Although under-reported here in the Far East, the volcanic ash problem is of unprecedented seriousness in Europe. As at this morning - three days into the travel ban - millions of travellers and kg of air cargo are 'in limbo'. The economic impact on European import/export business is enormous, just as the British economy is beginning to slowly recover from the global financial crisis of 2008/9. As the BBC report here the gravity of this situation will financially impact business large and small. Here is the position at Harbeth UK:
- We completed our financial year at 31 March and took a full inventory check. We then adjusted the MRP computer's inventory levels and are 100% correct on stock count and 99.7% on stock value. We know exactly what inventory we have on the shelf. We know exactly what we can build with that inventory and we know exactly when it will be exhausted.
- Our well-managed financial control position (I note British Airways unlike many has also been prudent) has allowed me to invest cash in a rising stock of paid-for parts inventory during the last two years to cover just such a disruption in supply. With such a long order book from customers we have no excuse for late delivery due to the non availability of piece parts - we must have adequate inventory stock to hand, and we do.
- We have all the parts we need in stock or arriving by sea for at least two months ahead assuming the usual level of rejects due to unacceptable quality etc.
- Production continues at normal speed and in fact, last week we recruited another production staff member who is already usefully improving productivity
- Most of our sales are supplied by air to our customers. Doubtless some will switch to sea shipment. This will lengthen your leadtime.
- We are warehousing at Harbeth the cartonised completed built speaker systems until customers call them off at their convenience as air or sea freight as the volcanic ash situation develops. We do not want your speakers to be crushed under a mountain of other cargo at the airport - better we sit on them under our control
- We are not at all concerned about the impact on our cash flow of being unable to collect payments and we do not need to and will not pressurise any customer to take delivery at this difficult time
I apologise for our inability to maintain a continuous supply to your market but assure you that production is totally unaffected at Harbeth UK. Thanks for your continuing support. More pictures here.
- Assuming that end user demand remains buoyant, this volcanic ash problem and the disruption in supply is a temporary problem that a well-structured business like BA and on a micro-scale Harbeth can ride through from its reserves. Harbeth is wholly independent and financially structured for the long term, intending to be here to serve the next generation of consumers. This situation is just a minor irritation for us. You need not be concerned about your speakers when you see the unfolding grim economic impact of this volcanic eruption.
Alan in Hong Kong