMB is still the world's number-one show and the most important trade fair for processing all kinds of textiles. The trend toward verticalization is more prominent than ever. The whole production chain must know what the upstream and downstream links in the chain are doing. "Simple" apparel information is not enough any more. ( TW will refer to this trend in the next Rupp Report.)

Mixed Emotions At IMB

Some exhibitors from Europe and the United States were quite happy with the show and had a hard time handling all the visitors. On the other hand, it was quite remarkable to see that mainly Far East exhibitors had a hard time too, but rather with no visitors during the show. And, as it's been since 2003 - who is shouting ITMA Birmingham? - there were some companies present at the show, but also some absent.

The French company Lectra, a global leader for machinery and software for the apparel and technical textiles industry, was present with a 500-square-meter booth, and the stand was crowded during the whole exhibition. Lectra invited some journalists to an evening presentation to discuss the market situation and the future of the global textile industry.

The Market Position Is The Determinant
Lectra CEO Daniel Harari gave a remarkable opening speech. In his presentation, he mentioned that every company has to evaluate first its position in the market: "Low-value products are always under pressure. There is always another one with a lower price. If you produce high-quality products, and you can convince your customer with the added value of your products, you will make more money." Then he asked himself if the lowest price is always the best price, and the answer came promptly.

Do You Want To Make Money?

"Well," Harari said, "first of all, you have to believe in the future. If you don't believe in it, you will not invest. So we always ask our customers, do you want the lowest or so-called 'best price,' or do you want a return on your investment? The question, 'what is your best price?' becomes obsolete if the equipment is fine-tuned to the requirements of the customer. The best or lowest price is usually not the best solution, and definitely not in hard times. When the market is booming, you can sell anything. But in hard times, every customer wants the best product for a competitive price. And to be competitive means to have the right equipment. One should always strive for the best equipment for his production to make money. And that's what we all are here for. Without any profit, every company will go down the drain. How do you want to further invest, if you don't make money?"

Let Textile World know if you agree or not with this statement. We'll be happy to see your comments. Write to jrupp@textileworld.com.

April 28, 2009

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