An old saying has it that the Lord helps those who help
themselves, and the Forte Buying Group is testing that premise. Forte represents
around 100 companies operating some 300 decorative plumbing and hardware showrooms.
At the group’s annual shareholders meeting in Palm Springs last Feb. 26-28,
President C.J. Schnakenberg (Chicago Brass, Highwood, IL) announced a plan to
distribute a substantial portion of the group’s strategic reserves as a
stimulus rebate to help members invest in new or revamped showroom displays.
This was on top of normal quarterly patronage rebates.
Concurrently, the group asked preferred vendors
to step forward and give the best possible deals they could muster as
conference specials. The result was that the 95 Forte shareholders
participating in the conference issued more than 500 stock and display purchase
orders from the vendors in attendance. According to Schnakenberg, of the 58
vendors present, all but two agreed to special terms. “I bet those two are now
wondering what they were thinking,” he told me.
“One thing that none of us wants to do today is spend money,” said
Schnakenberg. “We’re laying off people and analyzing every expense to save
every possible penny we can. The thought of investing in new showroom displays
strikes fear in our soul. Yet, that is the very thing we need to be doing. You
can’t save your way into growth. Our showrooms have to be the best in the
marketplace today to attract the business that’s out there. Equally important
is the need to be at our best when the market rebounds.”
Although showroom traffic is suffering like almost every other sector of our
industry, Schnakenberg advised, “There are still some people who have money,
and they’re still spending it on their own homes, even if they’re not buying
other property.” Forte’s directors believe that its stimulus will enable
shareholders to make a statement to designers, architects, builders and homeowner
customers that their showrooms are the destination of choice to see what is new
in decorative plumbing and hardware.
This in-house stimulus plan will take a big bite out of the group’s strategic
reserves. On the other hand, those reserves are intended as “rainy day” funds
and the current economy qualifies as a deluge. According to Schnakenberg, Forte
shareholders responded almost unanimously with approval of the stimulus
plan.
On the day I wrote this a somewhat related story crossed my path. It was announced
that GE Money, a financial services unit of General Electric, has teamed up
with the National Kitchen & Bath Association to offer consumer financing
through NKBA members. Like Forte’s initiative, it’s another example of the
private sector figuring out ways to deal with the economic crisis.
Time will tell how much good these programs do. Yet even if a dollars-and-cents
ROI is undetectable, the feisty attitude expressed by these moves is good for
the soul. Think of a boxer coming up off the canvas firing punches. Fighting
back inspires the belief that you can take a knockout punch and end up
prevailing.
Another interesting angle to these stories is within a larger debate taking
place these days about government intervention in our economy. Capitalism has
taken some lumps lately, and as a result the closet socialists in our country
have gained more credibility than they deserve. (Unlike their European counterparts,
U.S. socialists shy away from the label. They prefer the cowardly and intellectually
dishonest term “progressives.” We capitalists don’t reject that term even while
conceding that our favorite economic system has some sins to atone
for.)
The news media and even many business owners are investing a lot of hope and
prayer that the federal government’s American Recovery & Restoration Act
will bail out our economy. Skepticism abounds, and even ARRA cheerleaders admit
it will take many months and maybe years for its stimulus to take full
effect.
By the time that happens, I’m betting that small-scale initiatives like those
taken by Forte and GE/NKBA - multiplied thousands of times by private sector
companies and organizations - will already have figured out creative solutions
to turn our economy around. Then the major impact of ARRA is likely to be
raging inflation as money pours in to fuel an already heated economy.
But that’s a story for another day. I don’t want to end on a sour note when the
Forte and NKBA initiatives have given those of us who still believe in free
enterprise a little reason to cheer.
Forte's Stimulating Story
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