Last Run: Converters Brave Rough Economic Waters

However, this doesn’t mean that converters are not going to be adversely impacted by this recession. Some may have had customer concentration in industry segments that have been hit hard. Others may be hurt by customers stretching out their payments or even going bankrupt. Overcapacity in the industry has also been a problem for quite some time, and the economic slowdown will mean much more of it. This tends to result in “margin squeeze” as more and more competitors fight over smaller pieces of business. Many converters may resort to desperation pricing as they find themselves getting into deeper trouble. While their customers might enjoy the lower prices for the short term, in the long run, these customers get hurt by lower quality and service, and by driving out innovation and new capital improvement in the surviving converters.