It is helping us – this year we have had pockets of the business that have grown handsomely and then we have had other countries and regions where we have seen negative growth. In the next 12 months there will be a lot of concern and overhang out there from small to large businesses because of the banking environment, the financial market and the housing markets. But commodity prices, which were unreasonably high, are now collapsing, which is probably going to help the inflation situation globally – that is probably the one silver lining in the picture right now.
Generally, it will be more positive than not on that side but I think we are in a situation right now where most economies are staring at some degree of recession in the short term. Maybe in the back half of next year, things will turn around in a positive way, but there are a lot of question marks hanging out there; how long does this thing last?
As I said in releasing our earnings results, what shape is the recovery and what degree is the recovery are big question marks. I think everybody feels we are going to be in a soft market for two to four quarters, and then what shape does it take to come out and how quickly does it come out is a question no one can really answer at this stage.
At Ingram, we have the second highest cash position we have ever had as a company. We are at our lowest debt to equity ever as a company and in the market place versus our peers, whether it is Australia, New Zealand, Europe, Asia, or North America, we are in a better shape financially than almost any company we compete against. This gives us lots of flexibility to acquire if opportunities present themselves, and weather further downturns in the market if there are any, which could hurt our competitors more than us – not that I wish that on anybody, I’d rather have the market be stronger. But from a financial point of view, we are in a really healthy position.
You mentioned commodity prices coming down. A month ago you had to increase your freight prices – how is this situation going to play out? Is it an opportunity to reduce those charges?
GS: Most of the companies in our sector generally don’t, and haven’t thus far in the past, recover the cost of freight. So the initiative we took on-board in different parts of the world, including here, when we announced very clearly and signalled very clearly [we would put freight charges up], was driven by the cost of fuel going up astronomically in the first half of this year and the latter half of last year. Now that things have checked back, are we going to be as aggressive as we were? Probably not, because there is some air cover now that wasn’t in play three or four months ago. But there is still an opportunity to say let’s just get cost recovery to cover our costs where we can. As a company, we can’t be too specific about that but we are going to do what we can and be reasonable with it in the market place we operate in. If there are situations where we can scale back, we will. If there are situations where we can hold the ground where we have made some progress we will as well.