The decade-long campaign to reform and restructure the doctrine in auto care that maintained a macho theme for its product mix is over. The vision of this small company’s belief that women, with 50% ownership of all vehicles, and 80% of the contribution to the decision to acquire a vehicle has prevailed, jettisoning the company as a successful global player with its conceptions distributed throughout the world, under its own well known brand Clean Plus® or that of its competitors !
The automobile after-market is about to enter a new and challenging stage, one in which the strengths and weaknesses of its key players are sure to be thrown into sharp relief.
In November of this year, with one eye on the several presidential elections, and the other on the economic fiasco, and the need to buttress the weakening finances of its behemoth and smaller end-clients, Falken, traded under the symbol FLKI has continued its incessant concentrated effort to attract technological know-how, increasing distributor and retailer support and developing innovative solutions for its governmental, military and industrial end-users.
While as a percentage FLKI’s investment in research and development is considerably higher than the declining average of the behemoth parents of its competitors, it represents a challenge for the automobile aftermarket-care sector and Falken’s management and several thousand strong shareholders base. Any cap on FLKI’s innovation and development, some believe, could hamper the company’s chances of raising the necessary investor interest needed to modernize still further its production capacities and meet the increasing needs of its global distribution network.
The success of FLKI’s concerted effort to sustain a continued improvement on productivity within the context of a fixed price policy to its global distribution, throws the company in sharp relief with its competitors, notably in the current environment which the world’s economies are likely to continue for another five years. Still more, the company is generally unchallenged in its embrace and alone reflects the importance of being an industry front runner.
For the last three years, FLKI has implemented an unprecedented program of investment and product development. The company has invested heavily in infrastructure, technology and services in efforts to improve the reliability of its existing distribution system – consigning to history disruptions in supply - and to connect production operations with its global distribution. During this period capacity has substantially increased with bottom line consequences as were evidenced in FLKI’s 3Q 2011 reporting (EPS .01, PPS .045). FLKI can now guaranty immediate supply, globally, in all but the most adverse conditions.
In the process, FLKI has substantially increased its ability to enter new markets, and done so with no meaningful increase in debt or dilution Although the company policy of holding the line on prices to its distributors means that the top-line growth potential of FLKI are by definition limited, the decision is applauded by industry distributors with the result that the defection rate of its competitor’s distributors in its favor is occurring at a surprising rate. Management believes that growth will result in 2012 as a result of the integration of this business, which it termed “substantial”.
Manuel Garcia, communications officer for FLKI during a telephone interview stated : “Management’s policy to hold prices and maintain margins as it has done through aggressive cost controls and efficiencies, while leaving us with almost no space to grow our income outside of competitor defections or acquisitions, brings welcome predictability to our distribution and into our business environment. Our customers will be able to grow their businesses with a generally positive intermediate term impact on our own.”
Garcia added : “FLKI’s priorities for the coming years are to continue its focus on improved operational efficiencies, and to grow the business by creating a business environment loaded with incentives that will enhance profitability for existing distributors, and draw the interest of others to expand their lines to carry those of the company – in lieu or in addition.”
Lastly the company, consistent with the shareholder meeting held early 2010 has retained consultants to address the issues of its underperforming stock and to overall its IR and shareholder awareness programs. It is expected that the long neglected stock will come to be recognized by the investment banking community at its potential value (some place enterprise value figures at 80 cents). Moreover this policy has already produced unintended consequences with a number of inquiries from potential partners seeking to make the most of FLKI’s technological experience and expertise. Joint ventures or outright acquisitions by FLKI are a distinct possibility.
Garcia concluded with a smile : “It’s as simple as that.”
There is little reason to suggest that Garcia’s confidence is misplaced.
Falken Industries Ltd OTC : FLKI is a diversified industrial conglomerate that operates in Chemicals, Wet Wipe and Biodegradable Technology. Falken Industries Ltd is the concept behind more than 160 products distributed through a network of global platforms and the recipient of trade awards for innovations, biodegradability and environmental and health quality standards. As a reliable partner FLKI creates chemistry to help distributors and retailers in virtually all industries to be more successful. With its high-value products and intelligent solutions, FLKI plays an important role in finding answers to global challenges such as environmental protection, energy efficiency, and mobility.
Author Resource:-
John David is one of the nation's most respected expert analysts on the Automobile After-Market Industry. He holds appointments as a covering analyst with some of the world's largest players. He also conducts a private practice as a consultant in capital raises, mergers and acquisitions for small to medium size manufacturers in the consumer, professional and industrial chemical, wipe, wet wipe and car and vehicular care industries.
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