Cost control increasingly vital

By John N. Anderson Vice Chairman and CEO Palmer G. Lewis Co., Inc. Auburn. Wa.

indication that lower interest rates to date have caused any significant increase in new housing construction on a prolonged basis. Rates have passed through the various "magic numbers," which were to have started the housing boom. Little has happened. There is some thought that even lower rates in the future may not cause any major change in new housing starts. This could be partially because of personal credit availability limits of many otherwise eligible new house customers due to disinflation, or even defla-

Story at a Glance

Lower interest rates will have little effect upon housing... markets will be stable, no boom ahead...more attention will have to be paid to cost control...innovation essenlial for success.

tion in formerly rising personal assets.

If you believe the scenario stated above, it is obvious that all segments of the business-manufacturers, wholesale distributors and dealers of all types and sizes will be fighting for a larger share of a somewhat stable market.

In order to remain competitive and operate at a profit, much of management's attention is going to have to be placed on cost of operation, whether manufacturer, distributor or dealer. High cost operations will have to be reevaluated. Services to customers will have to be re-evaluated to determine whether the customer is willing to pay for traditional services or whether he will require less to achieve the lower price.

This means innovative marketing will be required and adjustments made along the way for those who are to be successful. For those companies who are successful in fine tuning their costs and marketing programs, the rewards, in case of a business expansion, will be significant indeed.

These challenging times often bring out the best in companies and their management. It will be interesting to look back at the end of 1986 and see how things have gone.