From a CEO's Perspective

The continued drive for efficiency

A topic I often discuss is the continued drive for efficiency caused by technology and margin deterioration.  Being driven in several ways, consolidation, companies cutting expenses including employees, and failed businesses. Recent examples of this include the re-engagement of Wheat Growers and North Central Farmers Elevator who tried to merge but did not pass the vote are attempting to merge again, CHS, Landus, Bunge, and CFS, as well as many others, cutting expenses and numerous private companies selling or getting out. So, when or what stops this continued drive for efficiencies? The answer is nothing. Although at some point it may slow down after enough consolidations have taken place. However, new technology in the market place will not allow it to stop.  Many companies or probably most in our industry have relied heavily on product margins to carry profits through the business. I and others have said for years this needs to change and more profits need to come from service, knowledge, and expertise. I believe we are finally on the cusp of this transition, as there is simply not enough product margins left to return sufficient profits to sustain the businesses.   Too many of our expenses have become people and technology related, which is hard to cover with ever shrinking product margins.  I believe this transition will offer our customers, employees, and businesses with opportunities.The challenges are staring us in the face today. The opportunities need to be found.