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Ben Kepes: When investing in your customers makes perfect business sense

OPINION:

Pithy quotes are fun things, in that those who read them can obsess about their origins rather than cogitating on their substance. According to Google (and, thus, unquestionably accurate), the quote that “Those who cannot remember the past are condemned to repeat it” was coined by George Santayana in 1905.

But like all good quotes, here it gets more tricky because Winston Churchill, himself the originator of many an awesome quote, in a 1948 speech to the House of Commons, changed the quote slightly when he said, “those who fail to learn from history are condemned to repeat it”.

No matter where the quote came from, it’s one that I have always enjoyed. As a student at high school I wasn’t good at much, but my fifth form history teacher, Hugh Allan, sparked an interest in me to observe history in order to identify past mistakes and to, hopefully, create a better future informed by a less positive past.

I was thinking of Mr Allan (not to mention Churchill) the other day when I read the news that Deane Apparel, a family business founded close to a century ago, is shutting down its Christchurch factory. Deane is an institution, the business designs, makes and supplies overalls and uniforms to Kiwi businesses including Cleanaway, Foodstuffs and Fonterra.

You’d have thought that was a nice model – a generations-old Kiwi business supplying critical items to some of our most critical businesses. You would have thought those customers would have revelled in keeping a local business afloat and in indirectly employing people who are undoubtedly customers of their businesses.

But here we have a problem. You see Deanes has, for a number of years, faced increasing pressure from its customers to supply uniform items at – wait for it – rock bottom prices. Faced with this pressure, the company had already moved around 90 per cent of its manufacturing to Southeast Asia.

The Christchurch plant (and, here I have to give a couple of disclosures: firstly, that my business, Cactus Outdoor, has historically had Deane’s local plant make some products for us. Secondly, as a contract manufacturer of apparel, our other business, Albion Clothing, completes with Deane Apparel), ever since production began to move offshore, focused its attention on bespoke, made-to-order garments but, increasingly their customers have opted for off-the-shelf items. Which is what you say when you actually don’t care about the social and environmental impacts of what you buy but simply want the cheapest price possible.

Now I’m not dissing companies like Foodstuffs and Fonterra, they have a bottom line to think about as we all do. But, here’s the thing. Customers of both companies are regular working Kiwis, like the people employed (and, sadly, soon to be unemployed) at the Deane facility.

They shop at supermarkets and it’s a fair bet their shopping baskets have their fair share of milk, cheese and butter in them. By continuing to support local manufacturers, Fonterra and Foodstuffs are directly supporting the ability of their own customers to continue buying off them.

Maybe it’s too strong of a term to say that choosing local apparel would be a survival strategy for these massive businesses – it’s not quite that serious. But it would certainly be a smart move and would directly benefit the sort of people that are their bread and butter (especially butter!) customers.

So here’s the challenge for the folks in the procurement departments of Fonterra, Foodstuffs and Cleanaway. It’s not too late, we still have a manufacturing sector here in New Zealand and we still (shock! horror!) make apparel here. Come talk and see how you can help your own customers more readily buy the products you make.

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