Forefront | Blog
Forefront 2021 – Issue 1
As we come out of a past year of COVID-19 it is time now to embrace a new beginning.
There are many changes that will impact our economy going forward. I am especially attuned to the potential impact of the flooding of cheap dollars into the market. We will most likely see a new round of inflation as a result. People who couldn’t afford to buy groceries and gas will be placed at an even greater disadvantage. We spend a lot of time in the agriculture space and I can assure you the price of dairy and meat will be escalating. Free money is at best a sugar high for a very short time with a subsequent “let down” that could be miserable. Michiganders will most likely experience firsthand the real impact of reckless economic policies when they are forced to spend $4-$5 for a gallon of gas. But why stop there? The labor scenario is completely “out of whack” right now as unemployment is high yet there are countless jobs to fill. The beauty of getting free government checks discourages working for a living. I had a president of a North American auto supplier bemoan to me recently that he has 1,100 jobs open and only 650 applicants. He computed the average hourly rate he would have to pay to incentivize workers to get off government welfare in the form of bloated unemployment benefits at $25 per hour. Problem is, the work was quoted at $16 per hour when people were working. Economically, he is unable to staple $9 per labor hour in losses to his parts. That, too, is unsustainable. So where are we going? This issue shows the areas of M&A we think are popping and some strategies near term.
