As we turn the page from one season (football, harvest, road construction) to another (basketball/wrestling, tax, winter), the conversations at the coffee shop and around the break room table will change as well. A few things are always topics though like the weather. But I think what all of us want to know is, “Are the clouds on the horizon storm clouds and if so, what can we expect?”

 

Similar to conversations about the weather many of us have been discussing what is influencing economic trends. Many dealers have weathered all kinds of storms, including economic ones, and you will draw on that expertise as you prepare for the next storm. We can also rely on experts to help better understand the winds of change.

 

A couple of those resources are the Mid-America Manufacturing Index and the Rural Main Street Index. Both are products of Creighton University (Omaha, NE) and administered by Dr. Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.

 

The Mid-America Manufacturing indices are calculated from surveys of purchasing managers in the Mid-American region which includes the states of Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, and South Dakota. The Purchasing Management Index (PMI) has been used by economists and government officials to forecast the future state of the economy. It provides an early indication of where the economy is headed in the next three to six months.

 

November Mid-America Manufacturing Index “Highlights”:

  • The index dropped to its lowest level since June 2020, or the early days of the pandemic.
  • Index is in a range indicating recessionary conditions in the regional manufacturing sector.
  • The region has lost 12,000 manufacturing jobs since April (U.S. Bureau of Labor Statistics [BLS])
  • Six of 10 supply managers name the looming recession as the top threat to their firm’s business activity.

Further, the Rural Mainstreet Index (RMI), which is a unique index covering 10 states focusing on approximately 200 rural communities with an average population of 1,300, provides additional real-time analysis of the rural economy.

 

November RMI “Highlights”:

  • For a third straight month, the RMI sank to a three-year low.
  • Banker economic confidence dropped to its lowest level since initiation of the survey in 2006.
  • For the fifth time in the past six months, farm equipment sales declined.
  • Approximately 88.5% of bank CEOs reported that available jobs outnumbered available workers in their local economy.

 

There aren’t just clouds on the horizon, but head winds are blowing through the countryside. One of those head winds is the impact of federal spending and its’ inflationary impact on the economy and rising interest rates.

“The rapid expansion in federal government spending and debt will push the Federal Reserve to keep its foot on the economic brakes via holding short-term interest rates at its current level. I expect the Fed to make no changes in short term rates until the end of January when the Fed meets for the first time in 2024,” said Ernie Goss, PhD.

 

Unlike Congress, many of you have taken stock of these external factors and have begun to adapt to the changing conditions – not just continuing to do what has already been done (e.g. A majority of Congress continues to spend more the next year than the previous year). Your ability to adapt in the past three years alone has demonstrated you possess the skills and understanding necessary to not only weather the storm but to thrive.

 

Here are three quick reminders as you plan your course of action:

 

1. Understand your business.

 

On the heels of the Nebraska Ag Expo, where we see more and more companies developing solutions in the form of remote assistance, autonomy, or artificial intelligence (AI). Optimizing your service and product delivery is vital to understand how these solutions may help you more effectively manage your business. Further, I have had numerous conversations with dealerships this year who are evaluating their product lines and I have assisted them in understanding their rights in regard to part returns or even cancelling contracts for products and lines that are hard to service and do business. Focusing your time, energy, and money on lines and products which have strong customer demand and manufacturer support could be a way to better maximize margins. (Search “dealer protection” on ineda.com for a link to your state’s law or ask your Director of Dealer Relations for a copy.)

 

2. Double down on your customer’s expectations.

 

As you work through understanding your business, you also need to address what is in the best interest of your customers. You have built your business on the bond and trust you have developed with your customers. They can be your biggest advocates in the marketplace.

 

I have seen dealers empowering and including their customers as part of the team to develop the service solution to their problem – maybe it is remote assistance or product and service training and education workshops. This not only meets their needs, but it demonstrates that you value them and their business. Retaining your current customers is not only good business sense in this environment but gives you an even stronger foundation to build on in the future.

 

3. Opportunity is nowhere.

 

Did you read the heading above to read “Opportunity is now here” or “Opportunity is no where”?

 

In business and in life it matters how you see the problem. It has been said that every cloud has a silver lining – this storm is no different. Having the right frame of mind can set you and your team apart from others who are more focused on the negatives and external factors they cannot control.

[1] https://www.creighton.edu/economicoutlook/midamericaneconomy/

[2] https://www.creighton.edu/economicoutlook/mainstreeteconomy/