Thank you.
My name is Jeff Wilcox. I'm president of George's Marine and Sports.
Over the past 10 years that I've managed this company, we've taken it from a $100,000 dealership to nearly $14 million. I have been president of the company since 1999 and have been employed with it since 1985. During my tenure I've seen a number of changes to both credit at the consumer's end and to wholesale credit.
These times, however, have now created some of the most challenging set of parameters I have ever seen in how small businesses run. In business, we've seen interest rates rise and fall many times, but never have we seen a change this dramatic on both the wholesale and retail side. Not only have our credit providers changed the game plan in mid-stream, but so have the retail lenders, causing pressure from below and above.
Our main floor plan lender is GE. In the past month we have seen our rates nearly triple and credit availability tighten beyond anything I've seen in the past. We have seen rates this high in the past, but never with margins on products this low. Given the current economic status, our margins on our products have declined by over 40% as a result of dealers trying to keep market share. Combined with the increased flooring costs and the decrease in margins, profitability will be next to impossible without cutting costs dramatically.
The most likely cost will be to our employees. Given that we employ highly trained people, it will be a very difficult decision, but one that we may be forced to make.
In addition to the wholesale problems that we are experiencing, retail lenders are also changing how they do business. They have increased their requirements for available credit beyond what some of the consumers are able to maintain, making it virtually impossible for a mid-income family to receive credit. In some cases, clients who would have received credit a year ago and are currently working with very little debt have been denied.
These two factors are now forcing small businesses like mine to restrict business operations and directly reduce our workforce in order to remain in business. George's Marine and Sports will most likely not look the same after this current recession ends, nor will we return to where we once were.
Thank you.