Broker by the Minute
Join Date: Mar 2007
Location: Cartoon City Nirvana
Feedback: 0 reviews
Jim and I discussed business in general terms. It was like shop talk, from one business owner to another. We never talked specifics and I was never really privy to any "inside" financial information for Nth Degree Mobility.
I know that they were very successful with the TJ product line and were having trouble keeping up with the TJ products and with even more designs and prototypes they in mind for it.
When the JK came along I think the sales and success of the model surprised everyone, including Jeep. Many vendors rushed to market with all sorts of crap (sometimes literally) to meet this new potentially massive market. The JK model is predicted to out sell every previous model by significant multiples. Anytime you bring new products to market you bring a lot of costs in design, engineering, preproduction, tooling and packaging.
However I wouldn't say that it was the JK specifically that closed Nth, Jeeperman and Rev but I would speculate that the overall economy had something to do with it. Prices for everything skyrocketed with the price of gasoline. Steel costs jumped overnight. Along with the increased costs to everyones living people wanted more money in payroll to buy the things they needed or wanted. However a lot of the companies we do business with had moderate, if any price increases. The only way a company can accomplish holding prices and staying in business is by reducing margins and if there isn't enough margin, then you take it out of your pocket until you are broke. The only other way a company is going to make it is by borrowing the money and with many banks now left holding notes on all the housing foreclosures money isn't as available as it used to be. So banks aren't as eager to lend and are even more finicky over to whom they lend and what risks they are willing to take. It is a pretty ugly situation for smaller businesses, particularly if your having a hard time as the resources available for funding options is significantly reduced.
Now I'm not saying this was the case for Nth or Jeeperman but this is a very likely scenario that the funds just dried up and/or was absorbed in additional and unforeseen costs of doing business.
Unfortunately I would say that we will see more closures in our future for our niche market. I'd like to think that there are still those prosperous companies that will absorb those in hard times and we won't loose products. But taking on that much liability in this fragile and weakening market is going to be a huge risk for all but the strong.