Four tough questions for Ingram leaders

Published: October 28th, 2008

San Diego, Calif. – More than 800 people as part of the Venture Tech Network (VTN) Invitational recently witnessed a rare grilling of chief executives from some of their top reseller customers.

Ingram Micro CEO Greg Spierkel and company COO Alain Monie took part in an hour session where they faced some hard questions from the VTN membership. Doing the questioning on stage were VTN co-presidents JoeAnne Hardy of Saskatoon’s WBM Office Systems and Greg Starr, president of I.T. Works of Houston, Tex.

The following is an edited transcript.

Question One: With the current state of the economy in North American what impact will it have for Ingram and its reseller network?

Greg Spierkel: We do see some softening in Europe and good growth in Latin America, which has not been touched so far. North America is relatively flat. I think we’re in a time were we need a crystal ball. The housing market has collapsed and the values are down by 30 per cent to 40 per cent of the market. We’re starring at big change.

The stock market situation is volatile and the view is that this is the bottom, but I’m not comfortable with that. We’re heading into a recession and the sense I have for myself is that the outlook for North America is soft. Does that mean a recession for at least another year and maybe longer than?

We have not seen the credit crunch. 401Ks/RRSPs are down. Car sales are down. Travel and hotel business is down. The unemployment rate will climb in the next four quarters. We’ve been spending money on bailing out banks and spending on a military exercise and frankly it creates a difficult situation. There is government change in the U.S. and in Canada with the election of Steven Harper with a minority government, which means he can’t pass legislation easier. Canada’s economy is still stronger than the U.S., but 60 per cent of its economy comes from the U.S.

The good news is the $1 trillion plus dollar market and the small business markets are still very positive. The number of resellers that say they’re still very positive on SMB (is high) and if there’s going to be cuts we have become even more important because we have gained the trusted advisor status now that there are less resources inside the customer.

Question two: What actions are you taking to protect the VTN community from the economy?

Alain Monie: Go back to basics! There are three things to focus on:

First, continue to concentrate on customer needs.

The second is to look at your cost base. If you want to stay ahead and thrive you need to re-adjust the cost base.

And third, new opportunities are coming out of this turmoil. With change there are new opportunities and most people hold on to the handle bars and wait until the storm passes. But there are new opportunities to go after and provide solutions such as those that bring more productivity to the marketplace. It’s the basics and it’s a focus on customers and getting costs aligned. Then watch for new opportunities because there will be new ones.

Question three: What do we (the VTN community) do that drives you crazy?

Greg Spierkel: Oh, lets see…buying from my competition in all honesty. I get frustrated on some of the initiatives with VTN sometimes and feel like we’ve earned the right to help. Price for price sake! That’s the only thing that we talk about in engagement. The last piece of the decision process, and that said I recognize what I get from you. I don’t look at any one independent deal and we’ll continue to do that.

Question four: What can you do to help with the tightening of the credit markets?

Alain Monie: Look at two things, the economy and the market effect of that tightening is still too early to see. The impact there will be going down to consumers and that picture is difficult to assess at this stage. First is access to liquidity and a strong balance sheet. That is important and we work on that with you. You need to work on that too and we will help with our credit and finance people.

Working capital is going to be tougher to maintain and customers will pay late and some will have difficulties and need professionals in place to control that. It will also require more working capital management expertise.

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