August 2011 Newsletter

It is strange to be writing this report having been in the country throughout the month.  Over the first half of the year, we were in Asia every single month and it is great to be in the UK in July and August.  When the sun shines, England has to be one of the most beautiful counties in the world. It is sad to have to report that our chief product tester – my golden retriever Billy, passed away after 14 and half years. He had tested and taken chunks out of virtually every garden bench and chair that we have ever imported, but was particularly fond of the Springdale hammock in which he spent many happy resting hours.

There is so much uncertainty in the world economies it is impossible to predict what will happen next.  Whilst our immediate focus is drawn to the stability of Spain and Italy, one cannot afford to ignore the crazy scenario that is being acted out in the USA.  What the politicians appear to have missed is that whilst they have now passed the new budget, their posturing has exposed the fragility of the world’s largest economy and scared financial markets worldwide. Many businessmen now realise the sticking plaster employed by the political leaders is not a long term solution to the world economic problems.  August is set to be a very testing month in the world stock markets.

 Asia is not immune to the travails of the Western economies. The falling level of economic activity has a direct effect on the industrial powerhouse of the world. Exporting companies are seeing demand levels start to fall off yet cannot control the ever spiralling cost of raw materials and labour.  China is increasing the minimum wage on a monthly basis and this is combined with a shortage of labour which only increases labour rates further. In certain provinces there are signs of political unrest as people are starting to challenge the one child one family rule. Most people to whom we talk to cannot believe that this policy is still in existence.  It has been in force for over a generation and is causing conflicts with ordinary people and is now a target for intense foreign criticism. The effect upon the demographics of the country will only be felt in the next 30 years. The overall age of the population of China will be one of the oldest in the world. Not only has this policy resulted in a shortage of labour it also has a great influence on the sex ratios. It is no accident that China has far more male births than female births according to official statistics as a son is far more valuable to its parents than a daughter.

 Raw material price increases vary greatly depending upon the type of product. As an example a few months ago the price of cotton had nearly doubled. This is now starting to fall whilst aluminium which had been stable for some period of time has started to rise dramatically. We are having to watch and revise our prices on a monthly basis dependent upon the commodity involved – however we continue to offer our price promise that we will always honour the price that is stated on our order confirmation, even if the delivery is not for another six months. In addition, the weakness of the US dollar against the Yuan is also resulting in price inflation. These increases are not only coming from China but we are receiving similar communications from most of the other producer countries. One of the biggest drivers of price inflation is the cost of fuel which is the same throughout the world. Even factories in India where labour is not a issue are applying double digit price increases.

 As mentioned last month, factories are trying to plan out their production for the next few months and the slowdown in Europe and the USA has resulted in many customers delaying the placing of the orders until such time as they can be certain of their product requirements. This is playing havoc with production planning and the good factories are now saying that unless orders are received by the end of August they will not be in a position to guarantee shipments for next season. Apart from the obvious problems of labour and the purchase of raw materials, the factories have drawn our attention to the fact that the Chinese New Year will on 23rd January 2012. This is extremely early and it will result in the factories closing by mid January for a break that now, in all honesty, lasts for a month. Even when the factories have restarted production, shipment is not immediate. In reality, one has to assume that there will be very few shipments from the second week of January until the last week of February. With Easter being relatively early in the calendar as well, this will cause a bottleneck in production and deliveries. As usual the good factories will be the first to fill their production space and based on the results of last season once they are full they will not employ additional labour to produce late orders. Therefore, we would urge all customers to place their orders as soon as possible in order that we will be able to satisfy your requirements. Additionally, the factories are adamant that any preseason price offers will be withdrawn from the end of this month.

 In the middle of the month we exhibited at the Solex show in Telford. We were pleased to welcome our existing customers and meet new customers.  Overall the show was well attended, especially as this was such a busy period for the garden centres. On the stand we were able to display at least one new item from our new ranges, thereby giving those customers who have booked appointments at the showroom the opportunity to get a taster of what they would see during their visit.

 We have worked incredibly hard over the past six months to bring together a large number of new ranges of garden products. We can say in all honesty that we have introduced the best range of new products that we have had for many years.  The quality of the products on display at Telford was exceptionally good and this view was echoed by those customers who spent time with us. It is worth highlighting just a few of these products.  The new cast aluminium range was extremely well received and in particular the combination of textaline and cast aluminium offered a great look at an inexpensive price.  The new painted range of outdoor furniture was also admired and the distressed painted look produced many positive comments. The star of the show which was given a prime position on the new products stand was our Heavy Duty greenhouse which is available an incredibly competitive price

In order to give customers the best opportunities to examine these items we have totally revised our showroom to ensure that every one of these is on display, together with other items that can be mixed in the same containers. We are certain that spending a few hours at the showroom will prove to be a very beneficial and rewarding exercise.

 Please remember that our showroom of over 10,000 ft.² is conveniently located by junction 4 of the M1. This facility is open every day of the week from 8:00 AM to 6:00 PM. Within 200 yards of the showroom is the Elstree Village Hotel, where we are able to get preferential rates for our customers if you are planning an overnight stay to spend time in London.