A Buzz was in the air, like the one that fills a stadium just before the start of the most important game of the season.
Those attending the “Financial Storm” session at recent NATM convention, though, weren't gathering to watch a game. They were there because they participate in a game. And in today's business environment, the game was on the line.
When the formal presentations of the session were over and the question-and-answer segment had begun, it was clear why the interest in the program was high. One question in particular said it all.
“What you are suggesting makes sense long term, but I don't have time for that,” a woman in the middle of the audience said, speaking into the hand-held microphone. “What can I do to save my company now?”
Life or death. It was really that simple.
Products may be the heart of most businesses in our industry, but credit is our lifeblood. And the pulse of many companies in our industry has been weak in recent months in part because of the credit crunch.
It takes money to move products through the system: Short-term financing helps raw materials flow through manufacturing plants. Dealer floor plans help get the products from the plant to the dealer. And consumer financing is needed if trucks and trailers are to leave the dealer's lot and go to work for the ultimate user.
When credit tightens up, sales do, too. Right now, a lack of financing has our industry in a stranglehold. Not surprisingly, the speakers at the NATM finance session had the audience's attention as they offered some suggestions for weathering the storm. For our report on the session, please see Page 36.
While financing remains tight, some positive news has occurred since NATM held its convention at the end of February. Perhaps most significantly was the broadening of the Federal Reserve's Term Asset-Backed Securities Loan Financing (TALF) program to include trailers, making them eligible for retail loans and leases and dealer floor plan financing. Initially, the only trailers eligible for financing under the TALF program were recreational vehicles.
The Federal Reserve announced the launch of TALF March 3. According to the Fed, TALF has the potential to generate up to $1 trillion of lending for businesses and households.
In addition, the Small Business Administration's 7(a) business loan guarantee program may offer our industry another option. SBA is currently considering allowing SBA 7(a) loans to be used on a temporary basis for floor plan financing.
The NATM financial session included a plea to its members that could help the industry in the long term. Speakers at the session made it clear that a lack of data regarding the trailer industry is an obstacle to getting financing. “Lenders don't know the trailer industry,” said Stuart May, national sales manager for Trail Boss Conversions. “We have to help educate them. That's how you get a lender comfortable.”
For the light- and medium-duty trailer manufacturers — the core of NATM membership — bankers only have a rough idea of the scope of the industry. NATM members can say that last year the association sold 600,000 trailer labels. These labels are placed on trailers that have been built to the guidelines of the association's compliance program. While this is an indication of the size of the industry, it's a crude way to measure production. Bankers are looking for specifics — numbers of trailers, types of trailers, and values of trailers that that industry as a whole produces. By knowing industry totals, loan officers can better evaluate the strength of the company that has come to them in search of financing.
Industry data also can help trade associations present their case before regulators. As the story on Page 38 points out, it's too late to argue the effects of regulations when they are published in The Federal Register. The case has to be presented to regulators and legislators early, and it has to be specific. What will the cost of the proposal be? How many people in the senator's state or the representative's district will be affected? What will the proposal do for jobs back home? How much does this industry contribute to the local economy?
In recent months, Washington has begun controlling private industry like never before. It's reasonable to expect that more regulations are coming. The next time your trade association is surveying its members, will you stand up and be counted?
Agree or disagree? Make your voice heard by visiting trailer-bodybuilders.com and clicking on “Contact Us.”