World Economy vs US RP Market

From: Joe Allison (
Date: Mon Jan 18 1999 - 21:43:46 EET

I agree with many that the US economy is not immune to the world crisis
going on right now. I still find it unbelievable that we have not
experienced a major down turn here yet. I think we are just waiting for a
couple of international banks to fail. But I believe the difficulties of
some of the RP bureaus in the US is completely disconnected.

First, Plynetics is an isolated incident that has nothing to do with the
market place. They got caught up in the venture capital game and got
burned. I won't elaborate on this any further.

As for the so called down turn in the market place, this is a simple lesson
in business. I have heard several business consultants/experts predict this
over the last several years. In a mature market for other types of custom
manufacturing, gross margins are somewhere in the area of 45%. In a start
up industry, these margins can be much higher due to the lack of
competition. For the past several years, for our industry, these have
probably been as high as 55-75%.

What we are seeing in the RP market is the equivalent of a painful
adolescence. Gross margins are below the 55% mark with more room to drop.
This will drive some of the smaller and less efficient service providers out
of the business, but you will see growth in the overall industry. Unless,
of course, the entire world economy collapses.

OK. I better go get some work done now.

Joe Allison
Solid Concepts Inc.
28231 Avenue Crocker #10
Valencia, CA 91355
Tel: (805) 257-9300
Fax: (805) 257-9311

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