THE SHOP

July '16

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92 THE SHOP JULY 2016 I n my 45 years in the performance parts and accessories industry, I have seen many changes. Most of the many changes are just natural shifts from one group of popular products to another. Favorite cars come and go. Fads change. Trucks get lifted for a while then trucks get bagged and lowered. Technology changes. New trends develop. New products bring new sales opportunities. Nothing is as consistent as change! And the most disturbing change has to be: recession. If ever a saying has been true, then "his- tory repeats itself " must be the most true. The performance and accessory market- place has seen frequent, repeated down- turns we call recessions. Today, there is news, both bad and good. THE BAD NEWS There will be another recession. How do I know? I know because his- tory repeats itself—over and over. Some downturns are mild while others are deadly, especially for the unprepared. Let's talk about being prepared. During my time (1970 until today) in this industry there has been an economic downturn about every 10 years. (I am not going to go back and research exact years and the percentages of sales volumes lost; I am speaking in very general terms.) My first recession experience was in the 1979 to 1981 slowdown. Following strong sales and growth in the '60s and '70s there was a strong recession that put many small businesses out of business. In the mid- '80s, performance parts sales recovered and boomed again until the early '90s. The 1990 recession was not as severe as before and was followed by slow-but-steady recovery/growth and record sales increases through 2007. Then the bottom dropped out and many businesses folded in 2007, 2008, 2009 and the first half of 2010. The hardest hit was the truck accessory market. A serious downturn in housing and busi- ness construction eliminated the need for many large truck fleets in the construction industry. Many blue-collar workers lost their jobs and had no real need for pickups or accessories. Dealer sales of trucks were very flat due to low demand. Meanwhile, grassroots racers with income from construction did not have the money for bracket racing or Saturday night racing, so the sales of race parts dropped out of sight as well. Many small truck accessory businesses folded. The ones that did survive experi- enced a very slow recovery. It took four to five years of 5- to 10-percent growth—but it did finally recover. There were exceptions and many businesses were prepared and able to survive, even grow, as others failed. It's now been about 10 years since the start of the last recession, so you could say the next one is about due. There are many indicators of a possible coming reces- sion: our country in debt; changes in our political climate; complacency by store owners; increased Internet competition; serious out-of-balance trade with foreign countries; and the worst—I-don't-think-it- will-happen-again-soon thinking. THE GOOD NEWS Today the aftermarket parts industry is stronger than ever. We are wiser than before, right? The 2015 shows like SEMA and PRI were among the strongest ever in attendance, enthusiasm and sales (my opinion). The mood in the industry is good. We are approaching business with a wide-open, full throttle. Every business is expecting busi- Is a downturn looming? Don't invite me—I'll be making sales. Recession Recession Lessons 92 THE SHOP JULY 2016 HOT ROD & CUSTOMIZATION By Ed Preston Shops that hustle have a better chance of surviving—and even thriving— when times get tough.

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