Hardi Promotions 2 October 24, 2010 : Page 1

C O NVE NT IO N D A IL Y SUNDAY October 24, 2010 Houston, TX hardi FORGING NEW FRONTIERS EV E N T S C H E D U L E MONDAY 7 a.m. Continental breakfast 7:30 a.m. ‘Principles of Sales Greatness’ (Jeffrey Gitomer) 8:30 a.m. HALO breakfast, business meeting (Sharon McGee) 9:45 a.m. Hydronic heating and cooling council steering committee Controls distributors council steering committee Refrigeration systems council steering committee HVAC systems and equipment council steering committee 11:30 a.m. Lunch, ‘Value Strategies for Distributors’ (Michael Marks) 2 p.m. Conference booth program (trade show) 7 p.m. Vendor hospitality events Look for economy to grow in the next two years By Jeffrey Dietrich The economic news seems depressing — T stagnant high unemployment, limited credit, diminished wealth, a soft construction market with high vacancy rates and too much inven-tory, consumer debt, rising national debts and de⇒ cits raising the specter of higher taxes and fees — and a national leadership that appears to be short on options for what to do next. The question that continues to rattle around is “Will this recovery last?” The short answer is “Yes.” The follow-up question is, “What about a double-dip recession?” The Institute for Trend Research has consis-tently said, “AW-shaped recession is not in our forecast. An unusually mild recovery is.” Ben Bernanke, chairman of the Federal Reserve Bank, now seems to agree with ITR. We feel con⇒ dent that the U.S. and global recovery is sustainable aswemove through the next three years.Yes, there are real dangers out there that threaten our well-being, but we have he general mood among consumers and business leaders is confusion, uncertainty and caution. taken them into consideration when putting together our forecast. The leading indicators, extant economic activity, consumer trends, the nascent improvement in state tax revenue, and our cyclical theories offer a view consis-tent with a mild recovery in North America. Jeffrey Dietrich Improvement to come We are forecasting economic improvement through 2012. This recovery will have many bumps and some bruises along the way. Be proactive anyway. There are excellent oppor-tunities to gainmarket share at this point in the business cycle. What makes us con⇒ dent that the recov-ery will last? For one, the leading indicators we track are not giving off a “danger signal” for this year or next. They are however, tell-ing us that growth will slow for a couple of Continued on pg. 4 EXCLUSIVE ARTICLES HARDI’s convention dailies are produced by BNP Media. Sally Fraser, publisher and advertising sales; Michael McConnell, editor; Karen Talan, production manager; Wendy Zaremba-Just, senior art director; and Ally Caruss, art director. Teaching representatives a thing or two By Mike Marks Stop closing sales and start providing value By Jeffrey Gitomer . . . . . . . . . . . . . . . . . . . . pg. 2 . . . . . . . . . . . . . . . . . . .pg. 18 HARDI Convention Daily 1

Look For Economy To Grow In The Next Two Years

Jeffrey Dietrich

The general mood among consumers and business leaders is confusion, uncertainty and caution. The economic news seems depressing — stagnant high unemployment, limited credit, diminished wealth, a soft construction market with high vacancy rates and too much inventory, consumer debt, rising national debts and de. Cits raising the specter of higher taxes and fees — and a national leadership that appears to be short on options for what to do next. The question that continues to rattle around is “Will this recovery last?” The short answer is “Yes.” The followupquestion is, “What about a double-dip recession?” The Institute for Trend Research has consistently said, “A W-shaped recession is not in our forecast. An unusually mild recovery is.” Ben Bernanke, chairman of the Federal Reserve Bank, now seems to agree with ITR. We feel con. Dent that the U.S. and global recovery is sustainable as we move through the next three years. Yes, there are real dangers out there that threaten our well-being, but we have Taken them into consideration when putting together our forecast. The leading indicators, extant economic activity, consumer trends, the nascent improvement in state tax revenue, and our cyclical theories offer a view consistent with a mild recovery in North America. Improvement to come We are forecasting economic improvement through 2012. This recovery will have many bumps and some bruises along the way. Be proactive anyway. There are excellent opportunities to gain market share at this point in the business cycle. What makes us con. Dent that the recovery will last? For one, the leading indicators we track are not giving off a “danger signal” for this year or next. They are however, telling us that growth will slow for a couple of Quarters in 2011. In addition, the stimulus spending can be expected to continue through at least 2011 and likely into2012. It is also likely that Congress will propose more stimulus measures. Despite high unemployment, retail sales are gaining.Consumers are shopping again and for more expensive items. Consumers are also returning to healthier balance sheets; savings as a percentage of disposable personal income are running around6. 5 percent, even while credit borrowing declined by over $16 billion in May and June.Add to these savings the fact that U.S. businesses are estimated to be holding more than $2 trillion dollars in reserves. Count on both sectors to use up some of that cash over the next two years. Housing prices in most major markets have reached their nadir and mortgage rates are at historic lows, making this the most favorable housing market in decades. Even without a tax credit, look for more consumers and speculators to jump off the fence and get into the game.Non-defense Capital goods new orders are rising at a healthy clip, which is a sign that businesses are purchasing equipment. Commercial sector to lag The commercial construction market will be on the tail end of this economic recovery.While housing starts and retail sales are seeing improvement, of. Ce vacancy rates, at 17.4 percent, are at a 17-year high and net absorption of of. Ce space remains negative. The glut of commercial real estate is leading to low levels of new construction that we expect to persist into 2011. The recovery will come in commercial real estate and we expect the vacancy rate to come down next year, but this market will certainly lag behind most other areas of the economy. What should businesses be doing at this phase of the business cycle? . Be entrepreneurial. Entrepreneurs work smartly and creatively. They also work hard and don’t let others tell them what they can’t do. They set measurable goals and reach them. . Move quickly and decisively. This is a time of change and change brings opportunity and growth – for those who seize the day. Exhibit a “can-do” attitude. Use the uncertainty that exists to your advantage. . Don’t be self-limiting. Look for new opportunities. Don’t say, “That’s not our market.” Instead, ask, “How can I get into that market?” Don’t state, “We don’t have the right person.” Instead, declare, “Let’s go out and get the right person.” . Know your break-even point. Be keenly aware of your break-even point. If credit is limited, focus on organic growth. Review your cash . Ow statements regularly and adjust your pricing, budgets, expectations and pro. Ts to maximize results. Know the sales levels needed to be pro. Table given your current cost structures. Coming off historic lows that reduced overhead costs, the break-even point may be a lot lower than it was and the margins on each product and service will differ from what they were. . Make acquisitions. Coming out of this downturn, many business owners are tired and discouraged — especially if they are short on cash. They may have a fundamentally healthy business but they face an uphill battle . Nancially. If you make them an offer, they just might accept, and you can make a lucrative deal. Warren Bennis, an expert on leadership wrote, “Managers look at the bottom line. Leaders look at the horizon.” What do you see?D. Jeffrey Dietrich, Ph.D., is a senior analyst for the Institute for Trend Research. At the institute, he provides insight, analysis and support for companies throughout the United States and Canada, assisting the companies through the phases of the business cycle.He will present “Reading Those Economic Tea Leaves” at 11:30a. m. Tuesday.

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