Latest / Best of Business / Jarrod Adam: Unleashed Head of Product on revenue for manufacturers dropping amid global conflict

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Jarrod Adam: Unleashed Head of Product on revenue for manufacturers dropping amid global conflict · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk st be
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  Speaker 2: Now. As we know, the manufacturing sector has been hit
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  Speaker 2: hard in the past few years, but with tariffs and
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  Speaker 2: a war in Iran all in the past year, things
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  Speaker 2: are getting pretty grim. Average revenue for manufacturers is down
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  Speaker 2: fifty eight percent on the same time last year. Profit
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  Speaker 2: margins are the lowest they've been in eight years, and
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  Speaker 2: manufacturers and manufacturers are now clearing out their warehouses. The
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  Speaker 2: data is from a new report by Unleashed and Jared
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  Speaker 2: Adam is the head of product for Unleashed.
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  Speaker 3: Hi Jared, Hi, Heather, thanks erving me.
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  Speaker 2: Yeah, it's good to have you. Is it the same
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  Speaker 2: story across all of manufacturing.
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  Speaker 3: It is pretty pretty common, unfortunately. Yeah, we're seeing slight
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  Speaker 3: differences in terms of margin stability, but in terms of
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  Speaker 3: the revenue it's pretty consistent.
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  Speaker 2: What about I mean the gross margin I think is
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  Speaker 2: interesting because it's fallen for everywhere except for beverages, electronics, food, energy,
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  Speaker 2: and industrial machinery.
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  Speaker 3: Why, yeah, good picking. It may be that we'll find
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  Speaker 3: out in the future editions of the data, but it
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  Speaker 3: could be that because they're the fast moving products, they're
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  Speaker 3: able to pass on the price more to consumers, so
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  Speaker 3: we may see that impact then again on demand in
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  Speaker 3: the future. It also just may be that they're less
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  Speaker 3: energy sapping production lines compared to some of the mass
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  Speaker 3: machinery that we see in some of the other areas,
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  Speaker 3: So we'll have to wait and see a little bit
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  Speaker 3: on those.
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  Speaker 1: Now.
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  Speaker 2: Clearing out the warehouses sort of seems like a problem
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  Speaker 2: waiting to happen. Are you worried about that?
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  Speaker 3: It is if you do it without strategic care. And
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  Speaker 3: what I mean by that is if you're as a business,
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  Speaker 3: if you're close to so the top twenty twenty five
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  Speaker 3: percent of your revenue driving products, then you're going to
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  Speaker 3: be restocking those. You're going to make sure that you've
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  Speaker 3: got the margins really clear on those and you've got
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  Speaker 3: control on them. You're also really close to the revenue
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  Speaker 3: and that's where you you need to make sure that
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  Speaker 3: you're getting the orders in time. If you don't get
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  Speaker 3: that right, then that the impact to your business is significant.
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  Speaker 3: You can kind of you can leave some of the
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  Speaker 3: lower volume products to a little bit less care. It's
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  Speaker 3: not going to have that much of an impact on
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  Speaker 3: your business, but definitely that top twenty twenty five percent
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  Speaker 3: is going to be critical.
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  Speaker 2: Is this I mean, I know this is a global
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  Speaker 2: problem because it's a global These are global problems that
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  Speaker 2: we face. But our manufacturers here doing it tougher than
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  Speaker 2: other parts of the world or is that just something
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  Speaker 2: we've imagined.
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  Speaker 3: Unfortunately, we see pretty consistently. So we have three main
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  Speaker 3: regions that we're operating in New Zealand, Australia and the UK.
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  Speaker 3: They're all fairly consistent with this sort of data. Definitely
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  Speaker 3: on that smaller side of these operations as well, So
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  Speaker 3: that's where those margins that you're referring to are so
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  Speaker 3: critical for these small businesses. They really live and die.
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  Speaker 3: They're not making huge amounts of money on these products,
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  Speaker 3: so the impact of higher prices or higher costs I
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  Speaker 3: should say, really impacts on the profit margins within their business.
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  Speaker 2: Okay, if there was one thing that you could point
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  Speaker 2: to and say that is the hardest thing that we've
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  Speaker 2: had to face, what would it be.
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  Speaker 3: In terms of the dynamics that they're facing.
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  Speaker 2: Yeah, the ARAM or the tariffs, the power price is, whatever,
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  Speaker 2: the cost living crisis, what is it? What's the hardest thing.
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  Speaker 3: Look, I think it's definitely the costs increasing. So whether
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  Speaker 3: that's coming from I believe that that's more from the
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  Speaker 3: supply chains as opposed to tariffs. The challenge there is
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  Speaker 3: that they just don't have any certainty over what's coming
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  Speaker 3: in the next month, you know, days. Even so what
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  Speaker 3: we've seen with the running down of that stock on
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  Speaker 3: hand or the warehousing is really just a pause. It's
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  Speaker 3: waiting to see We're not committing a huge amounts of
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  Speaker 3: capital at a higher cost point. We're going to let
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  Speaker 3: you use the product that we have in our warehouses
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  Speaker 3: and see what happens. The one positive that I would
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  Speaker 3: say from this data is that the lead times that's
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  Speaker 3: from when you order to getting the product in as
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  Speaker 3: at a historical low. So we are still seeing the
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  Speaker 3: products moving through the supply chain. That's not the case.
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  Speaker 3: That wasn't the case in COVID. This is very much
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  Speaker 3: a cost event, not a supply chain reliability event.
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  Speaker 2: All right, Hey, thank you, Jared appreciated Jared Adam, who's
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  Speaker 2: the head of product at Unleashed.
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